Epic and Scarlet release in 2010

[Otis Grapsas]

Jannard has pretty clearly laid out that there are two reasons he started RED, first is that he is a camera freak and he wanted to build the ultimate camera. Second, he wanted to impress his girlfriend (now his wife).

And by looking on things Red have done in the past, you buy that? Red is only following the money.

- Canon/Nikon SLRs are on the money with 2K-3K cameras, a strong oligopoly, lets try to get some of that, a Red camera in the hands of the amateur and professional still photographer (FAIL but since it never came, many got lured into considering more expensive models).

- 35mm film by Kodak/Fuji is on the money in feature film production, another oligopoly, lets declare it dead and try to replace it, Red in feature film productions (FAIL but a few films are shot on Red just like some are shot with other camcorders).

- Bluray, and HD distribution formats (yet another oligopoly) are on the money with their licensing and market shaping chracteristics, and lets not forget digital cinema. Lets try to get some of that with Red Ray, Red in all homes and digital cinemas, and broadcast stations, why not (FAIL but who knows, some Red users might buy it).

The only thing missing is an attempt to go against the H264 monopoly for web distribution or in general. That about sums the important/lucrative markets in the business.

 

[Rick Burnett]

I look at Red One as their getting into the market camera, they made a lot of mistakes and learned a lot from it. Compared to buying a 35mm film camera, the developing costs, the digital transfer costs, going with the Epic to me would be a no brainer, and looking at the quality so far, is just amazing. I personally feel that the Epic *IS* going to be the camera that they had hoped the Red One was if they get it off the ground in a reasonable time frame.

 

[S. Matthews]

Otis why so hard on Red? considering you are making your own camera you shouldn't even care about them. we have got into this before but this Red bashing is really unbecoming of a independent camera maker with very little track record. Not telling you how to operate just pointing out that many could be rude and say "fail" about your camera in the future (not saying I feel that way just saying). why knock people, honestly you or I don't know what peoples true intentions are (Red and Jim) but considering their prices and the happy costumers out there today (as well as unhappy) I don't really care why they sell cameras or what market they claim to sell to just what quality it is how stable it is and is it in my budget.

people who live in glass houses shouldn't throw stones.....

have a good one and keep on keeping on

 

[Otis Grapsas]

Otis why so hard on Red? considering you are making your own camera you shouldn't even care about them. we have got into this before but this Red bashing is really unbecoming of a independent camera maker with very little track record. Not telling you how to operate just pointing out that many could be rude and say "fail" about your camera in the future (not saying I feel that way just saying). why knock people, honestly you or I don't know what peoples true intentions are (Red and Jim) but considering their prices and the happy costumers out there today (as well as unhappy) I don't really care why they sell cameras or what market they claim to sell to just what quality it is how stable it is and is it in my budget.

people who live in glass houses shouldn't throw stones.....

have a good one and keep on keeping on

I'm not being hard on Red, I'm just saying Red is a business, operating like a business.

What has my track record got to do with my opinion on Red being a business vs a charity or a means to impress a girl? I thought the point of being a billionaire was that you wouldn't have to try that hard to impress one

Do you disagree that Red pursued some lucrative segments and failed? Time will tell. I'm entitled to my opinion and you are entitled to yours. I'm listening to your opinion without questioning your business, art or talent. That would be immature.

Btw, I have nothing to fear and I have nothing to hide. I'm proud of everything I have done in my life, so spare the comments on glass houses. I never compromised my vision. At least my glass house has been shooting full resolution video for a while, it's capable of more than stills.

 

[Barry_Green]

When Red first started, there was a perception among some that they would be giving away $200k cameras at $20k, because Jim was rich and wanted to run a charity. It was an extremely naive notion, I don't think billionaires become billionaires by making foolish business decisions.

Red is a for-profit enterprise. Jannard has extremely grand hopes for it. Red is not losing money, they're making it hand over fist. That's the whole point of a business operation after all. Red charges $5,750 for a sensor, a thousand bucks more than Panasonic does for an entire AF100 kit. This isn't a charity. There's nothing wrong with a capitalist enterprise building a new industry and customers supporting it by buying their products at market prices, obviously. But to think that they're losing money would be, I think, not an accurate assessment.

 

[maranfilms]

I think people for the most part are done with RED for the mere reason they have not come through on any of what they said they would with the Scarlet. People feel somewhat deceived. Everything they originally said about scarlet is changed (as far as price, delivery go) Which are the two most important aspects. And now the Dslrs have arrived, and Panasonic's new AF100. People looking in that price range are like" red who" 2/3 sensor on a fixed lens. " Thats so obsolete. The 3k is cool, but how many do a film transfer? Not many

 

[S. Matthews]

I guess I was more addressing the FAIL comments(less the comments more the word fail) of yours a little harsh and immature, you are entitled to your opinion was just pointing out considering you have a camera company as well you might want to(be a little more political about comments than the typical user but it's up to you not me) and treat others as you would like to be treated but perhaps this is how you would like to be treated I don't know.

I guess as we have realized in other conversations it just comes down to differing opinions, so I wish you the best of luck with your project and I will try to refrain from entering this discussion again with you.

have a good one.

edit: yeah and I never meant to attack you or your company if it sounded that way just said at this point in the company not the things I would say, but If I offended or overstepped my bounds I apologize

 

[Rick Burnett]

I think people for the most part are done with RED for the mere reason they have not come through on any of what they said they would with the Scarlet. People feel somewhat deceived. Everything they originally said about scarlet is changed (as far as price, delivery go) Which are the two most important aspects. And now the Dslrs have arrived, and Panasonic's new AF100. People looking in that price range are like" red who" 2/3 sensor on a fixed lens. " Thats so obsolete. The 3k is cool, but how many do a film transfer? Not many

I'm not, and I pre-ordered an AF100. I am not done with any manufacturer. Right now, I will be moving from Canon's court to Panasonic's court in a few months. From there, it depends on what Canon, Sony, Panasonic and Red come out with next. I really like the Scarlet S35 on paper. Nothing compares to it at the moment for what I want in that price range. That said, the AF100 is real and almost available. And, it fixes the biggest problems I have with my current camera. I am absolutely brand agnostic. I'm just not going to wait for a camera that has no realistic target date. But it doesn't mean I wont keep my eye on it, as I don't live by first impressions. People and companies make mistakes, and most times they learn from them. Now, after seventh or fourteenth impressions...well, now we have a trend. And I *will* be put off by that kind of record!

 

[Jason Ramsey]

People feel somewhat deceived. Everything they originally said about scarlet is changed (as far as price, delivery go)

Not to stir anything up, but I don't get why... that now infamous quote is plastered at the bottom of every one of Jim's posts, as well as all over their website. prices, specs, and delivery dates subject to change... count on it... and you wont' be surprised. Some folks may hate the quote, but it's pretty clear on the fact that these things can and will change all the way up to release... and specs can and will change even after release (adding higher data rates, higher resolution, etc to RED One at no charge for example)

 

[Otis Grapsas]

I guess I was more addressing the FAIL comments(less the comments more the word fail) of yours a little harsh and immature

Since 3K for 3K failed, 35mm film is not dead and nobody uses Red Ray, it's centainly not WIN. But FAIL was just a comment, I just wanted to point out the directions Red have taken in the past. Considering these, I would say it's a normal agressive business vs a side project, some romantics following their dream or anything like that.

 

[Zacatac]

Since 3K for 3K failed, 35mm film is not dead and nobody uses Red Ray, it's centainly not WIN. But FAIL was just a comment, I just wanted to point out the directions Red have taken in the past. Considering these, I would say it's a normal agressive business vs a side project, some romantics following their dream or anything like that.

Ahem... redray doesn't exist outside of RED HQ

 

[Otis Grapsas]

Ahem... redray doesn't exist outside of RED HQ

Yes, that was my point A lot of ambitious goals, it's hard to WIN even one of them. Jim has money and ambition, but his opponents have more money and resources. At some point I wrote a post that pointed the single flaw in the Red plan.

Jim Jannard's only weak point is that he wants it all. The dSLR users, the prosumers, the professionals, the high end cinema. Jim would do 4K cinema chains, 4K projectors, and a 4K commercial distribution media standard if he could. But one cannot expand to all directions at the same time and anyone attempting this will fail miserably. It's a large complex playground, it's full of bullies and the best spots are already taken.

Jim must have have been thinking something similar at that time because he renounced the soccer moms and many low budget filmmakers and hobbyists a few weeks later. He managed to alienate many people with the related posts, and the "man up" comment that effectively correlated talent/capacity/professionalism with the pricetag of the equipment, went viral. But Jim succeded to a degree, by giving a compliment to those who can afford more expensive equipment, many felt a lot better and probably more professional as Red owners or future owners. Many also liked the decision because a focused company can provide better service, it makes sense. I don't want to offend Red customers in any way, I'm just presenting my view on the subject.

I have a friend that was very succesful in a couple of projects. He decided to buy a supercar when we joked about the subject with some friends. He called a manufacturer, they didn't have the one he wanted on display. He made the mistake to ask about the availability and price. The rude OWNER of the company replied that if he asks about the price, he cannot afford it. He lost a lot of money that very moment, but many customers actually like that sort of thing. I bet there was a customer in this guy's office ready to buy the very moment he was talking at the phone, overhearing the discussion. I don't know, perhaps it makes the service/product a little more exclussive, which makes some people feel special.

Back on topic.

 

[aquavideo]

To Jim's deep pockets you can add $160 million plus in Red 1 sales to date, 8000+ cameras and counting.

I've seen a few people throwing that number around lately.... you do realise that huge amounts of money were required to get R1 off the ground? I would be amazed if RED currently run a profit.

I have spoken about this with some fairly knowledgeable people and strongly suspect that the initial development of the RED1 - i.e. all costs to get the the prototypes and the first 100 built were about like this:

$1 million to 2 million for development and minimum order of 500 to 1000 mysterium sensor chips (additional chips $500-$1500 each)

$4000-5000 per camera to singapore manufacturer for components and assembly (plus the chips from the above) = 100 x $5000 = $500,000

Sensor Chip development costs are reasonably well known (you could probably simply write one of the design houses and fabs and get a ballpark quote for similar project); FPGA and other electronic component costs, connectors, etc. are very well known, and I have a pretty good idea of the actual case component costs since I have CNC and make similar parts.

10-13 employees for two years (IIRC Jim or Jarred said, around the time of the initial shipments, that RED was 13 people), and I'll just pull some numbers from the air on some of this:

1 Jim - no salary
2 Graeme $250,000 for two years dev work
3, 4, 5 Ted, Stuart, Jarred 2x $325,000

6-10 $ 250,000 year one
6-13 $ 500,000 year two

building and misc overhead $250,000 for two years (don't know how much there actual building is, haven't been there - Jim may own it - but think you could rent sufficient for this amount)

Outside consulting, legal, advertising, travel, etc. $500,000

$2,000,000
500,000
250,000
650,000
250,000
500,000
--------------
$4,150,000

This is a "back of a napkin" analysis but I doubt if I'm off by more than 2x.

I think there was something like 1200 - $1000 deposits and another 600 or so at $1750 before the first 100 were shipped, so something like $2.3 million in deposits during that startup phase.

We really don't know how many R1s are out there since we don't know the numbering scheme and if many numbers were skipped, but even at 5000 @ $20K per sale would be $100,000,000 not including lenses. 4900 more cameras after that first 100, at $6000 apiece, would be about $30 million direct cost, leaving about $60 million to cover additional overhead, epic/scarlet/rocket/redcine development, etc. since then.

I don't think you can underestimate how important the simple knowledge that RED was backed by a committed, passionate billionaire to the credibility that it would actually happen (it was a key factor in my deciding at NAB 2006 to drop my $1000 deposit on SN206) - so much of the startup costs may have been offset by the deposits (although he may have escrowed the deposits and gone completely out of pocket on those costs.)

But overall, I'm pretty convinced that so far RED has been a pretty profitable business, by almost any accounting standards. And that's great - those are normal manufacturing margins, and I want RED to be viable for a long time.

I've been manufacturing for 25+ years - could be way off, but the speculation is kind of fun, I'd be curious to hear other thoughts.

 

[Razz16mm]

Yes, why do we ignore the development costs, the unit manufacturing cost, the administration costs, the running costs and salaries for development and support, the licensing costs, the capital cost and even income taxes?

No doubt they have a ways to go to recoup ongoing development costs. But Jim Jannard has a well established track record for being able to build a profitable business enterprise. I am sure the income from R1 sales is covering operating costs other than R&D for the new cameras. Jim is as passionate about building the kind of camera he wants for himself as you are about building the Drama Otis. Over his years running Oakley he shot most of their print ads and TV ads himself, he is a highly skilled serious shooter and photography enthusast as well as a first class successful manufacturing entrepreneur. He started Red because no manufacturer showed any inclination to develop and build digital motion cameras that can match or exceed the performance of film in virtually every meaningful respect: sensitivity, dynamic range, resolution, creative flexibility, and feel. Red One went from being a "scam" in 2006 to being the primary A camera on 5 academy award nominated films this year. Pretty successful I would say.

 

[Rick Burnett]

Red's failure is that they talk too much about things that are not final with their 'open' communications. At first, I was a fan of it, and I've seen good things come from them listening to the responses of what their current/future user base want. That said, they have cultivated a series of let downs for people, and they've slowly diluted the excitement of getting your hands on any camera in the Scarlet price range. Don't get me wrong, I still want an S35 as I mentioned earlier, but with every schedule hit and price increase, it doesn't give you warm fuzzies. It's almost like the story of the boy who cries wolf.

What I am impressed with is how Panasonic has talked with many people during their development of the AF100, and at the appropriate times, has given us more to see (and continues to do so) and talk with all of us. They acknowledge why they've made the decisions they have and it has impressed me quite a bit. But, we weren't witness to all the ups and downs of what got added, and what got pulled out of, the final design. I'm sure they probably went through many.

I've also notice that Red has been A LOT MORE hush hush about a lot of things, other then their new HDR technology. Maybe they are learning. I remember when they posted that they'd definitely have something out by the end of the year. That we'd be surprised. I am not surprised it wont be out. When it comes to schedule, I believe them in NOTHING.

The only thing so far that Red has done that upset me personally is they put their Red Station for sale in April. I ordered one. Last month it had not shipped and I canceled it. I told them I canceled for two reasons. (1) I understand they have to pass FCC ratings, but that is an unacceptable amount of time to wait. (2) They end of life their 64GB CF card before it's even released and they are moving away from CF on the new cameras going to SSD. They pretty much obsoleted the product before it even shipped for me (since I was preparing to use it with the Fixed).

That said, I hope their refocusing works and I want them to succeed. We win if they win

 

[Otis Grapsas]

Very low on marketing and Graeme is a little underpaid in this budget. Graeme is worth the salary of 4. He does the work of 4 people. 3 engineers and a marketing guy

 

[Jason Ramsey]

i think your numbers are way off... Maybe their lawyers cost as much as your total figure

if it were that cheap, more people would be doing it...

 

[aquavideo]

Very low on marketing and Graeme is a little underpaid in this budget. Graeme is woth the salary of 4. He does the work of 4 people. 3 engineers and a marketing guy

I wondered about that, (and I know several have probably increased dramatically) but I think he was also working on his own software as well in those early years. No doubt he is worth 4X but what's your estimate for graeme. And remember, I think initially they were only figuring on a total market of a few hundred cameras.

i think your numbers are way off... Maybe their lawyers cost as much as your total figure

if it were that cheap, more people would be doing it...

Remember, I'm talking startup phase 2005/6-Jan 2008. And no, even if it were that cheap, more people wouldn't be doing it - big, established companies have other disincentives and small companies don't even have a few million to put on something that everybody says can't be done and they aren't sure will have a significant market - and more importantly that if they hit on something the big companies would smother them. An entrepreneurial billionaire has the resources to go toe to toe if necessary, and overcome those things.

So what's your estimate of those numbers, smarty pants

P.S. Jason, Just teasin' smack talk.

 

[Otis Grapsas]

I wondered about that, (and I know several have probably increased dramatically) but I think he was also working on his own software as well in those early years. No doubt he is worth 4X but what's your estimate for graeme. And remember, I think initially they were only figuring on a total market of a few hundred cameras.

I know it's realistic, but I hate to see key project engineers underpaid, even on theoretical budgets

 

[Rick Burnett]

And I know they contract as well, so you'd need to figure that into the costs as well. (Engineering work)