Apple to Lose Money on Same-day Movies

Apple said yesterday it had finally scored deals to sell movies from almost every major studio on the same day they come out on DVD. What’s surprising is that the company will lose a dollar on every new release it sells, according to the Wall Street Journal.

New movies will cost $14.99 for consumers, but $16 wholesale for Apple, making them a loss leader for the retailer, the WSJ’s sources said. (iTunes sells most older titles for $9.99.) I’m not quite sure what the difference is between $15 and $16 — either one of them sounds like more than I would pay for a movie.

It’s common wisdom that Apple started selling music with tiny margins on iTunes to boost iPod sales. It certainly worked, but that rationale only holds up so long, especially considering Apple is now the largest online music retailer, and possibly the largest U.S. music retailer overall.

Last year Apple sold only 5.7 million movies on iTunes, but it only had 575 for sale. Yesterday Apple said it currently stocks 1,500 films, including 200 that are in HD.

For Apple, opening up the video retail market by selling tens of millions of movies might be worth losing tens of millions of dollars. It’s really not that much for a company of Apple’s size. But seriously, $15 to download a single DRM-wrapped file? The movie studios’ greed is just ridiculous.