iTunes To Lose Money On Same Day As DVD Deal

iTunes To Lose Money On Same Day As DVD Deal

Saturday, May 03, 2008 - by Chad Weirick
Apple recently came to an agreement with a group of film studios including the 6 largest that would enable the Cupertino firm to release movies via iTunes the same day that they are available on DVD.   The problem is that Apple might actually be taking a loss on them for the short term:

“Apple said that starting this week, iTunes customers will be able to purchase newly released movies for $14.99, while most catalog titles are $9.99.

The Wall Street Journal reported that Apple is paying the studios nearly $16 for each sale, but a source close to the negotiations told CNET News.com that Apple is paying closer to $15.50 than it is $16.”

It’s not unheard of for companies to take a loss on new products, especially if they think they can eventually charge more and/or negotiate cheaper rates from suppliers.
Via: CNet | News Archive | Tags: EA, itunes
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By ice_73 on May 3, 2008

this is kind of the same idea with console gaming. you take a loss on the console for the short term. then you make money via reduced hardware costs, and licensing.

its good to make more options to buy, one thing that would actually make the itunes dvd deal is if you download the actual dvd (with all those nice extras).  15 bucks for a new good dvd sounds good, even though most new dvds can be bought for around 15 the day they come out, sometimes even less. i personally cant picture buying a video online for the same price as the dvd when the dvd has the extra content and wont have drm to worry about. 

By willardcw4 on May 3, 2008

I think, in the long run, apple will still make money off of it...

ice_73:
this is kind of the same idea with console gaming. you take a loss on the console for the short term. then you make money via reduced hardware costs, and licensing.

Agreed!

By higgamo on May 3, 2008

 yea they it not much of a hit when everyone one getting ipods and can now get video's on it with out any work. and this can help with the sells of apple tv.

By coolzonestefan on May 4, 2008

Sony experienced the same thing when they started to sell PS3's 

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