Disney Sells 2 Million Movies on Apple iTunes

[crazy4wdw]

Disney Sells 2 Million Movies on Apple iTunes

Business 2.0 - By Philip Elmer-DeWitt

May 09, 2007

Disney Sells 2 Million Movies on Apple iTunes

If Steve Jobs' presence on Disney's (DIS) board helped persuade Robert Iger to risk front loading Disney content on the iTunes Music Store, the gamble seems to have paid off in spades.

In its quarterly earnings report and call, the company told analysts today that it has sold 2 million movies and 23.7 million TV shows through Jobs' store.

Most of Hollywood resisted when Apple (AAPL) first made digital movies available for download. But not Disney. It was on board from the start and currently has 70 titles on sale, from The Little Mermaid to Confessions of a Teenage Drama Queen. Ars Technica's analysis of the potency of the format is particularly sharp:

During its earnings call, Iger said ... Mickey and Company were quite pleased with Apple's movie pricing and the margins they were seeing. Although the pricing of a movie on the iTunes store is lower that that of a physical DVD, Disney is making about the same amount of money on each movie it sells there.

"There are cost of goods that are factored out of the iTunes sale, which allows them to sell at a lower price," Iger said during the earnings call. "That's their decision and it allows us to take revenue out that is equal to, in terms of a per-click sale, store sales."

That's the piece that the other major studios... feared when it comes to Apple's movie prices—$12.99 or $14.99 for new films and $9.99 for older content—on the iTunes Store. As a result, most of them have eschewed the iTunes Store in favor of Wal-Mart's recently launched download store. ...

Of course, Wal-Mart has one thing in common with most of the studios: they all share an interest in shoring up traditional DVD sales. The studios fear a price war between DVD and movie downloads will take a bite out of their margins, while Wal-Mart is concerned about losing DVD sales to an online vendor. Disney is virtually alone among the major studios in realizing that sales are the important thing and that there's significant money to be made on digital downloads if you can offer compelling value to the customer.

 

[djm99]

It really bothers me that itunes dominates the downloading video market. Although there are many much more efficient (and legal) ways to download music, the Video downloading just haven't caught on to any other company. I'm hoping Disney extends its movie offerings to Zen, Yahoo, or Urge soon. BTW, I owned an iPod Video (60G) sold it on eBay for a Zen Creative Video M (60G) which is much less complicated w/ more features - IMO.