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Does Apple lose money for every film sold?

febrero 8, 2020

Apple loses money for every film sold among those released simultaneously with DVDs. This is the thesis supported by the Wall Street Journal.

According to the financial newspaper Cupertino, he agreed to pay substantially more for each film than the price charged to customers. Translated into practice, Apple would pay each film $ 16 to collect just $ 14.99. The reason for a service that loses money lies in two essential factors: the need to be accredited as the main interlocutor of the studios in the sector of digitization of entertainment also with regard to films and the prospect of a recovery of the money lost on the service on the profits generated hardware.

The logic is not new in the field of the entertainment industry. Sony and Microsoft go this way in the opposite direction, losing money (a lot of money) on each console sold and then recovering on the software that is used on them and on the programming tools. In the case of Apple, Mac, iPods, Apple TVs, iPhones, or all those media used to watch the films on which Apple loses money, should generate profits. On the other hand, Apple has already shown that it can do it when it launched iTunes for digital music; numerous observers have shown that even if Apple had lost money on the store (which in reality did not happen) it would have earned many, many more by selling the iPod thanks to the store.

What the Wall Street Journal claims appears reliable also in light of what has happened in recent months. Wal-Mart had threatened not to boycott those film companies that had allowed Apple to sell films at a price lower than what is practiced in its stores. The $ 14.99 is definitely lower than the wholesale price of DVDs, while $ 16 is roughly the cost charged at Wal-Mart. In this way, the film companies would not dissatisfy the retail giant that in the USA produces about 40% of the DVD turnover.

If Apple hopes to be successful with its strategy, the film companies, of course, have it right away, at least from an economic point of view. Obviously, a digital film has much lower living costs than a DVD; unlike a disk it has no support, printing, paper, packaging. You don't pay for transportation and distribution, nor do you have the problem of warehouses and returns. Result: of the $ 16 paid, presumably, by Apple, according to some calculations, they go into the pocket of the majors $ 11; from a DVD sold for the same price you will earn about $ 3. This is the explicit reason why Warner decided to launch the digital films on the same day of the DVD release; against a 3/5% reduction in the number of DVDs rented, the gain increases by 370%

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