125,000 and counting..Disney Downloads
Disney CEO Roger Iger did a bit of chest thumping today and said that they sold 125,000 movies for about a million dollars at the iTunes store.That’s is good news for him and Disney, but I wonder how much money is being earned by Apple.
With current file sizes, experts in the content delivery business say that it would cost between $1 to $2 to deliver a movie. In other words, the cost of delivering movies could be as much as $250,000, though given Apple’s size, it might get better pricing. Any guesses/estimates on how the pie is being sliced between content owner, content distributor and delivery network provider. It be great help, for future reference as well.
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10 cents per move.
Lets focus on the emerging trends and teh cash will follow, Apple is crating momentum here changing the way world use to njoy entertainment money at this point is incidental and stock value thingy, if the trend catches up Apple will figure out a way to make money and Apple has already made enuf monies from Disney, remeber Pixar deal :)
Remember, Apple makes almost all it’s music profit from selling iPods, not selling songs. It’ll be the same with movies – video iPods and iTV boxes will bring in the profits.
Three letters: P2P.
Apple is probably happy just selling more video iPods for now but in order for the movie download business to really take off, with healthy competition and price points consumers will embrace(I think Apple has set the standard once again), margins will have to be plumped-up by reduced delivery costs. Its the only variable that can move. Especially as consumers get spoiled by their HD TVs (this is the demographic that buys movies online), they will demand higher quality and HD video bitrates for media they buy, sending file sizes well north of 1GB per flick. Economies of scale dictate that P2P will be called on by movie download services to enable those margins. Look to proven, commercially viable P2P platforms like Kontiki and Pando to play a big role. (Disclosure: I work at Pando)
To directly answer your question Mr. Malik, my best guess is to assume that Disney is walking away with a majority of the pie since at the end of the day, they are the ones toiling away at creating and envisioning the content. It is a given that iTunes has a reputable brand name in its industry and is providing the users with the downloading options and paying for the server costs, but Disney has the dollars to match the downloading services that iTunes provides.
Not only that, but also this was mentioned an article on CIO.com:
“By the end of this year, Disney expects to reap $50 million in movie sales through the iTunes store ‘at no marketing expense to us at all,’ said Robert Iger, chief executive officer (CEO) of Disney” so that sets alarm bells ringing about how hungry for pie Disney is.
..uh, the pricing and distribution schemes will not be over until walmart weighs in and prompts a reaction from netflix and others…until then it’s all posturing as these firms try to see just how far studios will go in a share…imho.
One question to consider is whether MSOs will ignore this as a threat to their future VOD revenues. Granted, I doubt Apple will sell anywhere close to the 45M TV shows they have sold in a year, but even that represents a significant chunk of revenue migrating from TV to broadband sources. Probably keeps a few finance folks awake at nite. :)
Apple’s share is probably marginal; they only make pennies off each iTunes track sold, no reason to suspect it would be much different for movies.
What’s surprising to me is that Apple hasn’t made any moves towards integrating bittorrent support into iTunes to cut down on the bandwidth costs… there was a rumor about that a while back, you’d think they’d have done that prior to selling movies.
Om, who cares? It’s all about the iPods, baby!
I believe the per movie delivery costs listed above are waaay overinflated. It should cost them no more than 5 cents. Actually, I have been running movie sites in the adult industry for 5 years now. My cost to deliver is 3 cents per full movie including storage and tech.