Apple Day-And-Date Movies: Loss Leader For the Company; Higher Profits For Studios
This story was written by Rafat Ali.
As we wrote last night, Apple (NSDQ: AAPL) is launching its day and date movie release service..previously movies from most studios hadn't been available on iTunes until weeks after their DVD releases. Other competing services like CinemaNow, Movielink and Amazon (NSDQ: AMZN) Unbox have some deals for day-and-date, but this is the more expansive deal.
The interesting part: new movies will cost $14.99 to the consumer, even though the wholesale price paid by Apple to studios will be $16 per new movie, thus making it a loss leader for Apple, at least for now. Not that surprising considering that's what Apple's philosophy has been from the beginning: sell more devices and content is the glue to keep coming back and upgrading. Though studios make less gross revenues with digital, they will end up with a bigger profit for each sale...savings will come from the elimination of expenses like distribution and returns, this WSJ story says. More details on the service in Apple's official release.
By Rafat Ali