By Richard Menta 2/5/07
According to Disney CEO Bob Iger the sales of the company's digital movies on iTunes had a relatively strong start. In the first three months they were available on iTunes Disney movies sold 1.3 million digital copies. Iger said that Pirates of the Carribean and Cars, two of Disney's biggest box office successes of late, were the best sellers during the period.
But possibly the most interesting news is Iger's comment that all of the Disney titles available on iTunes also did well in DVD sales. Iger told the Financial Times that digital sales did not adversely affect sales of the physical medium product, easing concerns by several retailers like WalMart and Target that cheaper iTunes availability is canabalizing DVD sales.
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The iTunes-Disney pairing shows that there is indeed an audience for digital movie downloads, albeit a modest one so far. Still, distribution costs are almost nothing compared to physical product. The fact that physical product continues to sell unchanged validates Iger's observation that iTunes is expanding the market, not canabalizing it. Arguably, this fact was already proved during each of the last several years as box office and DVD sales continue to set new records, while tens-of-millions of Americans trade movies online for free.
Iger feels these results will draw more studios to iTunes. But Paramount, the only other studio selling movies on iTunes, only offers older back content fare on the service. None of their recent releases are available. Furthermore, at $14.99 for a recent release ($9.99 for back catalog), the overall dollar figure brought in during this three-month stretch is smaller than what a popular studio picture can bring in during a single week.
With these types of returns the other studios feel they can afford to take a wait and see attitude with iTunes. The studios are also wary of Apple gaining too much control of their content as it has the record industry. Apple's market dominance in paid music and movie downloads allows the company to strongly influence market pricing and terms of purchase. Such influence rubs media execs the wrong way and this is most likely the reason why Paramount only offers back catalog movies as the risks are lower for content that has already played on broadcast TV.
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