Pricing Digital Movies

Why are downloads as expensive as physical as the same content burned on a silver disc? Anne Thompson of The Hollywood Reporter has a really interesting piece here. And CinemaTech has got the discussion.

The basic question: with downloads you get instant gratification, but otherwise less. Lower video quality, no bonus material, annoying DRM, no physical goods, no artwork and covers and booklets. OK, convenience has it’s price tag attached. But of course digital downloads and physical goods are not on the same level. It’s pure content versus content plus a thing. Something you can touch, collect, show off, present to somebody.

What got some people steaming, was Ben Feingold’s (Sony’s president of worldwide home entertainment) remark on pricing: Currently there is basic parity in the electronic or physical landscape. That’s what makes sense at this particular time.

Comments like price parity is NUTS are of course on track. From a consumer’s perspective, price parity looks greedy and pointless.

But Anne Thompson’s makes an important point: The reality is that the studios are so invested in such brick-and-mortar video retailers as Wal-Mart and Best Buy and Target that they can’t afford to alienate them. The big box retailers represent about 60% of the studios’ $24.5 billion in annual DVD revenue. At the recent quarterly meeting at Wal-Mart headquarters in Bentonville, Ark., where the studios bid for positioning in their stores, Wal-Mart made clear to the assembled studio home video reps, according to sources, that it does not view digital downloading favorably. And the prospect of Wal-Mart ordering fewer copies of just a title or two sends a chill into studio hearts.

The Grinch lives in Bentonville, Ark.

Via CinemaTech

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