Disney CEO Bob Iger told the audience at the Digital Hollywood Media Summit today that that Disney has sold 4 million movies and 40 to 50 million videos through iTunes since signing up in 2006.
Peter Kafka at Silicon Alley Insider estimates that this equates to $122.8 million for Disney from Apple, then writes:
In other words, a little less than 10% of the $1 billion digital revenue goal Iger has laid out for his company this year — and a rounding error for a company that generated $35 billion in sales last year…The upside for Disney is that this is all incremental revenue, with zero marketing costs. So they’d rather have it than not. But another reminder that digital sales aren’t going to do much for Disney or any other the other large media congolomerates’ top and bottom lines for quite some time.
Fair call in that it’s a drop in the Disney sales ocean, but in talking down the figure it ignores the alternative, which is no revenue and increased piracy in a marketplace that is switching to digital content in large numbers. 40-50 million videos and 4 million movies sold in a marketplace that is conditioned to free/ piracy after 2 years is positive for Disney and the industry going forward, because that’s 50 million times some hasn’t downloaded the video or movie for free. The movie market itself has been stifled by DRM and poor quality video, but Apple’s move into HD and rentals should drive further growth in the legitimate download marketplace, such that these figures could easily double or even triple over the next 12 months. Huge revenue figures no: but growth at a time where DVD sales are now declining and Bluray has yet to fully establish itself in the broader market.
It should also be noted that Disney’s biggest shareholder is Steve Jobs; if they were making $1 in profit from iTunes they’d still likely be using the service.
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Considering that digital downloads compete with DVD sales and the sorry state of broadband here in the US, I’d say that was a good first year/year and a half for Disney.
This is not “free” money — there is non-zero cannibalization on offline media sales by iTunes sales. I have no idea how much of iTunes customers would have otherwise pirated the content, but my guess is that a substantial portion of those customers would’ve bought the content offline in the absence of iTunes. It’d be interesting to gather some data on how iTunes sales is affecting traditional sales channels.
I wouldn’t say, “that’s 50 million times someone hasn’t downloaded the video or movie for free” because I’m not so sure the typical Disney customer has been “conditioned to free/piracy after 2 years”.
There are some tech-savvy parents out there, but I bet that the vast majority of of them would never even consider firing up BitTorrent to snag a The Little Mermaid for their 5 year old daughter. Maybe the Disney crowd has heard about BitTorrent in the news, but most certainly don’t know how to use it.
50 million digital downloads is a commendable accomplishment, but I’d be more interested to see stats from a company whose core audience truly has become conditioned to piracy.
The problem with iTunes is that players not made by Apple can’t use it, because Apple locked it down. Thus you limiting your audience. Their are better players than the ipod, such as the Creative ZEN. Creative invented the iPod interface. A better service is emusic.com or Amazommp3 which are drm free, meaning any mp3 player can use it.