Indie Replicators Fight to Survive9 Apr, 2014 By: Chris Tribbey
LAS VEGAS — It’s not easy being an independent Blu-ray Disc replicator. Just ask the five guys on hand April 9 at the Ultra-HD Physical and Digital Media Conference at the NAB Show.
Coming from as far away as Germany and as close as California, the indie manufacturers groused about everything from licensing fees and technology royalties, to small run orders from needy clients, to being unable to compete with the big guys.
Mostly the go-to guys for small independent distributors and maybe used as a back-up when someone such as Technicolor, Cinram or Sony DADC needs an extra few replication lines to handle overflow, the indie replicators rarely see a big box office movie come off their lines, and mostly deal with sports or music content.
“From the capacity side, it’s just dominated by the majors,” said Ray Zerrusen, president and CEO of Optical Experts Manufacturing in Charlotte, N.C. “Very few independent replicators deal with a major release.”
Ashwin Bedi, managing director of London-based replicator VDC Group, said he often gets orders for Blu-ray runs of only 1,000 copies, and when you figure in licensing fees and an inevitable percentage of discs that don’t come off the lines properly, it’s almost not worth the effort, he said.
Michael Hosp, CEO and president of kdg Holding GmbH in Austria, said that his company is seeing more and more Blu-ray-only runs, and fewer and fewer DVD-only projects.
“Sadly, we’re not at 50% yet,” he said, estimating his company does twice as many DVD orders as Blu-ray.
All of the panelists agreed independent manufacturers get the short end when it comes to royalties, such as those paid to the Advanced Access Content System Licensing Administrator (AACS LA), the industry consortium that licenses copy protection used on Blu-ray Discs.
“The royalties are quite high, and that’s hard for our customers to understand,” Zerrusen said. “The studios have cross-licensing agreements that let them push [royalty fees] down, and we can’t compete with that.”
Joe Brunatti, director of Blu-ray sales for CD Video Manufacturing in Santa Ana, Calif. relayed a different, but perhaps more stressful, problem: It’s difficult to find people trained to manage Blu-ray replication lines, calling it “a tremendous hurdle.”
“CD was like riding a bike, DVD was driving a car, and Blu-ray is like flying a helicopter,” Hosp agreed.
Still, despite the thin profit margins, and the difficult market for competition, the panelists mostly expressed hope for the future of their businesses.
“It’s going to get busier,” Brunatti. “More [content owners] are experimenting more today than they were two years ago.”