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Is Red Losing Money On The Scarlet?

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Adam Levins

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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!
 
Is like charity for many filmaking wannabes. They should feel blessed with this camera and stop asking more from it.
 
Maybe, in order for scarlet to be so cheap it forced them to make epic to recoup the losses.
 
You also have to put all the accessories into the equation, they must have a good margin and plenty of repeat custom too.

Jim
 
Red may lose money on each Scarlet but they'll make it up on volume. ;)
 
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.
 
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......
 
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.
 
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.
 
WesVasher said:
Red may lose money on each Scarlet but they'll make it up on volume. ;)
Click to expand...

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"?
 
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.
 
gunleik said:
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.
Click to expand...

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
 
Bruce Allen said:
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
Click to expand...

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


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)
 
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