VERDICT: iTunes movie sales whup Blu-Ray and HD-DVD - Quicker, Harder, and With Less!

[Cleverboy]

Okay, sure... so iTunes movies cost anywhere from $9.99 to $14.99 and HD disc content is about 3x pricier. But... come on... they don't have subtitles, they don't have surround sound, they're not even DVD resolution. Oh, and you miss all those snazzy extras and director's commentaries. --YET, here we are. MacWorld 2008, and they've managed to create a distribution model for movies that actually trumps sales from Blu-Ray and sales from HD-DVD (which trails Blu-Ray significantly). What's up with that? Are the studios listening?

From BusinessWeek.com:

Interesting statistical aside from the Jobs keynote on Tuesday. Apple has sold 7 million movies since the, and yet that number has been more or less deemed a failure. But, thats a million more than the six million Blu-Ray Discs sold as of the end 2007 according to Home Media Research, besting HD-DVD by a near 2-to-1 margin. MacDailyNews points out that iTunes Movies hit the 7 million mark after 15 months, besting the 18 months it took Blu-Ray out hit the six million mark.

This makes me wonder: Now that iTunes has the ability to sell HD movies, does that mark the start of the next battle: Between iTunes and Blu-Ray.

More juicily, a separate article interviewing
Jobs suggests possible flexibility down the road in the wake of the NEW model for Apple TV's future success:

Jobs also shared his thoughts on some other topics. For one, he says he expects that over time, the studios will relent in their opposition to simultaneous release of DVDs and on-line distribution on the same day. As of now, Apple has to settle for a thirty day delay, to give studios time to rack up DVD sales (Jobs wouldn’t comment on the comparative economics—that is, whether online distribution was more or less profitable for the studios than DVD sales).

Jobs says he is hopeful that other studios will follow 20th Century Fox’s lead, by agreeing to let Apple encode a Fairplay-compatible copy of Fox’ movies on its DVDs (by the way, as some readers predicted, Apple did not have to license Fairplay to Fox to make this possible—a question I raised in a recent post). “It’d be great if they did, because this is a great middle path” that enables the studios to sell DRM-protected DVDs in a way that still gives consumers some reasonable flexibility. “People think they should have the right to put movies they buy [on DVDs] onto their iPods,” says Jobs. This approach “keeps honest people honest.”

All I know is that clearly people are voting with their dollars. Hopefully the studios know the sound of money tinkling into their coffers. Hopefully we won't keep paying more for less. Hopefully they don't keep their dates with iTunes at first base, and graduate to full-on 3rd base, home run action!

Okay... maybe that's a bit much, but you know what I mean.

~ CB

 

[smilinmonki666]

I really think this is pathetic. We're in the next phase of media download and the high definition era, yet we're going backwards. Ok, so its cheaper, but as stated previously, we're paying more for less.

A reason for not putting my DVD collection on my network is that its compressed. If the apple tv could play .vob files over my network, I'd do it for ease of use for me and when kids want to watch a film they won't damage the discs, plus I don't want too compress and loose 5.1 audio. So I certainly do not want to download a film and pay rental, to only have 2 channels and 720p max.

Would you spend the money on a 5.1 system large screen to watch all your films on a mono VHS player in black and white???

 

[Cleverboy]

Ah, but what are ya gonna do. This is how the studios want it. On-Demand, hobbled and amaciated, but still outperforming with smaller margins.

~ CB

 

[SheriffParker]

gosh what a mess. iTunes selling more than Blu-Ray? I think its mostly because people are afraid to buy anything given how shaky the formats are.

 

[smilinmonki666]

This is very true. I've only got HD-DVD's because my dads got the player. And apparently theres an even newer format on the horizon. When will the just make a format that stay's, haven't sony & companies like been funded enough by us consumers...

 

[GFLPraxis]

Faulty comparison though; being that it is SD content, the AppleTV is directly competing with DVD.

7 million compared to Blu-ray is great, but 7 million compared to DVD is nil...let's see how the HD content does.

 

[Cleverboy]

Faulty comparison though; being that it is SD content, the AppleTV is directly competing with DVD.
7 million compared to Blu-ray is great, but 7 million compared to DVD is nil...let's see how the HD content does.

But, it's not competing with DVD. It's a next generation format AFTER DVD that focuses on portability over resolution. It's the chief reason why Fox can include a "digital copy" with a DVD and people don't wonder "why"? But instead go "cool". Much like getting a "Blu-Ray" disc with your DVD... the only question is, "does this fulfill your needs"? I can guarantee you... no one wanting a DVD, is going to pay $14.99 for an iTunes download. At least in my mind however, if they choose to pick up something OTHER than a DVD... its VERY telling that iTunes downloads are selling more than Blu-Ray discs at this point.

Blu-Ray discs are certainly FAR more comparable to DVDs than iTunes downloads, so that's the comparison. NOTHING outsells DVDs right now... but 2nd place? Second place is currently NOT going to a better quality product, but a more portable product. I think that is very telling. The brakes on the format are artificial though. I think it would continue to sell better and in greater numbers if 3 things leveled the playing field:

• For every Blu-Ray disc title, a corresponding iTunes download of that title was available at the SAME TIME (I believe that iTunes is selling greater numbers of a smaller selection)
• For every iTunes download, it offered both SD (480p) and HD (720p) versions from nominal price difference ($12.99-$14.99/$17.99).
• iTunes downloads all suppported 5.1 audio (surround sound).

While still missing ALL the "special features", I bet iTunes would still remain AHEAD for a while. If one year from today (January 2009) iTunes added "special features", "subtitles", and "multiple audio" tracks including director's commentary to each title. I'm sorry, but they would remain AHEAD almost indefinitely (especially if Blu-Ray discs remained at >$30).

Of course, the system will be gamed and studios will happily work not to impinge upon their DVD profits, while losing sales to Bittorent and/or rental-ripping unnecessarily. If studios adopted the features above, then downloads would begin competing directly with DVDs... but BETTER... they would represent high profits and the future of media. Instead, we all get to go through years of pretending we don't know what's happening. Oh joy.

~ CB

 

[smilinmonki666]

You've got a valid point CleverBoy. If iTunes made it available in 5.1 like the xBox 360 market place, then yes. It would out sell other formats, but only as a rental. One thing we've gotta look at is that they are comparing rentals to sales. Surely thats not a valid comparison? Places where you can rent DVD's/ BluRay's & HD-DVD will go down hill just as quick as BlockBuster's are, but then I think Tesco will get in on this idea and you will have Virgin & BT with their boxes, plus the xBox 360 market place, which again, is downloaded and not on demand & in 5.1...

Apple will have to look at this closely. Plus, how long before somone cracks the rental time period, were back with the issue with DVD/ BluRay & HD-DVD copying...

If man made it, man will hack & crack it!