Apple Losing Money on New Movie Sales?

[!¡ V ¡!]

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

Maybe just maybe it works on the principle of resolution, if these moveis offered on iTMS is half of the DVD quality then rather than ~$16.- USD is paying ~$6/8.- USD.

This only seems fair for all parties. Then again I get all my movies for free from a place called the library, apparently the division in my location has new releases a month after store releases.

 

[shiseiryu1]

But what is to say that this dollar per sale loss isn't offset by other profits from other parts of the ITMS?

Music, TV episodes, Movie rentals, and other content.

Plus, once the distribution channel is developed, Apple can re-negotiate their costs from a stronger position.

It does seem a little ludicrous that a distribution channel with very little material and absolutely no packaging or store shelf requirements should cost $16 dollars per unit. That seems quite high, especially in light of how inexpensive music and television media sells digital-only for.

Now if Apple can just build me a computer that I can use for my HD-quality media center, I would start considering purchasing or renting more online movies.

I am not going to add an Apple TV as one more box on my stereo rack. I want a Mac that will replace most of the "boxes" on my stereo rack. Mac Mini is just short of that task, iMac isn't well suited for it unless you want a small media monitor, (even 24", being big for a computer, is small for a TV across the room) or a complete-overkill, monsterous, expensive Mac Pro.

I agree that $16 is WAY TOO high for a digitally distributed movie. Apart from the distribution being cheaper, consumers are MUCH more restricted as far as what they can do with the movie (ex: can only play on 5 computers or AppleTV).

I have an AppleTV on my stereo rack and I really like it. All they need is a bigger selection of movies; however, the convenience factor is hard to beat. Also, I wish AppleTV would let you browse Internet Radio on your TV...come on Apple ur killin' me!

 

[moslayne]

no way

I don't believe it at all.

That's my to cents

 

[reldream]

Don't Doubt RedBox...

I somehow knew it was only a matter of time until we had more Red Box plugs in the TV thread. You'd think the fact that every time it's brought up people point out ALL the problems with it? Limited supply, is much further away than picking up a remote control, you're at the mercy of the previous renter to not scratch it.
TV and RedBox are NOT in the same market. Besides - if the price of gas continues to go up people are going to be FAR more likely to just stay in

Of course there's the whole convenience factor - getting into the car, driving down the road, hoping the movie you want is in, driving back and then getting in the car again, returning the movie and driving back VS turning on TV, scroll around, press a button, go get drink from the kitchen, cook your popcorn and the movie is ready to go.

There's always a price for convenience...

I live in Indianapolis, IN...and around here we have a redbox almost every block. The major grocery store has them and McDonalds has them. From where I live, I have 5 within 5 miles of my house. To make it better, I can go to redbox.com, search for the movie(s) I want, rent the movie(s) online, and then go get it when I go out to get dinner or something. (The redbox machine will save the rented DVD til I come pick it up) Or rent it online at work, and stop by one on my way home. Everyone says this isn't directly involved with TV but if you can rent for a dollar a day, and pick it up and drop it off after work, I can bet you people will do that. With rentals around 3.99 from you can keep a redbox dvd for 4 days before it'll equal about the same price.

I love . Just about everything I use is . But connivence isn't everything...people are trying to find the cheapest routes to do stuff these days.

 

[kornyboy]

Wirelessly posted (iPhone: Mozilla/5.0 (iPhone; U; CPU like Mac OS X; en) AppleWebKit/420.1 (KHTML, like Gecko) Version/3.0 Mobile/4A102 Safari/419.3)

This goes to show the greed of movie studios. They are making more on the movies with digital releases and therefore should not charge the same as they charge retailers. But what do I know.

 

[CWallace]

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.

DVD offers a significant boost in image quality over a VHS tape, not only in pure resolution but also in separating the various components that make up the image (chroma and luma) which improve the quality and clarity of the final image. And as mastering houses became more familiar and comfortable with the DVD format, the quality of the discs became better. And as film production improved (especially the move to digital editing and post-production which allowed digital sources to be used to master the DVD), that also improved DVD quality.

While it is true that DVD and ATSC HD both began development in 1993, the two programs followed different development tracks and the timeframe to adopt ATSC would have held up the release of DVD for many, many years.

I suppose you could use a DVD-18 to make a "high definition" DVD since it has sufficient space to hold an HD movie. However, MPEG2 as defined in the DVD video specification is limited to ~10MBit/s vs. the ~30MBit/s rate used in HD DVD with the VC-1 and AVC codecs so you would need a higher MPEG2 bit-rate (ATSC broadcast HD is ~19MBit/s and ATSC cable can approach ~40MBit/s), but that would require new hardware in the DVD player to handle it since it is beyond the approved specification and the existing hardware might not be able to handle it.

 

[MisterMe]

I don't believe it at all.

That's my to cents

That opinion is worth a lot more than two cents. The story makes no sense, pardon the pun. In essence, the Wall Street Journal is claiming that Apple is selling every movie for $2.00 less than below cost, but doesn't have enough volume to make it up.

Is this what the Journal's reporting has come to since Rupert Murdock bought the company?

 

[fourthtunz]

Don't underestimate society's ability to be lazy. Apple will "out lazy" Netflix easily. No subscription, no delay, no returns, no queue... and now that you can rent and buy dirctly from AppleTV, no fuss. All they need is the library now.. ( and personally I think they ought to buy Tivo now and port the APapleTV component to Tivo's OS ( leave the DVR part intact though )

Your a right absolutely! But when movies are a buck to rent, and they are putting these kiosks everywhere, even McDonalds, how many movies are you going to pay $10-16 for? Netflix has free movies on demand, just not for Mac yet. I also think Apple should have put composite out on the Appletv, seeing as how a big part of the market is still composite input.
Hey I'm a mac fanboy but this is what is out there so I think apple has a big challenge.

 

[fourthtunz]

I live in Indianapolis, IN...and around here we have a redbox almost every block. The major grocery store has them and McDonalds has them. From where I live, I have 5 within 5 miles of my house. To make it better, I can go to redbox.com, search for the movie(s) I want, rent the movie(s) online, and then go get it when I go out to get dinner or something. (The redbox machine will save the rented DVD til I come pick it up) Or rent it online at work, and stop by one on my way home. Everyone says this isn't directly involved with TV but if you can rent for a dollar a day, and pick it up and drop it off after work, I can bet you people will do that. With rentals around 3.99 from you can keep a redbox dvd for 4 days before it'll equal about the same price.

I love . Just about everything I use is . But connivence isn't everything...people are trying to find the cheapest routes to do stuff these days.

Heh, we're on the same page My supermarket has redbox and its .5 mile away. I can get the movie quicker than a download and watch 4 for $4.00
I think that's hard to beat. When fiberoptics get cheaper then things will get interesting.

 

[Brianstorm91]

Bit of a random question but what quality are TV Show downloads?
I was wondering what they'd look like on a 20" iMac (soon to be mine), I couldn't find details in the iTunes store.
Thanks!

 

[fourthtunz]

...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.

This as they say depends on the eye of the beholder. I have a hardware dvd recorder as well as a couple of superdrives and vhs and won't be replacing anything for a while. I think the quality is fine. I like being able to record on a dvd, it costs 22 cents and offers indexing as well as very good quality.
So for many dvd is not obsolete yet!
I have an rca monitor/tv from 1986 and the picture is superior to most lcd tvs on the market. I guess it depends how many old movies and technology you have. HD at some point but I can wait until the prices come down.

 

[seedster2]

Enough with the greed talk. Movie studios are a for profit business just like Apple.

Why is it that they are being "greedy" for wanting as much as they can from digital downloads? They are experimenting in a new arena with tremendous risk of piracy. If you are still willing to pay, they are obviously charging the right amount.

No one considers it greedy when apple charges premiums for dated video cards or when they sell unsubsidized phones which required a 2yr commitment with AT&T

Capitalism is fine when does it, but when anyone else partakes...

Steve has tremendous leverage in the music arena but why everyone assumes he can dictate what movie studios decide is a mystery? TV needs the studios on board more than the studios need to capitalize on TV.

 

[rstansby]

Bit of a random question but what quality are TV Show downloads?
I was wondering what they'd look like on a 20" iMac (soon to be mine), I couldn't find details in the iTunes store.
Thanks!

I've purchased shows on my 20" imac. I think they look just as good as shows I watch on SD cable.

 

[emulator]

I bet it's the same when you see DVD's on sale the week of release for $12.99 (that's how much they are around here).

They get you to go to the store for the DVD and the store hopes you walk out with a new LCD HDTV or HD Camcorder....

I think they're called "Loss Leaders"?

DVDs are never loss leaders. Columbia House sell these very same DVDs for $5-6 and still make tons of money.

 

[Brianstorm91]

I've purchased shows on my 20" imac. I think they look just as good as shows I watch on SD cable.

Cheers for that.

 

[northy124]

Bit of a random question but what quality are TV Show downloads?
I was wondering what they'd look like on a 20" iMac (soon to be mine), I couldn't find details in the iTunes store.
Thanks!

Some are good and some are crap, Personally after buying BrotherHood I liked the quality so I bought the 2nd series Still great quality, Then I buy Futurama series 1 and I was so pissed with the quality I demanded my money back and they take Futurama off I mean it still had TV Logos and crap on it, Never buying TV Shows from iTunes again, Movies yes I might bought 3 superb quality just shame about TV Shows.

DVDs are never loss leaders. Columbia House sell these very same DVDs for $5-6 and still make tons of money.

And what else do Columbia House sell? In UK for example you go to Comet buy a DVD it's about £6 less than if I buy at the DVD only store. So gkarris I think you are right in your 'Loss Leaders' theory.

 

[arn]

That opinion is worth a lot more than two cents. The story makes no sense, pardon the pun. In essence, the Wall Street Journal is claiming that Apple is selling every movie for $2.00 less than below cost, but doesn't have enough volume to make it up.

It makes perfect sense. And they aren't saying Apple is selling every movie for $2.00 below cost.

They are saying Apple is selling new day-of-DVD-release movies at $2 below cost.

The studio cost likely drops the longer it is from release.

arn

 

[bigmc6000]

I live in Indianapolis, IN...and around here we have a redbox almost every block. The major grocery store has them and McDonalds has them. From where I live, I have 5 within 5 miles of my house. To make it better, I can go to redbox.com, search for the movie(s) I want, rent the movie(s) online, and then go get it when I go out to get dinner or something. (The redbox machine will save the rented DVD til I come pick it up) Or rent it online at work, and stop by one on my way home. Everyone says this isn't directly involved with TV but if you can rent for a dollar a day, and pick it up and drop it off after work, I can bet you people will do that. With rentals around 3.99 from you can keep a redbox dvd for 4 days before it'll equal about the same price.

I love . Just about everything I use is . But connivence isn't everything...people are trying to find the cheapest routes to do stuff these days.

I live in the 4th largest Metropolitan area in the entire country (DFW) and I can't honestly tell you the last time I saw a RedBox kiosk around here. The last one I saw was in Austin. And, as I mentioned before, it might be great for you but for *most* people RedBox isn't at all convenient or even cheap! $3.50+ for a gallon of gas your one way trip has to be less than 5 or 6 miles (assuming no traffic and mpg of around 20-24). If you have to sit at lights or drive around the grocery store parking lot looking for a parking spot that kills your gas mileage again. The only way it's cheaper is if 1) it's on your way or 2) you can walk to one and that's just not the case of 95%+ of Americans. Add in the fact that it's not $1, it's $1 A DAY and that's really a huge factor.

As we all start becoming homebodies because 1) it's too monetarily painful to drive or 2) people make you feel bad for burning oil, digital distribution is going to slowly push it's way into the mainstream.

If apple wants to push this big time right now there's a very easy way to do it - make a deal with, say, DirecTV to put an TV chip in their DVR and all of a sudden it's not $220 it's an extra (probably) $50 and that's far more reasonable...

 

[bigmc6000]

It makes perfect sense. And they aren't saying Apple is selling every movie for $2.00 below cost.

They are saying Apple is selling new day-of-DVD-release movies at $2 below cost.

The studio cost likely drops the longer it is from release.

arn

I respect the effort here arn but you've certainly been around long enough to know that people are going to argue anything

You could say the iPhone makes Apple money and you would be deluged with people pissed about the iPhone

Also, isn't it saying Apple is losing $1 per? I thought it said Apple pays $16 for a movie they sell for $14.99?

 

[GSMiller]

Typical, the movie studios are just as bad as the record companies for keeping prices inflated. $14.99 is a bit too much for a digital download of a movie that you can't even burn when you can get a hard copy at Wal-Mart for $5 more.

 

[northy124]

Typical, the movie studios are just as bad as the record companies for keeping prices inflated. $14.99 is a bit too much for a digital download of a movie that you can't even burn when you can get a hard copy at Wal-Mart for $5 more.

You can burn them as Data Disc but you can't play them on a DVD Player

 

[fourthtunz]

I live in the 4th largest Metropolitan area in the entire country (DFW) and I can't honestly tell you the last time I saw a RedBox kiosk around here. The last one I saw was in Austin. And, as I mentioned before, it might be great for you but for *most* people RedBox isn't at all convenient or even cheap! $3.50+ for a gallon of gas your one way trip has to be less than 5 or 6 miles (assuming no traffic and mpg of around 20-24). If you have to sit at lights or drive around the grocery store parking lot looking for a parking spot that kills your gas mileage again. The only way it's cheaper is if 1) it's on your way or 2) you can walk to one and that's just not the case of 95%+ of Americans. Add in the fact that it's not $1, it's $1 A DAY and that's really a huge factor.

As we all start becoming homebodies because 1) it's too monetarily painful to drive or 2) people make you feel bad for burning oil, digital distribution is going to slowly push it's way into the mainstream.

If apple wants to push this big time right now there's a very easy way to do it - make a deal with, say, DirecTV to put an TV chip in their DVR and all of a sudden it's not $220 it's an extra (probably) $50 and that's far more reasonable...

Good points all, but more redbox's will come And as others have mentioned unless you have an appletv you can't watch these movies on your television.
Hummm, wonder if Apple will put an appletv into a HD TV?
Well for now for me it's redbox,netflix and occasional apple content.

 

[theBB]

Enough with the greed talk. Movie studios are a for profit business just like Apple. Why is it that they are being "greedy" for wanting as much as they can from digital downloads?

I don't know how much a movie is supposed to be worth, as they cost a lot of money to make and market. Still, it does not make business sense to sell the downloadable versions without extras or subtitles and with noticeable compression and DRM at a price higher than the DVD. Besides, the cost is less for them as there is no manufacturing, transportation or stocking overhead. Thus, they are making "download" options a pricey niche, something a consumer would only occasionally use. It is not about greed, it is about logic.

Of course, in the meantime they will not refrain from complaining to Congress about how much piracy is hurting them without mentioning how much they themselves are contributing to the problem.

 

[Chopper9]

This "report" is total BS.

 

[tingly]

Reading comprehension is important. They're selling NEW movies as loss leaders. The other 99% of the movies are not new (like movies in Columbia House), make a profit from each sale, and apparently cover that tiny 6% loss from new movie sales.

What I wonder is how long are new movies considered new.