Just simply, how is red priced like it is

[Brennan Klensch]

is there an obvious point I'm missing or is it literally that sony, jvc, panasonic, panavision, arri, silicon, thompson, etc.. are just pushing for a massive profit margin? If the tech is better in the Red, but the price is also better, how do the others work? how expensive is the technology to make would be the bottom line?

 

[Steve Sherrick]

There are some major differences in how the companies are comprised. I personally don't think it matters too much. RED is setting prices where they need/want them to be. They were able to start from scratch, others are having to adapt/revise their plans. But in the end only this really matters:

Company X provides product Y at price Z. Consumer either purchases or doesn't.

Obviously companies will look at each other's business models/strategy and react, but from the consumer end of it, we all want the best product we can get at a dollar figure we can afford. Time will tell who succeeds at the various price/performance points. For me, I will choose on what I think is the smartest investment for the type of work I do.

 

[Steve Sherrick]

... is it literally that sony, jvc, panasonic, panavision, arri, silicon, thompson, etc.. are just pushing for a massive profit margin?....

I think in order to know that, you would have to be able to figure out all of the details such as R&D, manufacturing, distribution, sales/marketing, etc. to know exactly how much profit margin is in there. My guess is that there isn't as much as we would like to think. It might be a healthy margin, but I can't see any of them working on huge margins. Maybe I'm wrong.

 

[Tim Whitcomb]

All valid points Steve... but The BIGGEST cost difference?

Most of those companies listed create VIDEO cameras...
i.e cameras with on board "processing" to "bake-in" a look... where what you
see is essentially "what you get".

RED has created a RAW image capture camera with NO ONBOARD processing...and the processing instead is done in post.

Not surprisingly,. the most expensive component on a video camera is a PROCESSOR.

This is the main reason RED appears to "cost so much less" than comparable video cameras. Recording RAW, gives you something you can apply look after look to WITHOUT baking it in... its non-destructive... so when Jim announces NEW COLOR science... you can go back to RAW files you shot two years ago and process them again! That is what I call PRICELESS!

No way you can do that with a "baked in" video camera... you can color correct them, but the flexibility of RAW is why many of us have put our $ on RED.

EDIT: RED Rocket™™, is also an unbelievably priced RAW file processor... as it gives you 4K FULL QUALITY DEBAYERS, usually faster than Realtime. Prior to RED Rocket™™
a post RAid system would cost over $100K to get the same speed at 4k full quality.

This kind of thinking is disruptive and what makes RED so awesome. Now the tricky part is they are trying to squeeze all this innovation
into a form factor that makes upgrading less expensive than buying a new camera every couple years.

i.e a Fully Modular Scarlet and Epic Camera systems.

To most of us, that future savings is well worth the delays.

 

[Michael Bravin]

but The BIGGEST cost difference?

Not surprisingly,. the most expensive component on a video camera is a PROCESSOR.

...but the fleibility if RAW is why I and many of us have put our $ on RED.

No doubt RAW is why you bought your Red
... but the imager (sensor) is the most expensive single component in a digital camera

 

[Tim Whitcomb]

No doubt RAW is why you bought your Red
... but the imager (sensor) is the most expensive single component in a digital camera

Id argue that with EPIC, the ASIC is the most expensive component

Not sure you are correct Michael, as the image processing on the Sony F35 for example is where all the cost is, its way more $ than the sensor.

Perhaps I should have been more specific, as you are probably correct when it comes to the HVX-200 class cameras.

 

[David Battistella]

I believe that the reason RED could enter the arena and compete is because they had NO LEGACY products and no LEGACY customers to support.

They were able to bring fresh products to the table at fair market value with no one to piss off.

BlackMagic design did this really well with 10-bit SDI video cards ears back.

If any of the companies you mentioned brought out a "RED" style camera at that price-point, they may very well have been shooting their high-end customers in the face.

david

 

[Graeme Nattress]

There's a full image processing pipeline in ALL our cameras. It's not an expense you can omit on even a raw-centric camera.

Graeme

 

[Steve Sherrick]

There's a full image processing pipeline in ALL our cameras. It's not an expense you can omit on even a raw-centric camera.

Graeme

If there wasn't, I'm not sure how you would get video out the tap. And I would imagine that getting a 4K signal processed out at 720P RGB probably requires a few shingles, even if it's a "cheap/dirty" feed.

 

[Tim Whitcomb]

Ok, guys the thread title requested a "SIMPLE" answer as to why RED costs less...
as I DO have friends who think the RED must be inferior because it costs so much less than the F35.

and video monitoring, is still not processing the RAW file **EDIT (on RECORD), but I get your point Steve.

Graeme, I am not going to argue with you... but when I explain it the way I did above, I always get an "Ahhh, that makes sense" response and have won over some closed minded DP's lately with that "simplistic" explanation.

EDIT** As I understand it, there is NO PROCESSING ON RECORD, wherein the RED bakes in a look, like when you record an F35 to a HUGE TAPE DECK... versus recording tapeless i.e. compressed RAW file to a tiny CF card. That recording deck for the F35 is a tad more spendy than a CF Card

to me the genius, including the cost savings, is in the (the reads: yours Graeme) sophisticated compression.

 

[jimhare]

Simple, when a company is more interested in improving the world than making a quick buck, you get a product like the Red One!

Someone like Jim, who has the desire, means, and most importantly time, to devote to a project this large and ambitious, is a rare being indeed!

Finally, when a product is so revolutionary, in both function and price, you don't have to spend $500 million to market it... Just put the word out and everyone who needs to know will know.

One of those few times in history that we're lucky enough to be in the right place at the right time!

 

[Richard Andrewski]

Manufacturer direct, they don't go through dealers. All those other products mentioned are marketed through dealers mostly. RED has no dealers that I know of.

Also size of company and overhead to support. Those are simple answers.

 

[Shane Betts]

Let's get philosophical.

Let's get philosophical.

Having worked at Blackmagic Design I can tell you that the gear they make and sell for a fraction of (what was) the competitors' price costs exactly the same to make as the competitors' products do. The difference is a simple philosophical difference. Traditional film and broadcast manufacturers believe there is a very limited market for this kind of gear, figure out how much they have to charge per unit to recover R&D in that perceived tiny market and charge accordingly. Needless to say, their projections have been built upon years of experience in the industry that has proven them right. Make huge margins, sell very few units = make money. Then companies like Blackmagic Design, Apple, et al come along and think, "But if we sold our gear for 10% of the accepted price, then maybe a lot more people will buy it". And of course, history has proven them right too. Make "x" less margin, sell 100,000x more units = make even more money.

I remember reading to Grant Petty an Avid press release where they were boasting how many HD DS units they'd sold that year. Grant snorted and said he'd sold more HD cards than that the previous week!

But Jim is smarter again IMHO. With Red, there is one more factor to take into consideration and that is their factory-direct marketing model. Take the cost of a Red One, add in a distributor's margin, then a wholesaler's margin and then a retailer's margin and a Red One starts to cost you as much as an Arri, RRP's as much as Cookes. So Jim has moved a large number of units like the low margin, high volume guys without cutting his margin too much.

Result? Best of both worlds. Red moves way more units than the competitors without sacrificing margin and we get great kit at affordable prices. Brilliant, and that should be a source of great confidence to us all. When Sony, Arri, Panasonic owners and sales guys tell us that Red, as a company, is doomed because their margins are too low we can simply smile and know that just isn't the case. What's more, should the need ever arise and one of Red's competitors suddenly actually gets the idea into their thick skulls (no immediate danger it would seem) and comes up with a camera to threaten Epic and Scarlet, Jim could take Grant Petty's route, drop his margins to undercut the interloper and still make a bloody fortune due to the number of units he ships.

 

[Michael Bravin]

Slight correction, ARRI and Cooke sell direct from their factory.

 

[Richard Andrewski]

Where you're company is based (and the costs of doing business there) as well as where you manufacture all come into play too.

 

[Shane Betts]

OK, thanks Michael. That means that Jim also follows the Apple/Blackmagic theory as well - sell more at smaller margin (and develop faster). Either way, it's a more enlightened business model than the self-fulfilling "we'd better hoist up the prices because we can only sell 200 of these".

 

[Jeff Coatney]

As Simple An Answer As I Could Give:

1. The Red is driving the development and creating the underlying technology that makes their camera work at a very high quality level. --This means they don't have to buy it (off the shelf), license it (patent fees), adapt it from legacy technology (Sony, Panasonic) or share it (with technology partners).

2. The financial resources funding the R&D are isolated (protected) from the product's market conditions. -- R&D could continue even in the face of weak sales.

3. The product changes hands only once: from factory to customer, and the customer pays for shipping. There is no dealer mark up, no sales commissions, no advertising (Red User doesn't count), no additional transportation or warehousing costs, and a very low inventory.

4. Red changed the business model of 35mm cinema camera manufacturers. Red's aggressive pricing encourages the end user to buy their equipment. This has the effect of removing equipment rental customers from the market. Camera makers that rely on the rental business model are now faced with a smaller pool of clients. Even though many Red cameras are in rental houses, the aggressive pricing allows much cheaper rates, further eroding the pool of rental clients and their attendant revenues. Thus the very apt descriptor: "Game Changer".

5. Red uses proven retail marketing strategies in a market devoid of them (35mm digital cinema cameras - not video cameras), . 1. Enter the market at an aggressive price point with your mid-level item (the one that does the most and will sell the most) 2. Increase value and deter competition by introducing a higher-priced deluxe model while at the same time offering a lower-priced high-volume model. You now have a robust product line that is firmly entrenched* in the market. If you succeed at this, you have set the terms of the game, regardless of how your competitors see the market.

6. Red could accomplish none of this if they could not create a viable alternative to film. Therefore the focus for Red and the key to success is constant aggressive R&D posture and continued innovation. The fact that they have shipped so many units proves that the camera is a defacto alternative to film in the market. Red's sales figures prove the camera's viability.

*To compete against you, the competition has to outspend you in three key ways:
1. Huge R&D expense to play catch up with technology. 2. They have to launch a full-spectrum product line: low, medium and high price points - here they have to beat you on quality and price, not just user experience. They have to have the available talent resources to develop the entire line simultaneously. 3. THEN they have to spend marketing dollars to convince people to ignore your product and buy theirs. They have to convince that their product is worth buying AND it is better than yours.

Unwittingly, every player in the 35mm motion picture camera business (from Kodak, Arri and Panavision and others) created a perfect storm of opportunity for someone with the desire, the resources and the marketing acumen to rapidly establish a new product into the market. Red filled the void.

 

[Brennan Klensch]

thank you all for your answers very much. it's been insightful to say the least. I would like to hear, maybe even from the red guys, how much one of their CMOS sensors costs to develop, say for a Mysterium-X sensor, or another. I'm just trying to understand fully so I can do research of my own. Trust me, I'm not some corporate guy trying to steal ideas or rates or anything, I'm sure they've got plenty of people to do that in much more devious ways than I could devise. I'm a man of humble beginnings here and have mere ideas that lack solidity and planning and I am inspired truly by the productivity, cost, and efficiency of the people and products at RED

 

[tj williams]

The Ferrari testa rosa has as many parts as the Suburu... but there are way more Suburus. Thus Suburus work better in traffic and cost a bit less. I think it has more to do with business model than tech...

 

[Rudi Herbert]

thank you all for your answers very much. it's been insightful to say the least. I would like to hear, maybe even from the red guys, how much one of their CMOS sensors costs to develop, say for a Mysterium-X sensor, or another. I'm just trying to understand fully so I can do research of my own. Trust me, I'm not some corporate guy trying to steal ideas or rates or anything, I'm sure they've got plenty of people to do that in much more devious ways than I could devise. I'm a man of humble beginnings here and have mere ideas that lack solidity and planning and I am inspired truly by the productivity, cost, and efficiency of the people and products at RED

...and besides all those things, you are now also being naive. Jim has never revealed anything related to the origins, manufacture and cost of his sensor, however hard he has been pushed to do so here for years. And rightly so, many of these things need to remain closely guarded, regardless of the good intentions of the many of us who are just curious to know. Besides, knowing Jim, he would consider it tacky and inappropriate to talk about how much things cost him, lest anyone then try and establish a relation between costs and profits. Be content in the fact that RED offers amazing products at remarkable prices and believe that RED is not loosing money on this venture, good for them and great for us.