Target backs off in dispute with Disney over Apple iTunes Store movie pricing

“Discount retailer Target backed off plans to pull in-store promotions of products from Walt Disney after Disney threatened not to ship DVDs of the hit movie ‘Pirates of the Caribbean: Dead Man’s Chest,’ a person familiar with the situation said Friday,” Gary Gentile reports for The Associated Press.

“The companies are at odds over The Walt Disney Co.’s decision to sell movies online through Apple Computer Co.’s iTunes store for less than it charges Target and other retailers,” Gentile reports. “The dispute is part of a feud between a number of major retailers and Hollywood studios over online movie sales.”

“Target Corp. stores had removed signs promoting the DVD of the Disney-Pixar animated film “Cars” and other Disney products, according to a person familiar with the situation who was not authorized to speak for either company,” Gentile reports. “The two sides are discussing their differences after resolving the standoff, the person said.”

“Studios selling digital copies of films for less than the wholesale price of DVDs rankles retailers, who see Internet distribution of films as a threat to their business and have reminded studios that DVD sales provide the majority of profit for most films,” Gentile reports. “Studios counter that digital versions of films should be less expensive because they are lower quality and typically do not contain the kinds of extra features included on DVDs.”

Gentile reports, “Disney so far is the only studio offering films over iTunes, which sets its own price for all titles.”

Full article here.
Since there is nothing physical, no packaging, no shipping, etc., it’s only logical that iTunes Store movie downloads should cost less than physical media sold in places like Target.

Related articles:
Disney sells nearly 500,000 movies via Apple’s iTunes Store in less than two months – November 09, 2006
Fox movies, including ‘Star Wars’ franchise, coming soon to Apple’s iTunes Store? – November 08, 2006
Analyst: two major studios seen joining Apple’s iTunes Store – October 10, 2006
Target complains to studios about iTunes Store movie download prices – October 09, 2006
Report: Apple and Wal-Mart in discussions over iTunes Store alliance – September 29, 2006
Wal-Mart: we’re not fighting iTunes Store movie downloads – September 23, 2006
Wal-Mart threatens retaliation against Hollywood studios if they sell movies via Apple’s iTunes – September 22, 2006
Disney’s remarkable 1st week iTunes movies sales should have studios clambering aboard Apple train – September 20, 2006
Disney sells 125,000 movie downloads via Apple’s iTunes Store in first week – September 19, 2006
Apple debuts iTunes 7 – September 12, 2006
Wal-Mart not happy with looming threat of Apple iTunes movie downloads – August 31, 2006

18 Comments

  1. This would be a classic case of “shooting themselves in the foot”. Think about it, the number of people who would download a movie file are miniscule compared to those who would walk into a store and purchase a DVD. The big chains have nothing to fear from this “competition”. A DVD has higher resolution and more to offer in terms of extras, essentially they appeal to different audiences.

  2. The head of Target in 1998-99 made the statement that the Internet was just a passing fad. They were finally forced to go online as it turned out (as we know) it wasn’t. Looks like the new Target leaders are no more enlightened here seven years later.

  3. Target and Wal-Mart don’t stand a chance in this one. The handwriting is on the wall, downloaded movies is where the future is, they can’t stop the future. So, even if they did stop selling Disney DVDs, they’d eventually have to come crawling back somewhere down the road if they where to want any piece of the future’s pie. Good move by Target at least to not bite the hand that feeds them.

  4. In addition to the lack of physical material costs as mentioned above, Apple’s movie downloads are lower quality than a physical DVD, and there are none of the extra features of a DVD.

    How can anyone at Target or Walmart argue that these two versions of a product should be priced the same? Apple is offering a stripped down version of what Disney is selling via the brick and mortar stores. Consumers are being given a choice of convenience (apple) vs better everything else (stores) at a similar price. For now Target, et al, have the advantage in my opinion. Time and technology will change the formula, but Target doesn’t have a credible argument at this time.

    PS– Target is also the company that does not allow The Salvation Army to place bell-ringers on its property at Christmas time. There managment are cretins.

  5. Thanks for th evideo link. I didn’t know that Zune only ‘squirted’ music that the studios allowed! It seems M$ doesn’t alk about that in all their ‘social’ commercials.

    What a big brown pile of steaming ZUNE!

    Now back to your regular thread:
    Target et al are right to be worried about downloads being cheaper – their entire business is predicated on the standard US consumer falling for crap at a lower price. In the US, quality is always secondary to price.

  6. Our DVR f*cked up and missed an episode of CSI (which my wife just looooooves), so I downloaded it the next day and we watched it last night.

    I tell you – the quality was a lot more impressive than I thought it would be. On my flat-screen CRT TV, it looked pretty effing great. I was impressed. I for one am looking forward to iTV, or whatever it’ll be called.

  7. It’s true …
    the download version lacks the content of the DVD
    the download version lacks some of the DVD’s ‘fidelity’
    HOWEVER
    it’s also true that an iTunes sale means no sale for Target, or WalMart, or Johnny’s Movie Palace.

    Target has a right to be annoyed that Disney is selling a lower quality version at a lower price and sucking away sales. Now they have to do ‘product differentiation’ advertising – “40 minutes of additional content!”, “suitable for HDTV and 5.1!”.

  8. “Target has a right to be annoyed that Disney is selling a lower quality version at a lower price and sucking away sales. Now they have to do ‘product differentiation’ advertising – “40 minutes of additional content!”, “suitable for HDTV and 5.1!”.

    No, they don’t.

    At least , not any more than they would be annoyed at Walmart, or any place selling DVDs.

    And it could be claimed that ITMS is not just another competotor since it’s not the same product. Yeah, the content is the same, but the products (DVD vs. download) are completely different.

  9. I don’t purchase films, either via download or on physical media. I watch them on HBO, Showtime, and Starz networks. With InDemand I can watch anything when I feel like it. All the DVDs I do own are freebies or gifts (or porn).

  10. SCREW Target, Walmart and even iTunes!

    Netflix!! I can watch a movie a day for $20 a month.

    $20/30=.66¢ a frigging movie AND I can rip it too, if I wanted.

    Now that’s something to be pissed about.

    The retailers and studios will have their chance to gouge customers with BlueRay High Definition DVD titles to place on their shiny new Playstation 3’s.

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