This Is Just Stupid: Digital HD Downloads Still Cost More Than DVDs

Yesterday, Apple announced that shortly they will start selling HD quality movies for download from the iTunes store. While it sounds like a great idea, the business model is completely flawed and clearly the movie studios are living in a bubble. As I have mentioned in the past, how on earth can the studios continue to charge more for a digital download than a physical DVD?

I really don't get the thinking from the studios when they think they can make a business model out of charging $19.99 to download Quantum of Solace from iTunes when the average price to buy the physical DVD, from retailers like Amazon, is $16.99.

 

With digital downloads, studios don't have to pay to produce the DVD or any of the packaging. The bandwidth cost to download a two hour movie costs pennies and online promotion of digital content is a lot less expensive than other forms of marketing. Yet even with all those savings, the studios charge more for digital downloads. While one could say this is an iTunes issue, it's not. Looking at CinemaNow or any of the other online movie services and you'll see that digital movies cost between $3-$5 more than buying the actual DVD.

Why is no one questioning this? How can this be the future business model for the online consumption of entertainment? Many of us have waited a long time to get to the point we are at today with broadband connections capable of getting movies and having multiple devices to play them back on. Yet even with all the progress we have made, studios will keep the business models from being successful. Part of me really wants to see all the studios fail just so they learn their lesson. I know it would not be good for the online video industry but studios continue to run their business on one simple principle - greed.

Comments

[solrydr]

ID have to agree with only the few above. This is America and it is about capitalism. If someone wants to sell something at a price they see fit then so be it. The value of the item is generally set if it is consistently purchased at that value. This is how ebay works. If you say put an iphone on ebay and is in average to mint condition your going to get the going cost. Now if you spruce up your ad there on ebay for this phone, make it look pretty and with accessories it will go up more although you generally havent spent too much more money. Just effort. Which in a companies eyes this qualifies as added expense therefore charging more. As the demand for the item goes down possibly the price will as well. However if the supply is greater than the demand. guess what happens. price drop. Now using itunes as an example for downloading/selling content in sd and hd formats. Has anyone thought about the costs they have to put forward in order to offer these things. Think staff, servers, legal matters, copyrights, advertising, concept design, etc etc plus a few more we probably cant even fathom. As a retailer of these items they do have to make a profit in order to continue doing business and has the business in this area picks up the price will drop. Cds by themselves generally cost $20 when first released but for the most part $9.99 is the going rate now including downloaded albums. Only time will tell when the price drops and just use history as the example. Except for a car.lol

[Anonymous]

well, they'd better start making it affordable coz until they do i will stay on the cutting edge and get my 1080p movies off the newsgroups for free. it isn't big, it isn't clever, but its free, easy and convenient.

[ryan]

quote from christopher - "something is worth what people are willing to pay for it."

I agree, however, based on the sales difference between digital and physical; people are NOT willing to pay for this so called convenience. I believe it's the consumer's decision to decide whether something is convenient for them. Don't say that is an unfair example because you have given plenty of unfair examples. The point is I simply won't buy the movie digitally or a physical copy due to there greed. Dan was simply recognizing the stupidity of these companies and the possible reason to some of their profit losses.

With that said, you make some decent points but they simply don't justify the prices they are charging for digital sales.

This isn't brain science or rocket surgery :)