12/03/2007, 3:10pm, EST
Monday, December 3rdAnalyst: Apple to raise iTunes movie prices
Apple has made a rare concession to movie studios and will raise the average selling price of a movie at the iTunes Store in a bid to gain extra support for its service, according to a report (membership required) by Pali Research analyst Richard Greenfield. The company will reportedly boost the average wholesale price of a movie to $15, only $3 below the average selling price of a DVD. This is a necessary condition to lure in studios such as 20th Century Fox that have been hesitant to embrace iTunes in the past, Greenfield says. Fox in particular would roll out both its latest titles and earlier movies in exchange for the deal.
The move is also meant to secure support for iTunes on enhanced DVDs that include a portable, pre-encoded version of the video, the researcher writes. While Live Free or Die Hard comes in a special version with mobile video and Universal will release the latest Harry Potter movie this month with a similar feature, Apple is reportedly intent on guaranteeing that these videos work on its own devices, such as the Apple TV and iPod. These discs often command a premium between $3 or $4, at least some of which would go towards Apple.
The price increase may be partly involuntary, according to the claim. While never formally stated, previous indications have suggested that studios are under pressure from retailers such as Wal-Mart. Stores that rely heavily on sales of physical copies have allegedly threatened to end or reduce support for studios if video stores like iTunes significantly undercut their business.
Whether Apple will alter video quality or add the special features often missing from its iTunes video purchases has not been mentioned in the Pali Research report.
Filed under: iPod, Apple
Other story tags: iTunes, Wal-Mart, DVD, online video
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Excuse me, but isn't iTunes just using WalMart's business model of underpricing most retailers to make a sale? How can WalMart get bent out of shape at having it done to them? Strange world. As long as I can rent a DVD for $4 and burn a copy, this remains a non-issue.
Clueless studios run by morons force Apple to raise prices on movies; Apple goes along with it; sales of movies on iTunes drop; same studios turn around and point how this demonstrates how online is a bad business model.
If you're going to be providing an inferior format online, I expect to pay less, not more, for the content. Of course, these kind of brilliant decisions are being made by executives that never bought a single movie in their lives.
In other news - NBC/Universal gets dumped from iTunes, as a result of being (surprise) idiots - just in time for when the writer's strike will result in a lack of original programing on TV, and people will turn to online content to bridge their gap of entertainment.
All they get from NBC/Universal is 'Hulu', and their direct view service -- which does not work with iPods (which used to be their number 1 customer demographic. Brilliant!
And these people are actually drawing a salary for making these kind of decisions?
no, they are getting paid to be as greedy as possible, regardless of the consequences.
On the other hand, I'll pay comparable prices for digital rental movies, since I can download on demand. The big drawback to Amazon Unbox rentals is that you only have 24 hours to watch the movie once you start...
Now, I might pay extra for physical DVD, that has a version of the movie that I can watch on multiple units, not just the iPod/Zune/etc....multiple units!!!! I don't want to be tied to any particular company.
I find it fascinating that folks buy downloadable movies in the first place. I tried this a couple of times; once on my old Xbox 360 and once as a DRMed nightmare of a download of the Death Note anime. In both cases I cannot burn a disc so I can back it up or watch it in other DVD players, so I would expect to pay much less than the price of a physical product.
Buy movies with HD content. Burn with a built-in burner in AppleTV 2.0 or your Mac. Will cost more than current movie prices. Oh well.