It’s common knowledge that compact discs are very cheap to produce, yet both audio discs and DVDs are far more expensive than their magnetic tape-using counterparts.
Does this have something to do with the added cost of DVDs “extra features”? Or is it just that makers of DVDs know that video tape is on the way out and want to sell as many as possible at the lower price while they can?
I paid $78.00 plus tax for DVDs of “Alien” & “Aliens”. The same two VHS tapes would have cost me $32.00 at the same store. Does anyone here see the cost of DVDs going down any time in the near future?
WAG: The facilities for producing DVDs are newer than those for making tape. The tape making factory is already paid for. The DVD factory is still trying to reach the break even point. By the time the DVD factory is making a profit, people will be used to paying more and the manufactures will see no reason to make an adjustment. The same trend was seen in the price difference between LPs and Cassettes and then cassettes and CDs.
DVDs are more expensive for exactly one reason. You pay more for them. Prices are not set by cost, but rather by demand. If DVD buyers are less price-elastic than buyers of entertainment in other media (which early-adopters of technology tend to be), the price will be higher.
Majormd’s weird experience with Wing Commander results from another strategy. Whenever a new title is released by a movie studio, the studio has to decide whether to price it to rent or to own. If they think the title has potential to sell in large quantities, they set a suggested retail price it in the $16 to $30 window. If they think the title will mostly be rented, they slap a retail price on it of $110 or so, so they make money by selling copies to the video stores at the also-higher wholesale cost.
This pricing model is changing (slowly) as alternative media (DVDs, for example, which because of the small size of the market are almost never priced for rentals) and the changing economics of the video-rental business cause studios and video stores to explore new ways to do business such as rental-revenue sharing.
But there are plenty of examples of the old pricing model out there, and Wing Commander is obviously one of those. The Aliens situation that handy found is priced for retail sell-through. I have no idea how the OP found a $78 price, unless it came as a “Director’s Cut” or some such.
For just browsing, 800.com and reel.com usually have pretty good prices.
My roommate has been using the various deals all year, and he’s averaging something like 75% off of retail price. This is for good dvds too: Austin Powers, Matrix, Gattaca, etc.
I was recently looking through the latest Right Stuf (anime catalog) and all the DVDs were priced 2 or 3 dollars cheaper than their VHS counterparts. If I’m not mistaken, I think that DVDs themselves cost considerably less than the components that go into tapes. Most places I’ve been to have had a similar pricing scheme in relation to DVDs and VHSs, the sole exception being the Record Town in my local mall.
I’ve purchased DVDs on-line, and the savings are definitely there. I recently had a bad tiff with Amazon over some shipping costs, though, so I don’t think that’s the place for me.
The Alien movies I bought were indeed part of a “special edition” of sorts. Lots of extra features besides the movies. Really neat if you like sci-fi horror.
My main point is this: higher tech = higher cost? If we percieve something to be an advancement in technology, we seem to agree to pay more for it even though it’s actually be cheaper to produce.
manhattan: I have a microeconomics final tommorrow. I spent the whole afternoon bonding with my textbook. When I saw your post, I panicked. I recognized what you were saying but after a whole semester of this it still seems foreign to me. Something tells me I’m not going to do very well tommorrow. . .
also with that regular vs special DVD thing, Tarzan is coming out on two different types of DVDs. A regular one, regularly priced so you can enjoy this awesome movie, and then a much more expensive edition which makes the regular one look worthless. Fortunately, the Tarzan nut that I am, I don’t have a DVD player so I can just save money and buy the one edition that’s coming out on VHS.
“I’m just too much for human existence – I should be animated.”
–Wayne Knight
Well, at least in America you can buy a decent quantity of DVDs. In the UK, we have to make do with maybe 20% of the DVDs available compared with the US. AND the release date is always delayed six months. AND they’re more expensive. AND the quality is usually apalling (like no widescreen, no digital sound, no special features). The movie companies want DVDs to fail in Europe. I buy mine from Amazon.
On the subject of $100 VHS tapes, you are paying the for the copyright as well as the tape itself.
I once lost my corkscrew and had to live on food and water for several days
(W.C. Fields)
One nice thing about the advent of cheap digital copying - it may finally force the manufacturers to lower the prices of CD’s and DVD’s. Once the masses have the technology to burn their own DVD’s, the manufacturers will have to compete on price.
Take a piece of advice from an old econ major. For Ghod’s sake, to not try to relate how pricing strategies really occur to your micro course! You’ll go insane! Your head will literally explode! Your roommate will then get an A in Urban Legends 101, but other than that this is a bad thing[sup]TM[/sup].