“At a Goldman Sachs investor conference yesterday, Disney CEO Robert Iger reported that Disney sold 125,000 movie downloads through Apple’s iTunes Store in less than a week, accounting for more than a million dollars in revenue. He further noted that he expects this trend to continue with Disney capturing more than $50 million in revenue from movie downloads in the first year,” Principal Analyst Carl Howe writes for Blackfriars’ Marketing.
“This result is nothing short of remarkable. Remember, that the iTunes Store launched movies with fewer than 75 titles from Disney properties. No loss leaders were offered; every single one of these movies was paid for at prices ranging from $9.99 to $14.99. And while Disney and Apple will share those revenues in some undisclosed split, because this is digital distribution, Disney’s share of that $50 million will largely show up as profit on its income statement,” Howe writes.
What does this mean for movie studios? It means they should:
• Sign with Apple soon or miss out on the movie downloading profit stream
• Stop holding out for variable pricing of movies
“What does this mean for Apple’s competitors? It means that just as in music, Apple is demonstrating that a working system, a compelling store, and a simple business model is a far more powerful business proposition than promises of software, untried stores, and perfect profit optimization,” Howe writes. “If the first week is any indication, Apple may see similar success — and dominance — with movies.”
Full article here.
Disney sells 125,000 movie downloads via Apple’s iTunes Store in first week – September 19, 2006