FORESIGHT.

In typical RED fashion, the latest announcement of SCARLET-X has as many people excited as concerned.  There are a lot of opinions on the matter and I have enjoyed hearing the multiple perspectives from many corners of the market.  But some of the discussions came from what looked like a “reactionary point of view.”  Granted, many people have been making serious assumptions about what SCARLET was going to be, largely derived from RED’s own literature and demonstrations, but RED has been clear that everything changes.  Disappointment is hard to avoid when you count on something that changes, but that has been a struggle bleeding-edge professionals have all gotten used to.  SCARLET is affecting a slightly different set of consumers and those consumers are new to the “fringes” territory, and have yet to learn how to fully manage technological unpredictability.  Satisfied and safe participation on this level means you must learn how to:

1. predict
2. prepare
3. adjust
4. trouble shoot

Without considering each of these steps, disappointment will be a familiar feeling.  This can be seen in many of the reactions posted online, but these are often coming from people who are not used to this type of bleeding-edge development/implementation cycle.  The “bleeding edge” has been coined just that because you routinely get cut.  But in effort to help deconstruct some of the main points issues, I wanted to spend some time examining the situation, the market and the reactions and use that to draw some conclusions. To those concerned about Scarlet market disruption, pricing models or unnecessary specs, consider this:



SPECS
It is true that a Venn diagram of EPIC and SCARLET demonstrates a considerable amount of overlap.  To some, this may constitute a disadvantage to EPIC:
• EPIC is perceived to now be priced too high
• EPIC does not offer enough features
• EPIC owners do not want to compete with SCARLET rentals


Ironically, to others, the same overlap constitutes a disadvantage to SCARLET:
• SCARLET is perceived to now be priced too high
• SCARLET offers too many EPIC features
• SCARLET owners do not want to compete with EPIC rentals


Can they both be right?
I agree, from varying perspectives, all of the above statements hold some water.  Most of the statements sound like they come from a filmmakers perspective.  But a filmmaking perspective is, in itself, incomplete.  What needs to be done is also examine the Venn diagram from a business perspective, to which I draw the following conclusion:
All SCARLET feature-driven disadvantages are offset by its low barrier to entry.

This means that the price of getting a SCARLET is low enough that its feature set is then justified without cannibalizing EPIC rentals or owners.  This is possible because SCARLET and EPIC (ironically) both are stand-alone products to which competitors do not offer similar systems.  4 years ago, the RED ONE body alone cost more than a fully-functioning SCARLET.  Yet SCARLET’s feature set borrows more from EPIC than it does from the RED ONE.  This means the economy of the RED ONE body ($17,500) has dropped by 45% to $9,750 in 4 years.  That massive shift in a significantly lower barrier to entry coupled with the favoring of features from the EPIC make the SCARLET the best price-per-feature purchase, not the most over-priced.



SATURATION
The RED One is the first mass-produced cinema camera ever.  The number of RED ONE cameras out numbers the Sony F900, Arri D20 & D21 and Panavision Genesis combined.  You could probably add on the total number of Arri 435 cameras (around 2,000 built) and the RED One and Epic cameras would still outnumber the entire fleet of cinema systems combined.  The side-effect of this is Jim gave birth to a significant number of owner-operators of cinema cameras.  For the most part, this was a market that did not previously exist as there was no supply for high fidelity cinema systems in mass quantities from a single manufacturer.  The market effects of this can be likened to a series of earthquake aftershocks as the earth slowly settles in after a large tectonic shift.  Admittedly, because the market had never experienced mass-production of cinema equipment before, it is still carving trends that many people have been capitalizing on while others are missing out on.  Adding SCARLET to the mix will be somewhat difficult for all parties because we haven’t yet fully recovered from the original “RED One quake.” 



RENTAL
Every rental market is all about the shortest achievable amortization of equipment that is purchased.  -Especially cameras because rental agents, production companies and owner-operators always know that when it comes to cameras “…there is another…”

There are different formulas for different pieces of equipment; some require years of amortization, some require months and others only require weeks depending on the product. A large Hollywood rental agent once told me when they purchased 8 SONY F35 cameras, “We buy F35 cameras at a total package price of about $240,000 each.  We are forced to spend that money in order to keep our clients from going elsewhere, knowing we will likely never make a profit on the cameras themselves.  The amortization period of the F35 is not necessarily as the camera’s own lifespan.  The profit is found in accessories and glass.  For the most part, HD tape cameras are largely an unfortunate cost of doing business for many prominent rental houses.”



HISTORY
In 1999, the two rivaling low-cost top-dogs were the Sony PD150 and the Canon XL-1.  Both modestly priced around $5,000 USD.  If you adjust for inflation, the same cameras today would cost $6,650 USD.  A decade ago, the specs that these cameras provided were being used just about everywhere including a bit of narrative motion picture filmmaking.  Cable, reality, independent, documentary, web and even a few specialty shots in films like “28 Days Later” were common places to see these two 25Mb/s, 525-lined cameras.  But these cameras were not designed as cinema solutions.  Most of us recall how important these cameras and the first native data transport into a computer was to progressive filmmaking.  I believe that these systems were a very real part of the birth of digital cinema, even though they themselves were not designed for cinema use.  But the success of this story is that 12 years later, the specs of the SCARLET out-perform the lineage of where Canon and SONY cameras have ended up in 2012.



CONCLUSION:
So after examining my thoughts on the categories above, this is the conclusion I come to with Scarlet-X:


If you are a cinema system owner-operator, you are in a market that Jim Jannard almost single-handedly created himself.  While criticism is fair and I know Jim gives pause to all criticism, you must realize that criticizing how Jim is affecting cinema system owner-operators is actually criticizing the very person who created it.  Similar to the criticisms of OS9 to OSX, Apple has the sole authority to evolve platforms it created.  I personally believe it is well within Jim’s jurisdiction to evolve a market that he populates as the majority.

If you are a professional of any degree, meaning that you are paid in some form for your work, whatever that is, you will have the ability to write-off your SCARLET or even more likely, rent it out.  A 15,000 SCARLET package is comparable to a fairly cheap car - like a used Honda Civic.  Most of those cars have a 24-36 month payback with very low interest these days.  If you considered yourself in the market where you do not use your SCARLET every week, then I would choose a 36 month payback.  If you use it a lot, you might want to finalize the amor in 25 weeks.  Everyone is different.  A 36 month payback with 0% interest is $416 per month.  A 25 week payout is $600 per week.  Anyone who considers themselves a filmmaker on any level can fit within one of these groups.  If you cannot fit in this, you also do not own a car, you do not have cable and cannot afford to eat.

What this comes down to is a skewed comparative perception:What is the right price for a cinema camera?  Looking at the numbers without consideration to features is as follows:
Arri Alexa = 75K
Sony F65 = 70K
EPIC = 40K
Canon C300 = 20K
Scarlet = 10K
So SCARLET only seems expensive because some people are currently comparing it to the 5D and 7D.  But that’s an inaccurate comparison and can be proven by last week’s Canon announcement.  Canon has released the C300 as a digital cinema solution for 20K, roughly twice the price of a SCARLET.  So features aside, the comparison of a SCARLET to a 5D is not a correct comparison at all because the 5D and 7D are not built for digital cinema.  All this is to say that SCARLET is in a class all its own; giving the benefits of digital cinema at a price that no other manufacturer is able to offer.
SCARLET’s value is worth more than what many people are currently perceiving and that’s partially why they feel duped.  If you look at the market and evaluate the other cameras, you will not find a cheaper version across town because there simply is none.  In other words, it’s impossible to compare SCARLET’s pricing to anything because there is literally nothing to compare it with.  The closest camera with SCARLET-like features is the EPIC, and (I revert back to a previous point) All SCARLET feature-driven disadvantages are offset by its low barrier to entry.

My guess is that the cost of manufacturing different camera systems (such as the 2/3rds inch or fixed-lens Scarlet) would cost RED more money than $3,000 per unit.  That sounds backwards, but RED is doing consumers a favor by making the housing the same.  This means the price per unit on each accessory can be amortized across two sets of cameras and therefore drives down prices across the board and increases saturation.  The trade off is consumers get more features for a better price and they get them sooner.



FINAL THOUGHT:
The SCARLET is 47% more expensive than a PD150 or XL-1 when they were released.  But far more importantly, the SCARLET is 47% cheaper than the nearest current models of those camera companies today.  Consumers need both the past and the present lineage to determine if they are being ripped off.  This data proves that SCARLET is properly priced right in the middle.Don’t think about the price of a SCARLET, rather think about the price per unit of features.  SCARLET features are in a league all their own.  It means the price of renting the camera will be as little as a 25 week amortization.  That means the cameras will be available for the price of the accessories.  That’s great for renters because they can purchase brains very cheap and rent the glass.  This is also great for rentees because they can get access to the brain and shoot identical pictures to most EPIC feature films.  Oversampling at 4K is still unfortunately misunderstood by so many people, but it’s a critical component that most camera companies are finally giving credence.  When we shoot in 4K with REDCode, there are almost no disadvantages.  This is critical for everyone releasing theatrically and on the web.  To think that the SCARLET is overkill is extremely short-sighted.  Just like anti-lock brakes eventually became standard on all cars, so will 4K on all cameras.  I’ve been saying that since 2006.  Now it looks like the majority is starting to feel that way.
| m |