Source : http://www.news.comLast week, the announcement of a large partnership between Apple and the leading Hollywood studios created a lot of buzz. Indeed, the iTunes Store in USA will offer movies on the same day they come out to DVD. The price for such movie download from the iTunes Store will be around 14.99 USD for new movies and only 9.99 USD for movies already available as DVDs. But the price of 14.99 USD is reported to be already lower than the price paid by distributors to the studio for DVD-based version, as it is rumored to be around 15.5 to 16 USD.
So, it seems that Apple is ready to cut its margins or even lose money in order to make its online video store launch and business model a success as it already happened with the online music store. Despite investment and agreements, numbers of movie downloads did not really rocket up on the iTS, and beside some price consideration, the overall low broadband internet access for consumers in USA might well be the true limiting factors, and apple should rather quickly expand such online video offers on the iTS to countries where average internet speed ranges from 15 to 60 Mb/s.
Such low prices might also illustrate the current strategy of the Hollywood Studios willing to collaborate with Apple, without repeating the same mistake than Music majors: do not underestimate Apple.
[translation by Linathael]
