Originally Posted By Sport Goofy << Actually, right now, distributing on Apple is EXTREMELY profitable to the studio. >> Before NBC pulled the plug on their relationship with iTunes, they had generated only $15M in revenue from their downloads on iTunes -- and they had quite a large share of the total downloads there. No one is making a profit on $15M in revenues. A hit DVD can generate $100M in revenues easily.
Originally Posted By BlueOhanaTerror >>><< Actually, right now, distributing on Apple is EXTREMELY profitable to the studio. >> >>>Before NBC pulled the plug on their relationship with iTunes, they had generated only $15M in revenue from their downloads on iTunes -- and they had quite a large share of the total downloads there. No one is making a profit on $15M in revenues. <<< Well, that's misleading. Yes, they had a large share, but they were simultaneously GIVING away their broadcasts at their own website. So why milk the cow... etc. Besides, NBC was selling TV SHOWS through I-Tunes for $1.99 a spot. They STILL got the lion's share of that - about 86% of every dollar. So yes, you CAN make a profit on $15 million in revenues, if you're simply collecting royalties, and your outlay costs are basically nil. Which they were (for NBC). >>> A hit DVD can generate $100M in revenues easily.<<< Well, sure. But eventually, DVDs will disappear. It takes time for people's habits to change. But they'll change for a variety of reasons, and that money will migrate to revenues from downloads. And if a DVD DOES generate $100 million in revenues, the studio and the distributor use a schizophrenic means of charging each other for costs that eventually affects presumed "profitability". One cost is assessed for packaging, another for replication, another for freight, another for the commissions to these companies that actually DO the distributing FOR the distribution companies (yes, very few people know this goes on, but 20th Century Fox doesn't have its own fleet of trucks going to Walmart, Target and Costco). And then there's marketing costs and a whole host of other overhead charges. These charges are kind of ridiculous, because for most of these, the studio's either paying its own distribution company, or the distribution company is paying the studio or some other subsidiary it owns or has a part of. But they can legitimately do this, and if asked to open their books, there's a dizzying array of records to try to cross-reference. And like I said, there's no governing body that actually DOES this. You have to hire a bank of lawyers, and when the studios ARE challenged on their accounting methods, as in the Buchwald case, those lawyers work for a long time and just GETTING the material takes time (because the studio/distrib is "cooking" again). With downloads, eventually you're cutting out: Replication costs. Packaging costs. Freight. In-Store Marketing (artwork/standees) And who knows what else. Downloading will be much, much more profitable for studios/distribs, when this facet of the industry matures.
Originally Posted By mawnck >>Before NBC pulled the plug on their relationship with iTunes, they had generated only $15M in revenue from their downloads on iTunes<< According to who? >>No one is making a profit on $15M in revenues. << Seems to me they made a profit of just about $15M. It's not as if they had to pay for manufacturing, packaging and distribution. And we already know they aren't paying the writers.
