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Same-day movies are a loss leader for Apple

updated 02:35 pm EDT, Fri May 2, 2008

Same-day movie loss leader

Apple's new deal with major movie studios to offer downloadable movies on iTunes the same day they are released on DVD is currently costing the company more than it would make on the sale. According to The Wall Street Journal, Apple is buying movies for a wholesale price of around $16, while only charging $14.99 for the content. iTunes' popularity has so far earned the company a solid reputation, helping change the face of digital media distribution by increasing overall market revenue to $175.8 million from almost nothing two years prior.

"This is a game changer," said Craig Kornblau, president of General Electric Co.'s Universal Studios Home Entertainment and Universal Pictures Digital Platforms. "For all the studios to offer all their movies [on the same date] as DVD, with the most influential marketing company in the digital space, is a very exciting development."

Apple hopes its success with iTunes music - such as its recent surpassing of Walmart as the number one music retailer - will transfer to movie sales. The combination of not having to pay for distribution, coupled with the lack of returns, will help boost studio revenue, despite a lower wholesale price.




by MacNN Staff

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Comments

  1. climacs

    Joined: Dec 1969

    +5

    suck on that universal

    let them try to say now that Apple is grabbing the 'lion's share' of movie download revenue.

    Comment buried. Show
  1. testudo

    Joined: Dec 1969

    -14

    but...

    isn't using a product as a loss-leader (like the XBox from MS) frowned upon by people on these boards??

  1. thebiggfrogg

    Joined: Dec 1969

    0

    NBC-Uni Blows!

    Universal can suck it!

  1. rreed2000

    Joined: Dec 1969

    +1

    Wholesale Price?

    I don't believe for one second that $16 is the wholesale price of a same day distribution.

  1. UberFu

    Joined: Dec 1969

    0

    why would Apple

    take a flat loss of the top like this?

    makes no sense with the way they do business_ Even when they claim they don't make a profit from music sales_ They gain enough back from the hardware sales of the various iPods

    But with video - they don't have that same "groove"
    they don't have the ultimate video player and the Apple TV has only just recently been focused upon by Apple

    Not making much sense

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