“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.
Related article:
Disney sells 125,000 movie downloads via Apple’s iTunes Store in first week – September 19, 2006
Apple – please think about the European’s. Here i’m waiting for Movie and Show-downloads for Spain. Even in English!!!
Hey MacCracker!
if you have a sceond, how about more exatct procedure for blocking roll-over pop-ups for non terminal users. It didn’t work – cntrl x,y <return> just brought up another menu with no choices that made sense me to someone like me.
Help appreciated!
appropriate magic word, by the way – “couldnt”
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English Prof: “The built-in dictionary in Mac OS X is not the only dictionary in the world.”
I said it was? You must be a tough teacher.
Actually, I was using dictionary.com but point taken. The dictionary in OS X isn’t broad enough.
And opie, I have just enough. Does it bother you?
“Puppet Master” — Music is the wrong analogy. A better one is what happened with the iTMS and TV shows. That also started with Disney only, in the form of ABC. As the service proved to be a cash cow, the other networks came a-running. There were some long holdouts, but even they eventually came aboard. If sales continue to be healthy, and the studios can’t find equivalent success elsewhere, they will join iTunes.
maths wrote:
“where are they getting $50 million?
125,000 x $15 (assuming ALL movies were the $14.99 version is only $1.875 million
am i missing something”
They said that they have made $1 million so far (first week), and are projecting $50 million in a one year time frame.
Apple could market summer pants with a custom built-in pocket for the video iPod and call them Pixar Shorts.
Juxtaposed against Apple and Disney’s success is Amazon and their partners. However, for the moment we have no idea how successful Amazon was in their first week. What we should be asking ourselves is, what would it mean if Amazon fails to live up to everyone’s expectations? I mean, one would think they could easily surpass Disney by shear volume alone, right?
Personally, I believe it was premature for Amazon to delve into the digital download service. Amazon has opened Pandora’s box and given the nature of managements wanton desire to go down with the ship could easily make a mess of UnBox and lead to a period of denial in a face-saving measure to cover up their foray into unknown landscape poorly illuminated by Microsoft, resulting in a lot of finger pointing.
That Amazon’s business model is extremely effective at moving merchandise is irrefutable. Since 1995, they’ve worked hard to create an internet presence built on integrity, security, and shopping ease. They’ve made a fortune for them and their partners so it was a no-brainer for the studios to want to align themselves with a winner.
From a business standpoint this was a no-brainer for Amazon and its partners, but after reading some of the first impressions from those who have sampled the service, it begs to question how thoroughly Amazon vetted the computer process. Did they conduct a Beta-like process before unleashing the UnBox Player? I’ve read the UnBox Player is buggy and intermittent and that it’s performance depends heavily on the caliber of computer on which it’s running. Isn’t the caliber of computer a major factor in determining not only the target market but the size of that market?
Unfortunately for Amazon, and anyone else who would enter the digital content download service, they are entering a brave new world where the technological boundaries have yet to be pushed beyond the routine day-to-day online business transactions.
Unlike Amazon, Apple Computer has had five, perhaps seven years, to perfect the digital content download process and has built a rock-solid foundation as evidenced by their market share for online music sales. Why in the world would anyone try to compete with that record of success unless they had something truly equal to the task?
There is a lot at stake here. Billions of dollars. Integrity. Business acumen.
The list of studios who aligned with Amazon is quite impressive. In a general sense, it would seem “9 out of 10” studios signed on with Amazon and it makes one wonder whether greed was an underlying factor?
Amazon will unplug UnBox in the first few months of 2007.
Lanzarote:
I *promise* you it’s not Apple that’s bottle-necking international sales of any of iTunes media content. It’s the labels, studios, MPAA, RIAA, etc. who are too flipping near-sighted to make certain offerings.
Apple has nothing to lose by offering international downloads and more content.
unconfirmed sources say Amazon sold 23,000 with 11,000 asking for their money back. oochhh
screw the europleans. if they want the itunes movies, move to america.
god bless america.
“the europleans”
The word is “europlebeians.”
Guys..I am from europe so a bit more polite please: there are assholes everywhere. Besides…unless your native indian all other americains have european or african ancestors!
Besides, #2, if the sales in Europe would go to zero (0) Apple would have some difficulties.
And yes…my english has flaws, but go ahead…write 4 sentences in perfect dutch and I shut up.
Greetings,
MacB, Netherlands….die hard macuser since the late 80!
MDN: keep up the good work!
Anti-European comments are submitted just to push your buttons, so ignore them. That said, I don’t think Apple is too happy with the French or the Nordic countries, which seemingly are picking out Apple to target because they are successful.
Steve Jobs did say that Apple hoped to get international sales by 2007. Disney’s Iger also said yesterday that he’s trying to clear distribution rights for many more movies as there are lots of contracts to plow through.
Finally, it seems plausible that Disney gets about 70% of the revenues, or $7 per 9.99 sale and $10.5 per $14 sale. Guessing as to what the number of sales at 10 vs 15, it would yield around a million for 125k in sales.
“Amazon.com got the studio’s onboard with the promise it won’t affect the DVD download buisness, Steve Jobs got Disney only because he’s the majority shareholder.”
I think the cause-and-effect is wrong. Steve Jobs sold Pixar to Disney only because Disney has a similar vision to Apple of the future of entertainment content sales. Disney has been the most aggressive with TV shows, both through iTunes and on its own site.
Iger recognizes the need to make Disney content available in many different forms and in a way that people can easily access it. And if the content is good, people will pay.
Jobs being the largest shareholder of Disney also means that Jobs’ own wealth is on the line. (Jobs has more of his wealth in Disney than in Apple.) It gives Iger confidence that Jobs would not screw Disney to the benefit of Apple.
MacB: My response was just sarcasm. Too dry?
(I like my cheese to be European.)
Ama-who?
Well Ampar..
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I wasnt’ too serious either…
European cheese is good….among others!
I like my computer Amercain…Californian that is, although it seems it’s made by Chinese…
MacB
Hey MacB and Ampar, will you guys cut it out… or go get a room.
i wrote the same topic in my blog too;
Check out my site at: http://www.moviedisney.com/
10x for it.
We can share this article with our friends. Especially with Maths lovers.
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