Where are the setup fees?
Yesterday I posted pricing information on the wholesale per disc costs associated with replicating Blu-ray and HD DVD media. The article has generated a lot of discussion and debates around the web. From the article comments and other discussions, I found that the number one item that people missed in the first article was the costs associated with the replication “setup” fees, which includes the mastering fee. This fee is normally waived or inconsequential for larger quantity replication batches, but it does bare some significance on smaller replication runs. After receiving some requests in the comments section of the last article, I spoke with one of my replicator contacts and he provided me with approximate setup fee costs. I have posted these setup fees in the comments section of the last article and have also included these in a table image below. My contact also reaffirmed a few pieces of information on pricing costs, numbered below.
#1) The setup or mastering fee is waived on larger orders
#2) The per disc cost of HD DVD-ROM DL is approximately equal to the per disc cost of BD-ROM SL (~$1.30).
#3) The per disc cost of BD-ROM DL is approximately 15 cents more than the HD DVD DL cost.
#4) These costs are likely to go down as time goes on and service (demand) increases.
#5) These are wholesale costs for the industry, going through a reseller or replication broker (such as ProActionMedia) will lead to higher costs.
Blu-ray vs HD DVD replication cost break down
The table image above shows the per disc costs and setup fee costs from replication plant #1. Remember that larger quantity orders of discs will have setup fees waived. From this we can see that Blu-ray SL discs cost more than HD DVD SL discs. But HD DVD SL is not often used, as the capacity is maxed at 15GB. A more interesting comparison would be to look at Blu-ray SL vs HD DVD DL costs or Blu-ray DL vs HD DVD DL costs.
Replication Example Costs Calculated
I have been told that the setup fees are waived at approximately 10,000 discs or more. With this in mind, let us look at the total costs for a theoretical batch quantity of 5,000 discs (setup fee applicable) and a batch quantity of 10,000 discs (setup fee waived). These examples only apply at this one replication plant, who happens to replicate both HD DVD and Blu-ray discs. Costs will most certainly vary at other replication facilities.
Replication costs for smaller batches
Looking at the calculated example costs in the table above, we can see that HD DVD SL would be the most inexpensive media type to replicate in a 5,000 disc unit run. HD DVD SL is not often used though, so what is the next most inexpensive media type to replicate at this quantity? Looking at the calculated data, we can see that Blu-ray SL is less expensive than HD DVD DL ($9,000 vs $9,500) on a smaller batch where setup fees are required. And although Blu-ray SL is a bit less expensive in this situation, opting for this type would lead to a smaller capacity (25GB) compared to the HD DVD DL (30GB). A difference of 5GB might not matter much to content producers though, as most HD films should be able to fit on a 25GB disc. Blu-ray DL (50GB) comes in as the most expensive option ($12,250) at the 5,000 quantity run, but we probably all expected BD-ROM DL to be the most costly option. All in all, it is interesting to see that replicating on the Blu-ray SL format is not more expensive than HD DVD DL on small production runs. Using these example calculations we can see that if a content manufacturer was looking for the least expensive HD disc replication option, they would probably go for BD-ROM SL (25GB) unless only 15GB of capacity was needed.
Replication costs for larger batches
Again, looking at the calculated example costs in the table above, we can see that HD DVD SL would be the most inexpensive media to replicate on in a 10,000 disc unit run. HD DVD SL is not often used though, so what is the next most inexpensive media type to replicate at a quantity of 10,000? At this quantity, HD DVD DL and Blu-ray SL have an equal cost of $13,000. BD-ROM DL (50GB) again comes in at the most expensive option, with a total cost of $14,500 for 10,000 discs.
Blu-ray does NOT cost significantly more than HD DVD
Using the pricing data and example calculations in this article we can make a few conclusions on replication costs at this plant. Replicating on HD DVD SL (15GB) will always be the most inexpensive option at any quantity. Replicating on Blu-ray DL (50GB) will always be the most expensive option. But the pricing of the other two media types (HD DVD DL and Blu-ray SL) is where the most interesting information is. Looking at the pricing and calculated data we can conclude that replicating content on the Blu-ray format is not significantly more costly than HD DVD. In fact, replicating on Blu-ray SL (25GB) can actually be less expensive than replicating on HD DVD DL (30GB). Hopefully this article will help to dispell the myth that Blu-ray disc replication is significantly more expensive than HD DVD replication. If you have any comments please post them in the reply section of this article below and thank you for reading.
29 Comments on “Blu-ray vs HD DVD replication costs analyzed again”
Wes, thanks for this interesting read 😉
Thanks for the analysis and info. Great read.
Nice info, good to know!
Don’t know which recent disk releases you’ve seen, but most of them I see these days(BOTH formats) are DUAL-LAYER, not single layer. Here’s where your own figures show that HD-DVD has anywhere from a 10 to 20-percent cost advantage. In case you havn’t noticed, that can be the difference between profit and loss. Why do you think the porno boys have been so quick to pick up on this? They’re among the best business people in the world, especially when it comes to shaving a buffalo off a nickel. No matter how Sony tries to finesse it, there’s just no getting around the intrinsic cost advantages of HD-DVD. Sony can try and twist and turn and spin the numbers much as they can, but for the guys having to pay the bill(as above), it’s HD-DVD by a length.
Since when the porno boys become “the best bussiness people in the world”? Should we appoint their CEOs to the Fortune 500 now? I think blu-ray is the better format but HD-DVD has a huge advantage: it’s the name with the “HD” prefix. Common folks think that when they replace their TVs with HDTVs, they might as well replace their DVDs with HDDVDs. Since the quality of the picture of both formats are the same, I don’t think blu-ray’s higher capacity would do much good.
One problem is that the Dual Layer HD DVD’s (30GB) are already being maxed to capacity on longer films or discs that include a good amount of bonus features. Due to this, the Blu-ray DL (50GB) “version” of an identical film could theoretically hold the same or better picture quality for a given film, but with many more additional bonus features and interactive features.
I still think everyone is missig the major point.
It is not the cost to make the disc but the cost of piracy and duplication. If HD-DVD cost .50 to make and Blu-Ray cost 1.00 that would add .50 to the price of each movie. Big deal. However if you could release a movie on a 30 gig disc or uncompressed on a 75 gig disc it would not be practical to release on the web if you cracked it. Also Blu-Ray leaves a tag on the disc as part of itâ€™s encryption that follows the copy. With the advent of all the tracking going on at retailers you could almost really put a damper on pirates. this would led to more studio support and lower prices in the long run due to higher profits. The major studios like Blu-ray because pirates, not disc cost steal profits. They are convinced that blu-ray has better protection through itâ€™s two encyption layers and sheer size. This is why blu-ray is really cheaper and a better format.
You make some good points about how stopping piracy could POSSIBLY lower overall disc costs for the consumer in the long run, but who knows if the studios will actually pass these “savings” on to the consumer?
The “tag” that you are referring to is known as ROM-Mark. I believe it is not being used yet on Blu-ray Disc movie titles, is it?
I believe, as Donald said, that piracy is going to make the difference between these two. The most easily pirated format will win. It was the same with DVD: The format didn’t start replacing VHS until pirated copies showed on the street.
It was the same with AutoCAD: It’s the most popular drafting app in the world because it’s the most easy to copy. And it’s the same thing Microsoft did with Windows: They let everyone copy it for years and when 80% of all PCs in the world were running it (mostly pirated), they started a campaign to stop piracy (That is, reap the benefits of all those years without piracy control).
Anyone ever go back and try to run these stats now? And curious to see how the DVD/HD-DVD combo discs stack up in the pricing comparison…?
Hello E Montoya. I have not asked about current replication pricing lately, but I doubt it has changed much.
Unfortunately I could not obtain any pricing on HD DVD combo discs. Combos don’t matter too much anymore anyway, as Paramount/Dreamworks does not use them and Warner is dropping them starting in 2008.
Here’s the thing that’s missing
The average Blu-Ray sells twice what the average HD DVD does (as supported by Nielsen VideoScan). Any difference in replication costs will be eaten by that easily just on economies of scale.
Also the studios typically replicate in the 20K range, which would waive the setup fees for Blu, I don’t know what they do for HD, but I’d expect they avoid them on at least half the titles if not more.
Why was AACS which is required to be on Blu-ray media for movies not factored in to these pricings? Or was that appropiately forgotten? Approx $10,000 per disc master, so with say, one final, and one check disc, that is $20,000 more on top… Oops… now that blows out the costs of Blu-ray replication costs… HD DVD does not require discs to have AACS encryption.
I believe the AACS costs are already factored into both pricing estimates. The vast majority of HD DVD discs do use AACS anyway, so it’s not much of an argument…
After linking to your article, a lot of ardent HD DVD supporters began to cry foul, point to many AVS insiders who say BD DL can cost up to $4 a disc. Others have stated that the per disc prices you quote can’t include the hard coating on BDs. Others still dismiss you outright because you name no sources. Any replies to that?
By the way, very interesting article!
Hello Archangel. The prices quoted in this piece were straight from a sales manager at a large replication plant in the USA. This plant can do both HD DVD and Blu-ray. I can’t name the source as I promised not to reveal the company name in order to receive the information.
One thing to note is that since the time that I posted this article (9 months ago), most Blu-ray Discs are now being made as DL, so Blu-ray replication is going to be the more expensive option in most cases.
The only thing I can do is to try and contact the company again and ask for permission to reveal their name. While I’m at it, I’ll ask for updated replication costs. I can’t promise I’ll get any answers this time though…
Blu-Ray has the extra capacity to provide future movies with formats like Stereo 1080P24 or 720P 60, or hopefully 1080p50 .
also it’s the real next format each new format should give at least 5* the last ie
6*800Mb (cd) ~= 4.8gb DVD
5*4.8Gb(dvd) ~= 25Gb Blu_ray
why bother with a with a format which is only 3* when you can go 5* the capacity blu-ray is the one.
You are a moron, I am the purchasing manager for the 5th largest DVD/HD-DVD/Blu-Ray replicator in the US, and I can tell you for a fact that your information is completely wrong. First of all, you didn’t take into consideration for the plant to acquire the necessary equipment to produce Blu-Ray and HD-DVD discs. The standard upgrade to HD-DVD from a Singulus Spaceline is about $150,000 USD. This German based DVD replication machine is what the majority of the plants use around the world. However the cost of being able to produce BD is a staggering $2,000,000 per unit… Just taking that into consideration, there is no way small-medium sized plants are going to take Blu-Ray in the long run, in fact over 95% of Blu-Ray discs are replicated by Sony themselves… (hence the little porn available). We are only dipping our toes in Blu-Ray and it is costing our company an arm and a leg… while our HD-DVD sales are through the roof with minimal upgrade costs. So from an insider’s perspective, HD-DVD WILL beat out Blu-Ray into the summer of ’08 due to cost reduction of HD-DVD and comparable sales for same titles produced in both formats/lower production cost. Do more research before you write next time…
Oh, and higher picture quality???? LMAO both are maxed out at 1080P, stop it with this theoretical bull crap… BTW do you work for Sony?
I am only taking HD-DVD in the long run, because there is no way Sony will be able to keep up with replication demands, and porn will sway the industry toward HD-DVD. And our company stands to benefit financially 150% more from HD-DVD sales. Again I say, Sony will not be able to keep up with production/replication unless someone else wants to throw in roughly 100 million USD for 50 Blu-Ray replication lines, neglecting the other 40 million USD they will need for stampers/mirrors… More research is a good thing…
You can believe whatever you want, but this information came from one of the largest replicators in the USA. And no, it was not Sony.
LMAO does his credibility no favor by being insulting and juvenile right out of the box. Also, I think I detect an agenda there. But that’s his and his company’s problem.
That being said, his analysis makes some sense. I work for a mid-sized replication facility (for real, just look at my email address – and I make no exagerrated claims of being a “purchasing manager” etc) and find myself having to explain to customers who want us to handle their BD replication that 1. the content provider MUST be licensed by AACS (and have paid the $15,000.00 annual fee) and 2. we will then charge them both a one time certification fee (which we pay directly to AACSLA as a “content producer”, that is, a disc manufacturer) and the per disc fee ($0.04 each disc which again, we pay directly to AACSLA, unless the content provider has made a deal with AACSLA as a “volume provider” and has managed to secure a volume per-disc rate deal, which they will then pay directly to AACSLA)
Let me say here, that dealing with this AACS licensing fees/bureaucracy is as bewildering as dealing with macrovision. Sheesh.
Anyway, we are also “dipping our toes” and have recently purchased a HD-DVD line – it is being installed as I type, and we expect to start making actual HD-DVDs next week. It is very fast and able to do DVD-5 and 9 as well as HD-DVD, so, as well as being able to do HD-DVD, we just increased our regular DVD capacity by 20%.
We also purchased, and expect to take delivery of in early 2008, a BD line, and we expect to be able to sell this format to a (what I believe will be) limited amount of customers. The boss here is very excited by the prospect of selling $3.00 discs. We shall see.
Bottom line: Blu-Ray will very expensive to manufacture, mostly due to the various AACS licensing/per disc unit fees, equipment upgrades, equipment purchases, etc., at least in the forseeable future, and will price some of our clients out of that business. While HD-DVD will only be marginally more expensive, and that cost increase gets smaller and smaller as amount of discs required gets larger and larger.
Though the post house and authoring guys tell me “Hollywood is going Blu Ray”, that does us no good since we do not have any *movie studio* accounts, and mostly deal with marketing types of content. I can’t imagine any of THEM wanting to pay an annual fee or per disc rate of any kind – they would be willing, however (I hope) to pay an additional $0.05 – $0.10 per disc (for 10,000 – 100,000 discs) to have an actual Hi-Def DVD of their wonderful program with which to lure customers.
And I just told one of the sales guys just this morning to stay away from BD…HD-DVD is my choice.
Thanks for the additional info acme. That definitely helps add to the discussion. You are speaking from the smaller replication plant perspective, whereas my unnamed sources actually do deal with Hollywood studios…
One year latter and all HD-DVD backers are proven 100% wrong
You dont know how MUCH this article has helped me. Developing a business plan for HSBC on making Blu-ray Disc out of Paper. Your cost breakdown is right now the only thing I got at hand. Can u name a way i can acquire information on further costing details…or even approximates, of the articles of cost? ANY information would be MOST helpful.
I must also say, I live half-way across the world in Bangladesh – where there’s nothing even CLOSE to a CD factory – so this is the only way for me.
Hoping you can help.
I would suggest that you contact the major replicators in your region. This pricing may no longer be accurate as the data was gather 2 years ago. In fact, pricing is probably slightly lower now.