The most controversial thing about Red has always been pricing, and the implications that pricing has for industry politics. So let’s talk about pricing, its long term implications, and Red’s power as a disruptive industry force. In particular, I’d like to focus on what impact Red’s entry into the market might be expected to have on existing digital cinema camera vendors. And I’m mostly going to pick on Arri, which is actually a bit of a complement, because second to what Red is doing (and, at the lower end, what’s happening with the video-enabled dSLRs), Arri’s upcoming A-EV cameras are the most interesting products in the industry right now, as far as I can see.
For the sake of context, these new Arri cameras begin at around $70K.
The Car Analogy
Over in this thread on Red user (which is of general interest to anyone concerned with this topic), another poster (I don’t want to use names without permission) suggested that perhaps we shouldn’t expect Red to have too much influence on Arri’s market. Arri has positioned itself as a high-end brand, and sells to customers with the money to afford its products. Red has much more aggressive pricing, and sells largely to the low-budget market, moving a lot more units. The poster compares the companies to Mercedes and Hyundai, respectively, and makes the case that once you’ve established your brand downmarket, it’s hard to move up; how many people would buy a luxury-model Hyundai, if Hyundai decided to make such a thing?
This initially seems plausible, but… is the car analogy really the right model? Cars are a basically mature technology, with differentiation mostly based on aesthetics, brand marketing, and non-functional frills like fancy interiors. Digital cinema cameras, in contrast, are in extremely active development. There are real technical differences between them and there are real improvements from year to year. In fact, the whole shape of the market is still in flux, as demonstrated by the fact that over the last couple of years, Red appears to have sold some thousands of units to people who were previously not in the digital cinema camera market at all, but in the ENG or prosumer camera markets.
Image not to Scale
Maybe instead of Hyundai vs. Mercedes, we’re looking at Mac and Windows NT desktops vs. SGI workstations in the late ’90s. Yeah, remember Silicon Graphics? They made expensive specialized hardware for a small customer base. They were good at it. I’m sure they told themselves the same things the high-end vendors are telling themselves now. “Our customers have a lot of money, and they want the best, and there will always be a market for that.”
They got completely trashed by the rise of commodity hardware. Completely. Trashed.
Why? Because it turns out there are massive economies of scale with most technology products, both for R&D and actual physical production. If the other guy is selling 50x as many units as you are (or in SGI’s case hundreds or thousands of times as many units), it might well be the case that you can’t make a better product even if you charge 10x as much for every unit.
Is this going to happen with digital cinematography cameras? Well… we won’t really know until someone shoots them side by side, but by the numbers Red’s new $7K camera body looks like it might actually produce a better image than Arri’s new ~$70K camera body. So that’s something to consider.
Coasting… off a cliff?
There are a lot of snobs in this industry, and enough subjectivity that they’ll be able to go on justifying the use more expensive gear even if it doesn’t really work any better. That will let some vendors basically ignore Red for a while. Maybe years.
But I think eventually, if for no other reason than that workforce turnover will fill the industry with people who came up using the cheap/powerful stuff, it will be “change or die” time. Companies like Arri need to decide whether they want to get out ahead of the market on this, or try to hold onto the existing high price/low volume model for as long as possible. The latter approach (which is, unfortunately, the direction companies most often decide to take in situations like this) will mean that when these vendors do eventually try to make the transition, Red will already be firmly entrenched in the market they’re trying to move into.
