DVD Discs

From an article/item on IMDB.com today:

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Video Distributor Says Hi-Def DVD Format Is "Price Prohibitive"

Image Entertainment, which distributes classic movies on home video, is likely to hold off releasing such films on high-definition DVDs. Martin Greenwald, the company's president and CEO, told an investors conference in Las Vegas that the cost of mastering high-definition discs is currently price prohibitive for companies like his. As reported by Home Media Retailing magazine, Greenwald said that at a meeting with Sony execs in Japan about Sony's Blu-ray format, he learned that mastering costs would be $40,000 per movie versus $2,000 for a standard DVD. Each disc would cost $2.00, twice as much as a conventional DVD.* "We have to wait until that price point comes down to a level that actually works for us," Greenwald remarked.

* emphasis mine

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My question: if the average DVD discs cost $1.00 each (as implied by the statement above), and the average DVD costs $20 to the consumer, where is the other $19 per disc going? Who is getting that money?

The typical blockbuster moves about 3-5 million DVD units the first week it is available. That means the issuing company is paying $3-5 million and is making $57-95 million in profit after disc production costs.