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Exclusive: Movie Downloads on iTunes By Mid-September


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August 31, 2006

Exclusive: Movie Downloads on iTunes By Mid-September

Arik Hesseldahl

Coming soon to a Mac or PC near you: Movies on iTunes. My BusinessWeek colleague Ron Grover has exclusive details about how how Wal-Mart, as the largest seller of DVDs -- it sells about 40% of DVDs produced -- is unhappy at the prospect of Hollywood studios doing business with Apple and iTunes. But here's the best part, and a detail you won't see anywhere else: The announcement is expected by mid-September, with prices of $14.99 for new releases and $9.99 for older movies.

I would have to guess is that there would have to be a new hardware product to go with such an announcement too, wouldn't you? Grover says says a "wider screen" iPod is on the way as well.

So unhappy is Wal-Mart at the prospect of all this that its demanding lower wholesale prices on DVDs, and Wal-Mart exec David Porter has been "playing the heavy" with Hollywood execs. Additionally, he wants marketing help when Wal-Mart launches its own movie download site later on. Wal-Mart's leverage certainly makes these Hollywood execs nervous.

Naturally this has studio execs spooked, and is irritating Steve Jobs, Grover reports. Jobs has apparently done some lobbying of his own around Hollywood, and is said to have personally called Wal-Mart honcho H. Lee Scott to express concerns. Wal-Mart also happens to sell an awful lot of iPods and Macs. Read all about it here.

01:58 PM

iPod and iTunes

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Can you ask your colleague, Grover, if the wholesale price of $14 is correct? It seems mighty high, considering the retail price is $14.99, leaving 99 cents for Apple or any other on-line purveyor. That's not a whole lot when you consider bandwidth costs for a song is probably in the neighborhood of 10 cents or more. A movie file is going to be about 500x larger, about 2gigs, compared to a song file, so you get my drift, how does a retailer make money on this deal? Perhaps, Google's dark fiber will make it cheaper?

Anyhow, I think Steve's right, movie downloads are going to be less than DVD quality, should be less than in-store physical DVD prices, just like music downloads, at less-than-cd quality are less expensive than physical CDs. Of course, if Steve uses H.264 and anamorphic widescreen, you could argue 640x360 is DVD quality.

Posted by: Ken Cheng at August 31, 2006 10:26 PM

This fits in quite well with the Sept 12th Apple event dontcha think ;) ..

http://ilounge.com/index.php/news/comments/reports-apple-to-hold-special-event-on-september-12th/

Posted by: Ross at September 1, 2006 06:09 AM

Wal-Mart does not sell Macs.

I also wonder how many iPods they sell. I mean now that the shuffle has been discontinued.

Posted by: Ian Eisenberg at September 1, 2006 07:26 AM

"Wal-Mart also happens to sell an awful lot of iPods and Macs."

Since when could you pick a Mac up in Wal-Mart. I don't think so.. you might want to check your facts.

Posted by: one1step1 at September 1, 2006 07:55 AM

Wal-Mart doesn't sell an "awful lot" of Macs. They, in fact, don't sell any at all.

Posted by: Kevin at September 1, 2006 09:33 AM

Since when does walmart sell macs?

Posted by: asdf at September 1, 2006 09:42 AM

Ken,

The bandwidth costs for a song (let's say 4MB) is nowhere NEAR 10c. In fact, it's well less than a penny. I would say 10c for the bandwidth of a movie is closer to accurate.

Posted by: Santos at September 1, 2006 10:04 AM

"you could argue 640x360 is DVD quality."

If you were ignorant and expected that your audience was too.

Posted by: Walter Polovsky at September 1, 2006 02:06 PM

So,

Wal Mart wants Welfare? They want the physical DVD for free? And the company that refuses to advertise in newspapers now wants the movie industry to do their promotion?

Maybe Wal Mart ought ot just ask Apple to do it for them. At least then it would have a ghost of a chance of succeeding.

What a bunch of bozos. Even Apple better pay attention here. What are we going to get for our money? DVD quality? iPod screen quality? Then it better cost a lot less than what's being reported here.

Movies will not sell well until they are priced reasonably. If I don't get a physical DVD for my money, I'm certainly not going to pay more than $9.99. Eventually, Wal Mart will have it in the bin for $5.95 or $11 for two. Why bother buying it at a higher price? $20? It better by HD.

Posted by: Eric at September 1, 2006 09:29 PM

Wal-Mart sells Macs? Bzzt! iPods yes, Macs no.

Posted by: Chris at September 5, 2006 01:22 PM

On upgrading to iTunes 7 if you click the customised install option there is a (non working) option to install an iTunes phone driver........hmmm

Posted by: Will at September 12, 2006 08:33 PM

How will Apple’s ‘iTV’ work?

Wednesday, September 13, 2006 - 12:10 AM EDT

"Thing is, it won't be available until early 2007. When released, it will sell for $299."

What Jobs said is that it would be available first quarter of fiscal 2007 - which is Oct, Nov and Dec 2006 - ie Xmas.

Apple 2006 Year End is Sept 2006.

Posted by: Graham at September 13, 2006 01:11 PM

That is the tough sell on Apple's part I would think. 14.99 for a movie that does not even include all the extras available on a DVD? And on top of that it is not DVD quality. Finally, since this story was broken we have had the special Apple event and there was no new widescreen iPod, just a brighter one with more capacity. I think moving the pricing down a 5.00 increment might make it more attractive to people. 9.99 for a new release and 4.99 for movies of the older variety.

Posted by: Jim Gleeson at September 15, 2006 01:42 AM


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