Apple Losing Money on New Movie Sales?

[ChrisA]

The TRUE cost of movies

You all forget the cost of a movie is not $15. It is $229 plus 15 times the number of movies you buy. Apple does not loose money until you buy the 230th movie. Apple hopes that with movies selling for $15 each more people will spend $229 for the ATV. Apple is a hardware company.

Actually the cost of a movie from Apple is very high. When you buy that first movie the effective cost is $229+15 or $244. The second move is cheaper because you can divide the cost of the ATV is half. After you have 10 movies your cost per movie becomes $38. Apple is not going to loose money until you've spent well over $1,000 on movies.

 

[Sheradon]

I got an Apple TV as a gift, wouldn't have bought one myself. Youtube on TV is actually genius, I love it. Being able to rent or buy movies is great, but the library is Waaaaaaaayyy to small - there's no reason to think of it as a resource yet. But... If they ever get 50,000 or however many titles netflix has, Apple will rule the world: want to watch a movie, any movie you can think of. Press a button, watch movie. it will be huge.

People often comment negatively on how many movies are available online but they keep forgetting that when they rent movies it's mostly for the most recent flick that is out. So as the library gets bigger (it does grow every week) i'm sure that most people would be satisfied with the most recent movies that came out.

Don't you think ?

 

[paul.b.davis]

this sounds like dumping to me...

 

[theBB]

You all forget the cost of a movie is not $15. It is $229 plus 15 times the number of movies you buy. Apple does not loose money until you buy the 230th movie.

How does Apple make hardware that does not cost any money to make? Assuming AppleTV to be pure profit does not sound reasonable to me.

There were also rumors that Apple has reduced the price of AppleTV to entice iTunes purchases and rentals, as the margins when AppleTV first came out was already lower than anything else Apple was selling. So which one is it? Are the rentals subsidizing the box or the other way around.

 

[LethalWolfe]

A movie distributed digitally should cost no more than 1/3 the price of a physical copy. Anything more is a ripoff.

Interesting. What numbers did you use to come up w/that figure? If you don't mind me asking.

So if Apple really is paying $16/movie to the studios, how do all of these retailers sell DVDs for about $16 the week they are released? Better yet, how do they justify price cuts on DVDs to sometimes as low as $4 at places like Best Buy?

Basically it comes down to Wal-Mart and Target (the two largest sellers of DVDs in the US, IIRC) making veiled threats to the movie studios that bad things would happen if the studios set on-line pricing in a way that undercut DVD prices. The studios want to sell the downloads cheaper, but they aren't willing to piss off their biggest retailers.

In fact, this makes me kind of angry at the MPAA for being so ridiculous in their demands. I wonder if they charge other companies the same amount to distribute their movies digitally? Maybe they're charging other companies $10 per movie, but charge Apple $16 because they don't want Apple to have such a dominance like they do in music.

What does the MPAA have to do w/any of this?


Lethal

 

[sebimeyer]

I think what they are saying is as long as the iTunes store as a whole makes a little bit of money then that's fine. By as a whole I mean literally everything that connects to iTunes. There's no doubt in my mind they are losing money with free podcasts - I mean they pay to have the server space and they don't charge for them so they have to cost money.

Apple does not host any of the podcasts itself, it only parses the RSS feeds through their store. The data moved by Apple itself is negligible.

Sure, there are administrative costs, but it would again be an argument for Apple spending money/taking hits in a sector they deem important strategicly rather than a proof that they don't do such things.

 

[JesterJJZ]

I would pay $20 if they were 720p HD.

I'd rather spend that $20 on a 1080p (less compressed) Bluray loaded with a ton of features on a disc that I can put in my shelf rather than have to back something up and hope it doesn't get lost or corrupted along the way somewhere.

 

[EricNau]

If this is the case, I find it hard to understand why the videos still haven't matched DVD quality.

I always assumed that it was to prevent cannibalizing DVD sales (at least from the movie studios' point of view), however, if they're receiving the same amount of income from either source (or possibly more from iTunes) I don't understand the difference in quality.

For now, I just can't justify spending $15 (or even $10) on less than DVD quality movies; in fact, I've even stopped buying DVDs altogether and since I'm not forking out $300 for a blu-ray player, I've essentially stopped buying movies altogether.

Actually, the movie industry isn't exactly on my good side at the moment. I bought my first DVD player less than 5 years ago and now I'm already expected to replace my movie collection with a new format? ...That's simply not going to happen, not again.

For now, I'll stick with renting on my Apple TV.

 

[Mackan]

Apple makes huge profit on their hardware, so I am sure they are not crying over this.

 

[LethalWolfe]

Actually, the movie industry isn't exactly on my good side at the moment. I bought my first DVD player less than 5 years ago and now I'm already expected to replace my movie collection with a new format? ...That's simply not going to happen, not again.

No one is forcing you to replace anything. If you are happy w/the DVDs you have keep them. If you want better quality buy BR versions. New formats aren't anything, well, new so I'm exactly sure why you are upset.


Lethal

 

[EricNau]

No one is forcing you to replace anything. If you are happy w/the DVDs you have keep them. If you want better quality buy BR versions. New formats aren't anything, well, new so I'm exactly sure why you are upset.


Lethal

...But they don't look good on my new HD TV.

In seriousness, I understand where you're coming from, but at the same time, I can't help but feel that the DVD was a compete waste of everyone's time and money. If a format can barely last 10 years before becoming "obsolete" then it clearly wasn't designed with longevity in mind.

 

[LethalWolfe]

...But they don't look good on my new HD TV.

In seriousness, I understand where you're coming from, but at the same time, I can't help but feel that the DVD was a compete waste of everyone's time and money. If a format can barely last 10 years before becoming "obsolete" then it clearly wasn't designed with longevity in mind.

With that mindset I'd hate to hear your opinion about computers, cell phones, cars, video game consoles, video cameras, still cameras...

Everything that's new will one day be old. Just the way it goes. Your DVDs will only become "obsolete" when you want them to.


Lethal

 

[Michael CM1]

All true, but you have to wonder: If the film companies are making $16 per movie (for nothing), then Apple surely wouldn't sell the movies at $8. I think if the companies were only asking for $5 to $8 per movie, Apple would charge $10 max.

Someone is being greedy, but I don't think it's Apple.

In fact, this makes me kind of angry at the MPAA for being so ridiculous in their demands. I wonder if they charge other companies the same amount to distribute their movies digitally? Maybe they're charging other companies $10 per movie, but charge Apple $16 because they don't want Apple to have such a dominance like they do in music.

You and me both. I changed my religion from CDs to digital audio because it was cheaper, very portable, and much easier to shop. Now Apple and others are trying to do the same with video, but more than likely the dudderheads at the MPAA/studios/whomever still want to charge so much that Apple apparently LOSES money on a $15 movie.

So far, digital video is not very portable. Sure, you can take it with you on most of the iPods and iPhone, but you need to have a special A/V cable to hook it up to a TV. To play audio back on an iPod, you need to have a $5 audio cable. Huge difference.

When all I have to do is say "Work thy magic, Handbrake!" why should I download a movie? I search around for the good ones to hit the $10 mark or cheaper at the usual shopping spots, rip them, then store them. Once Apple jumps on the Blu-ray bandwagon, I'll do that with my HD stuff. But I still have all the special features and a nifty hard copy.

The point of my rant (as always) is the video download market has a lot of maturing to do. The iTunes rentals will probably do very well if the content can catch up to rental stores like the music did. Apple has more music available than ANY brick-and-mortar store. When they have about 10,000 movies available for rent (and can drop the Apple TV even more), I think they'll start to win that battle big time. Sales, however, will take longer.

 

[EricNau]

With that mindset I'd hate to hear your opinion about computers, cell phones, cars, video game consoles, video cameras, still cameras...

All technologies are different, each with an expected lifetime. For example, I would expect my computer to last longer than my cell phone, but my car longer than my computer, etc.

Everything that's new will one day be old. Just the way it goes. Your DVDs will only become "obsolete" when you want them to.


Lethal

Not sure I agree. My DVDs became "obsolete" as soon as I bought a new TV because they now fail to produce a clear, sharp picture. In my opinion, it's as if the DVD was never qualified to work well on HD TVs, yet it was released just before everyone starting transitioning to HD. On top of this, the DVD wasn't much of an improvement over VHS, but was heavily marketed for its archivability, with only slight improvements to quality - like any of it really mattered, because now we're all going to buy something else just a few years later.

Plus, this can't be compared to software, which I gladly update every few years, because the movie doesn't change - it's exactly the same. It would be like paying Adobe $300 every 7 years for the exact same software, but just on an updated medium, so you could stick it in your computer.

I touched on this before, but truly, I don't get to decide when my DVDs are obsolete: the market dictates it for me. Eventually, I won't be able to buy a DVD player, and while that's not right around the corner, that day will surely come.

 

[chickenninja]

very interesting, i guess apple TV is really pulling the load.

 

[LethalWolfe]

Not sure I agree. My DVDs became "obsolete" as soon as I bought a new TV because they now fail to produce a clear, sharp picture. In my opinion, it's as if the DVD was never qualified to work well on HD TVs, yet it was released just before everyone starting transitioning to HD. On top of this, the DVD wasn't much of an improvement over VHS, but was heavily marketed for its archivability, with only slight improvements to quality - like any of it really mattered, because now we're all going to buy something else just a few years later.

Of course DVDs weren't designed to work w/HDTVs. No, they weren't released "just before" everyone started transitioning to HD (which has only been in the last 1-2 years). DVDs are a huge improvement over VHS in terms of picture quality, audio quality, convenience, value and durability. And, just so you don't get blind sided again, something will come along and replace BR in the future so be prepared to get upset all over again.

Plus, this can't be compared to software, which I gladly update every few years, because the movie doesn't change - it's exactly the same. It would be like paying Adobe $300 every 7 years for the exact same software, but just on an updated medium, so you could stick it in your computer.

You pay Adobe for an updated, improved product. If you buy a BR version of a DVD you already own you are paying the movie studio for an updated, improved product. The movie studio went back to the original film, re-transfered, re-mastered, re-encoded, and re-authored the film onto a higher quality format.

I touched on this before, but truly, I don't get to decide when my DVDs are obsolete: the market dictates it for me. Eventually, I won't be able to buy a DVD player, and while that's not right around the corner, that day will surely come.

I'm pretty sure all BR players can play SD DVDs too so I wouldn't worry too much about that. Hell, you can still buy VHS players.


Lethal

 

[gnasher729]

...new movies cost $14.99, but according to "a person familiar with the matter", Apple is actually paying the studios close to $16 per sale for these new releases.

Do I believe what an unnamed "person familiar with the matter" is saying? I don't. For two reasons: One, Apple is not in the business of losing money. Apple is aiming at 30 percent gross profit, which means Apple is unlikely to pay more than $10 per movie. Second, entering a contract that means selling at a loss would be something that for the first time could get Apple into legal trouble.

 

[Poll Smoker]

You all forget the cost of a movie is not $15. It is $229 plus 15 times the number of movies you buy. Apple does not loose money until you buy the 230th movie. Apple hopes that with movies selling for $15 each more people will spend $229 for the ATV. Apple is a hardware company.

Actually the cost of a movie from Apple is very high. When you buy that first movie the effective cost is $229+15 or $244. The second move is cheaper because you can divide the cost of the ATV is half. After you have 10 movies your cost per movie becomes $38. Apple is not going to loose money until you've spent well over $1,000 on movies.

Let's all listen to the opinion of someone who:

1) Thinks that Apple is making $229 on a product that sells for $229.

2) Doesn't know the difference between "lose" and "loose".

 

[Shasterball]

I bet they will make up a lot of money with the iPhone app sales...

 

[Shasterball]

On top of this, the DVD wasn't much of an improvement over VHS, but was heavily marketed for its archivability, with only slight improvements to quality - like any of it really mattered, because now we're all going to buy something else just a few years later.

Not sure I agree with this. Yes, DVD's would last longer (I remember some movies sounded and looked terrible after 4-5 viewings) and yes there was a more than modest increase in picture quality. But, DVD's also bring a lot more. Off the top of my head -- you can pause!, way more special features, menu navigation, more language features, skipping forward and backward without waiting, better storage, easier to rip!, etc...

 

[sachxn]

may be

I don't think Apple is paying $16 for a movie. Steve Jobs is smart enough to make sure that Apple is never at a loss.

Sachin

 

[PlayUltimate]

Two Words...red Box... I Can Go Get The Movie Quicker Than I Can Download It And Red Box Is A Buck.
When I Can Rent A Movie For A Buck, There Is No Need To Buy.
When This And Netflix Get Bigger Apple Has A Problem.

True about buying...except the selections keep changing and in a few months the movie you want will not be available.

Also I live about 4 miles to the nearest Redbox. And with gas prices going up, and the selection being mediocre at best, I'm willing give renting from my house a try.

 

[Psychic Shopper]

Jobs way or the higheway

Steve Jobs has had many good ideas since returning to Apple, but the video download may not be one of them. Why are there no digital TV tuners in a Mac?. like there are in PCs, why can't you use your Mac as a DVR right out of the box like you can with several PC's?.Because Steve Jobs is pushing his vision of people downloading TV shows from his store instead of just recording them off cable. No DVD player in the Apple TV box, so I would have to have 2 boxes plugged into my TV. Apple hardware is suffering from Steve's Vision

 

[PlayUltimate]

Do I believe what an unnamed "person familiar with the matter" is saying? I don't. For two reasons: One, Apple is not in the business of losing money. Apple is aiming at 30 percent gross profit, which means Apple is unlikely to pay more than $10 per movie. Second, entering a contract that means selling at a loss would be something that for the first time could get Apple into legal trouble.

Totally agree. There is now way Apple would sell movies intentionally at a loss. Too many people believe Apple is like MS and wanting to "dominate." They aren't.

Apple is looking to make $$$. And unlike the late 90s, Apple's survival is not being questioned anymore. (I never believed it in the first place though. )

Re: Apple's current domination in music. People forget that the iTMS came out in 2003, 18 months after the iPod!

 

[!¡ V ¡!]

All technologies are different, each with an expected lifetime. For example, I would expect my computer to last longer than my cell phone, but my car longer than my computer, etc.

I touched on this before, but truly, I don't get to decide when my DVDs are obsolete: the market dictates it for me. Eventually, I won't be able to buy a DVD player, and while that's not right around the corner, that day will surely come.

Format:

First came DVD then Blu-Ray (HD) and soon UHD (Ultra HD)

HardDisk:

First came CRT then LCD and soon HVD


I am sure if you feel the pain now, you have more to endure.