Is Red Losing Money On The Scarlet?

[Adam Levins]

If you consider that some RED ONE accessories cost more than what SCARLET costs it makes you wonder what the profit margins are going to be on this camera.

Maybe its a bit like the Bugatti Veyron which is being sold for €1,100,000 but the production costs of the car are approximately £4 million per vehicle.

Like a profile booster for RED?

I am going to get one or two (3D Rig) in any case....

this has been the best NAB ever!

[John Caballero]

Is like charity for many filmaking wannabes. They should feel blessed with this camera and stop asking more from it.

[redman]

Maybe, in order for scarlet to be so cheap it forced them to make epic to recoup the losses.

[JimmyC]

You also have to put all the accessories into the equation, they must have a good margin and plenty of repeat custom too.

Jim

[WesVasher]

Red may lose money on each Scarlet but they'll make it up on volume. ;)

[dieseljunkie]

Jim Jannard said that they have to make it $3,000 to sell it to the masses for them to make this camera anyway. So the $3,000 price is only possible when they sell tons of it and that is only possible with a low price.

But as mentioned, they will earn back the money on accessoires and maybe a bit with the Epic, but when they can give back $17,500 for the RED ONE towards an Epic, you can see how much margin there is.

[ColinSmith]

I'd be surprised if it will sell at a loss, but remember there is a value to increasing market share too, having more RedRaw systems/experience out there, being used by independent owners/schools......

[Gunleik Groven]

Scarlet is the guerilla cam to take over the world for lowcost RAW workflow, but I think too few have noted the 100 MB/SEC option on that cam. It's a biting little monster.

I don't think RED is anything but a business, and thus I can't imagine Scarlet to be sold @ a loss, when they reach the projected volume. I'm more wary about the distribution model on Scarlet vs ONE/EPIC. Scarlet SHOULD be in the shop around the corner, but I guess that's harder @ that pricepoint.

[Christoffer Glans]

I believe that as soon as somebody has a Scarlet in their hands and gets blown away by what that gives at it's price, it will probably bind the users to not really wanting anything else then a red one or epic if they choose to aim higher in the future.

To have three camera choices: one small, one medium and one large it will probably make RED bigger then Canon, Panasonic etc.
If this continues, then RED will be leading the market of digital cinema.
I only hope that the down to earth and close to customers approach is staying with the company even if they grow bigger then others.

[Ameer Azari]

Is like charity for many filmaking wannabes. They should feel blessed with this camera and stop asking more from it.

LOL that's what I SAID!!

great minds think alike...although, I hope I'm not a wannabe

[Peter Majtan]

Red may lose money on each Scarlet but they'll make it up on volume. ;)

What kind of mathematics are You using?

If 1 Scarlet = loss of $ XXX,- USD, then 1000 Scarlets = loss of $ XXX000,- USD - how could You "make it up on volume"?

[Peter Majtan]

I agree with JimmyC - if RED is indeed loosing money on Scarlet - they are planing on making it up with accessories...

[danielg]

Red's business model is different from Sony's. Sony has a multi-layered distribution channel that must be managed. That means that there is some amount of sales margin at each level, along with training, promotions, etc. While there is expense associated with the distribution channel, there is also intellectual investment on the part of the members of the sales channel and that commitment of time and resources acts as a deterrent to other companies who make competing products.

Red has attempted to forego that method of distribution by working exclusively with direct sales. While the cost of sales is lower, in terms of the amount of margin that dissipates between manufacturer and consumer, it requires more administrative time and commitment on the part of the manufacturer.

Traditionally, the goal of a manufacturer is to attempt to deal with consumers via a one-to-many form of communication, e.g., sales brochures, while having other members of the distribution channel deal with varying ratios until the salesperson, who deals one-on-one with the customer.

Red is attempting to use communications via the Internet to deal with customers on a one-to-many basis and filter the one-to-one requests by priority. This model will work only as long as Red continues to enjoy good will.

And they have it. They have it because Red is delivering or promising to deliver unmatched value for cost. Traditionally, product vendors in this segment filtered features and product characteristics so that there was a gradation of features and an escalation of cost. That escalation was quite steep.

Part of that cost was to cover the cost of maintaining the sales channel. The sales channel provides a well of resources, information and support. Red is relying on the sources on the Internet to do the same thing.

The Red formula: deliver an order of magnitude performance/price change, which develops an avid and well meaning enthusiast base, which reduces the cost of sales because there is no sales channel to support, which allows for products which deliver an order of magnitude performance/price change, which ....

It is a high wire act that the Red team performs and they have performed it well to this point. I just hope they don't get a run in their tights. That would be ugly.

[Bruce Allen]

I'm more wary about the distribution model on Scarlet vs ONE/EPIC. Scarlet SHOULD be in the shop around the corner, but I guess that's harder @ that pricepoint.

I think Jim knows a thing or two about getting things into shops around the corner ;)

The major problem with the mass market product is going to be workflow tech support of course - I don't envy them there. Good idea to work closely with Apple - I expect to see a rock-solid, deep AND intuitive FCP workflow demo'ed tonight... but this thing needs to slot into Adobe and Avid workflows easily and seamlessly too if it's a mass market product.

That means RedCine needs to work flawlessly across large projects - with pretty much every GeForce 7 / 8 / 9 series, Radeon 2000, 3000 series, and across Mac OS X, Win XP and Vista. You also need deeper / more integrated stuff than that.

Oh yeah, and RedCode needs to be playable on Windows Quicktime - ASAP - it'll take a few months to sort out the bugs so this can't be delayed.

Personally if I were them I'd hire some Windows porting specialists, plus a STACK of QA testers - and / or allow 3rd parties in ASAP and share the load across the other developers. Hopefully they're already doing both.

BTW, Scratch's price point makes no sense for Scarlet, obviously. If Assimilate are smart they will release a Scarlet-priced product. If not, they will miss a huge opportunity.

Bruce Allen
www.boacinema.com

[WesVasher]

What kind of mathematics are You using?

If 1 Scarlet = loss of $ XXX,- USD, then 1000 Scarlets = loss of $ XXX000,- USD - how could You "make it up on volume"?

Joke.

[Gunleik Groven]

I think Jim knows a thing or two about getting things into shops around the corner ;)
(...)

Oh yeah, and RedCode needs to be playable on Windows Quicktime - ASAP - it'll take a few months to sort out the bugs so this can't be delayed.

Personally if I were them I'd hire some Windows porting specialists, plus a STACK of QA testers - and / or allow 3rd parties in ASAP and share the load across the other developers. Hopefully they're already doing both.

BTW, Scratch's price point makes no sense for Scarlet, obviously. If Assimilate are smart they will release a Scarlet-priced product. If not, they will miss a huge opportunity.

Bruce Allen
www.boacinema.com

YUP. Agreed on all.
Sometimes I suspect RED of planning to do a "SONY", delivering end-to end RED workflow from shoot to delivery, and then buying their own theatres... :)

What I mean is that I wouldn't be too surprised if we saw a RED branded multiplatform FCS in a year or two... They have the coders and the momentum (Hey, if it wasn't for Graemes willingness to explain stuff to noobs, I'd probably have used something else...)

The RedRAY screams edit bay, to me (you just have to fit it with an HD and you have realtime 4k playback and what you need of HD-SDIs for a cool pro solution...) It's basically a cool deck - and then some...

Oh, heck. These are fun times.

[Peter Majtan]

Joke.

Sorry :innocent: , thought You were serious...

[Ameer Azari]

Good to see you Peter, it's been crazy with all these new people around!!! I miss the speculation, oh well...

[Peter Majtan]

I think Jim knows a thing or two about getting things into shops around the corner ;)

The major problem with the mass market product is going to be workflow tech support of course - I don't envy them there. Good idea to work closely with Apple - I expect to see a rock-solid, deep AND intuitive FCP workflow demo'ed tonight... but this thing needs to slot into Adobe and Avid workflows easily and seamlessly too if it's a mass market product.

That means RedCine needs to work flawlessly across large projects - with pretty much every GeForce 7 / 8 / 9 series, Radeon 2000, 3000 series, and across Mac OS X, Win XP and Vista. You also need deeper / more integrated stuff than that.

Oh yeah, and RedCode needs to be playable on Windows Quicktime - ASAP - it'll take a few months to sort out the bugs so this can't be delayed.

Personally if I were them I'd hire some Windows porting specialists, plus a STACK of QA testers - and / or allow 3rd parties in ASAP and share the load across the other developers. Hopefully they're already doing both.

BTW, Scratch's price point makes no sense for Scarlet, obviously. If Assimilate are smart they will release a Scarlet-priced product. If not, they will miss a huge opportunity.

Bruce Allen
www.boacinema.com


You're right Bruce, but I think the major logistic problem is going to be the actual tech-support and service. What about all of us outside of USA? When something goes wrong where do I get service done?

Here some kind of alliance with Apple will actually make sense...
(Flame-retardant suit on)

[Peter Majtan]

Good to see you Peter, it's been crazy with all these new people around!!! I miss the speculation, oh well...

Good to see You too Ameer! :clown2:
Check out this and let me know (in that thread) what You think...
http://www.reduser.net/forum/showthread.php?t=11882

[David Dennis]

You know, it just hit me that in some ways Scarlet has a higher spec than Sony's high-end unit they're selling for $130k. That's pretty darn impressive.

Is there any interview with Jim about Scarlet floating around? I'd love to read it.

D

[Ameer Azari]

Good to see You too Ameer! :clown2:
Check out this and let me know (in that thread) what You think...
http://www.reduser.net/forum/showthread.php?t=11882

I think it's a great idea, and "RED VAULT" sounds pretty cool (do you know something we don't?:ph34r:)

I've heard some horror stories about failing footage.

My parent's just pledged $7,000 to the Afsaneh Films Launch

"Afsaneh" mean "Fable" in Farsi, so I'll be ordering a Scarlet the Second it comes out.

For now I'm gonna stick with my iMac 4GB RAM (uhhh) with a backup solution of a time Capsule (uhhh) but soon....MAC PRO...

How about you? What're you planning on doing?

What do you think about the lens? it's caused quite a lot of controversy on the forum,

also, all these newbies keep telling me that they know what I can and can't afford (manymoosh, grrrrr):):angry01:

[Chris Kenny]

I'd be surprised if a significant part of the cost of Red's products wasn't in the R&D. R&D costs don't go up as unit sales do, which means Red can sell stuff pretty cheaply as long as they sell a lot of units.

I've discussed this rather extensively in the past... as far as I can see, this is the major difference between Red and the traditional vendors in this market. Vendors like Sony seem to believe that the potential pool of customers for a digital cinema camera consists of a small number of large companies with deep pockets, whereas Red seems to believe far more people than that interested in owning a digital cinema camera, if the price is right.

[Peter Majtan]

I think it's a great idea, and "RED VAULT" sounds pretty cool (do you know something we don't?:ph34r:)

I've heard some horror stories about failing footage.

My parent's just pledged $7,000 to the Afsaneh Films Launch

"Afsaneh" mean "Fable" in Farsi, so I'll be ordering a Scarlet the Second it comes out.

For now I'm gonna stick with my iMac 4GB RAM (uhhh) with a backup solution of a time Capsule (uhhh) but soon....MAC PRO...

How about you? What're you planning on doing?

What do you think about the lens? it's caused quite a lot of controversy on the forum,

also, all these newbies keep telling me that they know what I can and can't afford (manymoosh, grrrrr):):angry01:

Ameer (please don't take this the wrong way :innocent: ) we should not "hijack" someone's thread for "chatting" purposes. If You want to talk about the backup - let's do it in that thread (viz the previous link).
As far as the lens issue goes - I have expressed my opinion in:
http://www.reduser.net/forum/showthread.php?t=11888

See you there!

Sorry Adam...

[Ameer Azari]

Sorry about that Adam, I'm never sure where people are so I end up talking on other peoples threads (which is quite rude of me)

Sorry again

[Adam Levins]

Sorry about that Adam, I'm never sure where people are so I end up talking on other peoples threads (which is quite rude of me)

Sorry again

Hey, I am totally cool with it... Chat away :-)

[brandon herman]

I worked at Blockbuster a long time ago. I was speaking with the manager and she explained something that has stuck with me. It seems the store I worked at was losing money. However, corporate wasn't upset. In fact, we were never intended to make money at that time. The entire purpose of our store was to ruin business for the Hollywood Video across the street. Eventually, the Hollywood Video closed, and that Blockbuster became the only movie rental place in that entire neighborhood.

I'm not saying that RED is trying to crush Sony (but why not), but that even if they were losing money, it brings people from the big three to the relatively new kid in the game. It also creates brand loyalty. I'll make some great stuff with Scarlet, and when my budgets increase, I'll get a RED ONE or EPIC. In the meantime, I'll buy RED accessories, RED t-shirts, RED stickers, etc....

Why does New York City provide free permits and police assistance to indie filmmakers? Because some of those filmmakers will get studio gigs, and come back to New York to shoot "I Am Legend," or "Goodfellas," or whatever, bringing tons of cash into the city.

Let's assume, to prove a point, that RED makes only $10 profit on each Scarlet. If they sell 50,000 of them (at $3000, they will), that's $500,000. Hardly a loss.