updated 03:10 pm EST, Mon December 3, 2007
iTunes Movie Price Claim
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.