China Piracy: If You Can’t Beat ‘Em, Join ‘Em

Well not exactly.

Paramount Studios will be teaming up with Warner Studios to sell DVDs in China for $3 per movie. In addition to these rock bottom prices, the movies will be out on DVD within two months of their theatrical release. The plan here is to undercut the pirated versions. However, since these legal discs will be selling for nearly three times what they sell for on the black market, it is not clear how successful this new initiative will be. Ars Technica has this to say about the proposed new pricing:

The problem with $3 is that it’s more than double the typical price for illicit street copies of the same movies in China. But Warner Bros. and Paramount, like Fox, hope that the premium won’t deter customers from buying if they know it’s a real, legal version. As Fox’s international home-entertainment manager Keith Feldman said last November, “It comes down to our ability as marketers to convince the Chinese consumer it’s worth spending the money.”

Both Warner Bros. and Paramount say that this will be the earliest release date and lowest price that their movies have ever been sold for, worldwide. And their reason for teaming up with one another is strategic: they are competing against piracy in China, not each other. The more legit movies that are available in one spot, the more attractive the outlets will become to prospective buyers. “We’re committed to developing a legitimate market in China, and having two more Hollywood studios gives us more critical mass,” Warner Bros. managing director of China distribution, Tony Vaughan, said in a news conference, according to the Associated Press.

Whatever the price, the studios have come to realize that without affordable offerings in China, they won’t make any sales, period. Even just selling a few thousand movies at $3 per disc will be better than nothing. Plus, it helps the studios bolster movie sales numbers, which will be equally important to them while DVD sales in the West continue to go flat.

All Roads Lead to China [link no longer exists] is of the view that money can be made off these DVDs by arbitrage selling them into the United States for $8 per DVD. I do not think so because I am guessing Warner and Paramount will dub these DVDs into Chinese so as to prevent this. If they do not, All Roads Lead to China’s proposed new business is flawed because it fails to account for the fact that it would face competition from so many other expats living in China that the price for these China DVDS likely will be driven down to less than $5 for the US market.

What do you think?