Silicon Alley Insider noted that Disney CEO Bob Iger announced some numbers for video and movie sales via iTunes since the 2006 launch. With about 4 million movies delivered via the store, and another 40 to 50 million video/TV show sales, that's a lot of bits. SAI isn't impressed, though; writer Peter Kafka runs the math and comes up with a revenue number of about $123 million -- not a blip on the screen for the conglomerate that shelled out $7.4 billion for a renegade animation studio with a notoriously idiosyncratic part-time CEO.What Kafka does acknowledge, and what makes digital delivery via iTunes worth Disney's while (other than the obvious "Steve told us to do it"), is that this is incremental revenue that Disney probably wouldn't have captured otherwise -- Netflix or Blockbuster would have gotten the rentals, and relatively few DVDs would have been purchased to make up the digital slack. What did the revenue numbers look like in the first years of the VCR, DVD or cable pay-per-view offerings? Probably also on the less-substantial side, and yet those businesses are gigantic today.
Reader Comments (Page 1 of 1)
3-13-2008 @ 12:14PM
Robert Floyd said...
What's important about this number is that it's likely almost pure profit. The importance of digital downloads for the studios is that it's a cash cow, especially with someone else (iTMS) picking up the infrastructure costs.
As soon as they realize how they can monetize their back catalog (there are lots of us who would be willing to pay $5 for pre-1970 titles), I hope to see an explosion of older movies making their way to the download world.
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3-13-2008 @ 1:44PM
Dale said...
Well said. The cost of encoding their films is pennies by comparison, especially when incorporated into encoding costs for DVD and high definition that they would have had anyway.
Here's hoping for a ton more classic Touchstone flicks.