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Fox to sell low-cost DVDs in China to combat piracy

Leader: The strategy of beating pirates at their own game in China is beginning to catch on among movie studios who are offering extremely "affordable" DVDs to the public, legally. What good can this do for the studios, though?

Twentieth Century Fox plans to be the second movie studio to start selling cheap DVDs of its movies in an attempt to beat piracy to the punch in China. The country, which has a long and sordid history of movie and music piracy, is costing movie studios an estimated $244 million a year in lost DVD and ticket sales, according to the MPAA.

The first studio to announce such a strategy was Time Warner, which said in August that it planned to start releasing cheap DVDs in China soon after their theatrical release at about 10 yuan (approximately $1.25) apiece. This pricing structure falls in line with the typical pirated movie in China, which Time Warner hoped would drive customers toward buying their DVDs instead of illegal alternatives. The short amount of time between theatrical and DVD release in China was also meant to try to beat pirates in getting the DVDs out as quickly as possible.

Fox's strategy mirrors Time Warner's, but they plan to offer DVDs at a slightly higher price of 20 to 25 yuan (about $3 per disc). This is, of course, about twice as much as the average street price of a pirated DVD in China, but Fox hopes that the premium isn't so much that it deters customers from buying their discs over pirated ones of questionable quality. Fox's international home-entertainment manager Keith Feldman told the Wall Street Journal that "it comes down to our ability as marketers to convince the Chinese consumer it's worth spending the money."

In addition to offering low-priced DVDs, Fox also plans on aggressively improving its marketing and distribution in China. Feldman said that while the Chinese consumer is eager to buy foreign films, it's often difficult to even find legal copies of them. Guo Zilong, president of Fox's new distribution partner Zoke Culture Group, said that Zoke's nationwide network of agents should help movie studios such as Fox improve their retail presence in China.

If you think $1.25 to $3 seems like an exceedingly low price for a full, legal copy of a movie, it is. However, studios such as Time Warner and Fox have come to the realization that if they don't make such low-priced offerings to the people of China, they won't make any sales at all. Charging $1.25 to $3 per disc and selling a few thousand discs is certainly better than (nearly) nothing, which is what they were making before. Plus, it gives them a chance to get legal copies of movies into Chinese homes and be able to legitimately bolster their sales numbers—an important strategy in an age where DVD sales in the US are beginning to plateau.