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Disney: iTunes movie sales prove potency of format, pricing

Disney earned $931 million during the first quarter of 2007 on revenues of $8.07 billion. Profits were up from $733 million during the first quarter of 2006 even though revenues rose only $40 million dollars in the same period. Disney recently redesigned its web site and overhauled its web strategy and, as a result, page views are up 10%. Disney sees over 100 million videos per week streamed to 6 million unique broadband visitors per month. Nevertheless, Disney CEO Robert Iger believes that not hooking up with other content-distribution partners would be short-sighted: "We're looking for deals that allow us the flexibility to go directly to the consumer as well as through a third party. We're not entering into any exclusive deals."

In digital video sales, Disney thrived particularly well thanks to being the first to provide the iTunes with content when the online store began offering movies. Disney movies on iTunes have passed the 2 million mark while TV shows have topped the 23 million mark. Although the pricing of a movie on the iTunes store is lower than that of a physical DVD, Disney is making about the same amount of money on each movie it sells there. "There are cost of goods that are factored out of the iTunes sale, which allows them to sell at a lower price. That's their decision and it allows us to take revenue out that is equal to, in terms of a per-click sale, store sales," said Iger.

Apple's movie prices, $12.99 or $14.99 for new films and $9.99 for older content, are not something other major studios like and have therefore chose Wal-Mart's recently launched download store. Even though Wal-Mart's digital reach falls far short of Apple's, the studios prefer Wal-Mart's DVD-style pricing for downloads: $9.99 to $19.98 for new releases.

News source: Ars Technica

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