New Unbox service cutting margins pretty thin
When it comes to getting the online movie biz going, the key sticking point remains pricing.Amazon.com launched a digital moviestore, dubbed Amazon Unbox, on Sept. 7 with content from nearly every major studio. Apple is set to do the same on Sept. 12, but it will have movies from only one studio: Disney. Why the disparity? Amazon is apparently willing to go along with the studios’ wishes on pricing, paying wholesale rates equivalent to DVDs so as not to upset homevid retailers, who still generate billions per year for Hollywood even though sales are slowing. Amazon will cut its margins pretty thin, selling titles for as low as $8 and as high as $20 a download — even though the studios save several dollars per unit in manufacturing and shipping costs, and despite the fact that consumers who aren’t tech savvy can’t watch the files on a TV. Apple CEO Steve Jobs revolutionized the music biz by selling songs his way and, according to those who have dealt with him, thinks he can do the same for movies. But his effort to cut prices for digital movies — iTunes is expected to price its pic offerings at $9.99 for classics and $14.99 for new releases — hasn’t found many takers in Hollywood. Disney is expected to be the only studio onboard when iTunes begins selling movies — a deal sure to raise eyebrows, since Jobs is the largest individual shareholder in Disney thanks to the Pixar acquisition. But if iTunes’ movie sales far outpace Amazon and other competitors, the other major studios will likely come onboard. It may be the first big test of whether the studios can forge their own way online or have to be dragged there by techies.
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