From the December 24 Daily Variety. This is information from a chart that was published based on information from Merril Lynch. Keep in mind that this is strictly from finished/publishable title and does not include production, rights or non-direct costs.

DVD - Average Wholesale Price = $16

Marketing - $2.75
Duplication - $1.00
Packaging - $0.90
Distribution - $0.80

Total - $5.45

Gross Profit per Unit = $10.55


For comparison, here's the same information for a VHS tape:

VHS - Average Wholesale Price = $12

Marketing - $2.75
Duplication - $2.25
Packaging - $0.75
Distribution - $0.90

Total - $6.65

Gross Profit per Unit = $5.35

You would think the studios would finally release more catalogue titles. The marketing costs would be lower without the major ad campaigns, so even though they would sell fewer copies they would still make a considerable profit.

Yet they still don't think we're paying enough.

Leaving out the cost of trasferring a film to video, and then the cost of authoring, menu design, etc., are big omissions in my opinion. Those steps cost hundreds of thousands of dollars.

Mr. Salty...is very smart...

Plus paying for the cost of producing the extras. Some actors even have to be paid to do the commentaries like Arnold Govenegor.

The cost of producing the materials on the DVD are fixed costs. So if the volume of a certain DVD is very large, the fixed costs associated with the production spreads out over greater units.

This is why DVDs like 'Finding Nemo' and 'Pirates of the Caribbean' are pulling in a profits galore, thus they can be sold for 12 bucks each and still pull in a profit.

But high quality low-volume DVDs selling at the $20 price range have very negligible profit, sometimes even none and rarely if ever go on sale. (An example being classic films reissued as 2 disc special editions.)
This is the reason why Criterion DVDs retail for $30+

I don't know.....hmmmmm

Looks to me like all of those numbers are too high. $2.75 marketing on every disc. I don't think so. Packaging $0.80? I thought it was more like $0.40. I suppose these are meant to be averages but they still seem high to me.

I agree, these are some of the biggest parts of a DVD. Leaving out the cost of those isn't all that right.

It's like saying, "Well, the cost of each print of 'Return of the King' is only about $4,000, so look at the enormous profit it's making," while ignoring the $100 million production cost.

Your point is that the $4,000 print costs do not represent the entire costs of producing 'Return of the King'. I agree. You have to look at all costs. (And when actors and directors hold points in a project, the studios will count every penny against that project to attempt to keep profits as low as possible.) But I digress…

We are talking about DVD production costs. Dollars per disc. This discussion is not concerned with recouping production costs of the original content. For our purposes, the original content is “in the can.” We are interested in any costs necessary to bring existing content to disc as well as the costs for addition disc specific material. So while the $100 million production cost of LofR: RofK is not included in this discussion, the costs of DVD authoring, mastering, menus, gathering and preparing special features, disc manufacture, marketing, packaging, and distribution are all added into our $$$/disc number.

The article quoted at the top of this topic did not include many of theses fixed costs....probably because fixed costs vary so much from title to title. But your argument that fixed costs are a major portion of DVD production is not tenable. As smirnoffski said earlier

So depending on the projected sales of a certain title, the budget for fixed costs can be set to generate the desired revenues. Star Wars II: Attack of the Clones can spend more on menu designs then say Bonfire of the Vanities. The expectation is that they will sell a lot more copies (MILLIONS) of Star Wars. The point here is that fixed costs vary…but can be budgeted into a manageable amount: $$$/disc.

Leaving off the fixed costs was an omission…but hardly a "big" one. Some blockbusters may spend "hundreds of thousands of dollars", but those titles recoup those expenses by selling millions of DVDs. I think you'll find the majority of DVDs out there spend under $20,000 on the fixed costs you itemized (”cost of transferring a film to video, and then the cost of authoring, menu design, etc” ). I don't imagine most DVD producers would allow these fixed costs to exceed $1.00/disc. The actual number is probably far less.

Let's take a look at a current blockbuster. How many copies of Pirates of the Caribbean do you think they sold? Let's use 1,000,000 as a low figure. If they spent $200,000 on fixed costs, that's 20 cents per disc. The point here is that fixed costs are not the biggest expense on most DVD titles. The packaging portion (cost of box, labor to stuff boxes, shrink wrapping) usually costs more.

Where does rights and royalties come into the picture?

Yeah....we gotta add rights and royalties as well. To be fair, the first post actually mentioned that rights and DVD production costs had been omitted from the data.