Apple is losing money on iTunes Movies – Will it pay off?

It was reported late last week that Apple is paying $16.00 for every $14.99 movie that it sells in iTunes under its new deal with major studios like 20th Century Fox, The Walt Disney Studios, Warner Bros., and Paramount Pictures…just to name a few. All the major studios are involved…and now its clear why.

Apple is calling it a “loss leader” and hoping that it will help them finally get ahold of the downloadable movie market that they so desperately want to dominate (I know it can be argued that they already “dominate” in this area – but we all know they want it to expand – and to dominate the expansion).

I can understand the want to do this – but I’m not convinced yet that its going to pay off for them.

What I really can’t figure out, though, is what’s going on in the minds of those pea-brain executives at the studios. Universal, for example, would love nothing more than push iTunes under a bus for music, but they’ve made a deal that could potentially give Apple the same iron grip it has on digital music downloads to digital movie downloads.

My guess is that the different divisions within Universal don’t talk to one another as much as they probably should.

Regardless of what the movie executives are thinking – its pretty clear where Apple’s head is at this point. This same day as DVD release is the most compelling movie download offer that Apple has provided thus far. If they could just get the DVD special features in the downloads somehow I’d be on board. I know lots of you are supportive of the direct download method because its convenient.

My question to you is – will this gamble on Apple’s part pay off?

I still have a hard time justifying $14.99 for a new release, and a lack of HD is even more of a bummer – but getting the content out the same day as the DVD release is a step in the right direction. I’d like to see the price come down by a few dollars (which will never happen as long as Apple is having to pay $16.00 a download), and I’d like to see an HD option (in fact – if they go HD and I can avoid the purchase of a Blu-Ray player – I’m sold – special features or not) – but they are definitely getting closer.

What do you think?

Comments

  1. Love that they are doing this and I do think it will pay off for them, IF the rentals follow. 30-60 days AFTER it hits DVD? Thats crazy. Thats what I’m waiting for. When that hits, we are smooth sailing, apple tv suddenly becomes useful.

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