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Screen Magazine - Index

Screen Magazine - Screen Magazine: Vol. 29, Issue 11a - Index

It is no surprise that the start-up cost for
replicating is more – you would expect
that. But, now let’s take a look at the
true cost of getting product out the
door.
The first comparison to make is the
true manufacturing cost. On-demand
manufacturers generally bundle
manufacturing and fulfillment all
into one price. So, when comparing
on-demand with replication there is
the understandable reaction: “$1.20
compared to $6.00, why would I ever
make the product on-demand?”
The reality is it is $1.20 compared to
$4.00 not to $6.00, when you consider
you have a minimum $2.00 per unit
fulfillment cost.
More importantly, let’s look at other
costs faced by the content owner. The
financial tar-pit many fall into when
dealing with significantly excessive
inventory is failing to amortize the
excess over a reasonable measurement
period.
What is a reasonable measurement
period? Well that can depend on
your content, your business model, the
pending growth of internet delivery,
new media formats (i.e. HD), potential
obsolescence, etc. But, given today’s
rapidly evolving environment, most say
that anything beyond 18 months is
probably a mistake.
So, let’s look below at the true impact
that 1000 unit purchase had on
profitability of this title that is selling
200 units per year.
First thing to notice is that the raw
profit (revenue minus delivered cost,
inventory carry cost, plus hard storage),
for replication is less than 10% more
than manufacturing on-demand.
But that doesn’t address the fact that at
the end of 18 months you still have over
$700 invested in inventory that hasn’t
sold – much of it that won’t sell for
years to come. Moreover, that money
is at serious risk of being obsolete, lost,
damaged, etc. So to truly assess the
economics you need to amortize that
$700 over what you have sold in the
measurement period. That yields the
$2.80 per unit impact cost, and the
$46.67 per month.
(See Chart On Page 13)
So, the real gross profit turns out to be
8.4% greater when manufacturing on-
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demand. Investment capital is more
liquid and can be devoted to other
business needs. Branding, version
control and product enhancement all
are more flexible when not burdened
by excessive inventory.
Obviously when the sales numbers
climb, these metrics change. But,
the general rule of thumb is that
when selling less than 250 units, the
economics begin to significantly favor
manufacturing on-demand.
How Do You Get Started?
Start by looking at the titles in your
library and your trailing 12-month
history by title. Most libraries are filled
with titles selling less than 250 units.
Many have titles selling less than 50-
100 units. Do you?
If so, you stand to significantly improve
your profit with just one simple change
to your manufacturing process.
Where Can You Access DVD
Manufacturing On-Demand?
Allied Vaughn operates the nation’s
longest running DVD on demand
service out of our flagship facility in
Elk Grove Village, IL. Since 2002 we’ve
provided on-demand manufacturing
to entertainment, educational, faith,
special interest and corporate content
owners including Disney, McDonalds,
Turner Networks, The Willow Creek
Association, National Geographic and
Microsoft.
Service packages include building
branded media stores that seamlessly
link to flexible manufacturing and
fulfillment - be it on-demand, or
conventional fulfillment of replicated
media. Need digital downloads?
We do that too - all from the same
consumer-friendly store. Visit www.
alliedvaughn.com and click on Media
On-Demand to learn more.
Allied recently announced its
partnership with Lulu - the world’s
top-rated self publishing portal. Now,
through www.alliedvaughn.com/
gomod you can access “Go Media
On-Demand” - instant online, ondemand
publishing of CD/DVD and
print media from your desktop. Make
one unit at a time or 100. No setup fee,
no art prep fee, no minimums - and a
two-day turn.
Moreover, once you’ve published your
content you can quickly build a store at