Blog Post

Why Warner Bros. Bypassed iTunes With App Editions

Warner Bros.’ intent to distribute movies as standalone apps packed with all sorts of content extras may seem like just a high-end treat for movie buffs. But it’s actually the wrong solution to a problem playing out on a global scale.

At first, the announcement of the “App Edition” releases of The Dark Knight and Inception for iPad/iPhone/iPod touch seems a bit odd: What’s the point of that kind of distribution strategy when it makes an end run around iTunes? And iTunes has tried mightily to match DVD players’ ability to provide bonus materials.

But the justification for App Editions is the limited global footprint of movie download stores on iTunes. It’s no coincidence that the apps will be released in over 30 countries with just as many different subtitle options. Rather than wait for iTunes to catch up, Warner Bros. (NYSE: TWX) wants to reach those markets ASAP.

No wonder considering that many of the same markets where App Editions will be released are hotbed for film piracy. Just yesterday the International Intellectual Property Alliance released its annual “Special 301” review pinpointing the dozens of countries that either provide inadequacy copyright protection or “do not afford creators with adequate market access.” The likes of China and Russia are both App Edition markets and IIPA targets.

So problem solved, right? Pirates lay down their weapons, download their apps and everyone lives happily ever after?

Not quite. Don’t be fooled by the fact the app is free; to actually download the movie in the U.S. costs about $10 and the price is even higher in other markets. That still may seem like a bargain considering the app comes with trivia, games, social-media integration and other extras. But why go into markets whose rampant piracy problems prove they are prone to sticker shock with overstuffed, overpriced products?

The fact that Warner Bros. sees fit to make App Editions download-to-own is a manifestation of a Hollywood mentality that studios must maximize revenue opportunities at all costs. A cheaper rental option would clearly be a much more viable option, but there is such pressure to compensate for the decline of DVD sales that there’s no resisting the urge to charge through the nose even when it doesn’t make sense.

Warner Bros. has closely studied the patterns of piracy on a global scale. Meet those markets at a price that’s realistic or the problems in those territories will just continue to worsen.

UPDATE: Thomas Gewecke, president of Warner Bros. Digital Distribution, reached out to clarify that the studio’s intent is not to “bypass” iTunes, but supplement it in the interest of growing the marketplace for legitimate film distribution. “We’re trying to create great products with the tools available on each of Apple’s platforms,” he noted.

Check out this video demo of the App Edition:

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