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Digital Movies Offer Pricing Conundrum

19 Aug, 2015 By: Erik Gruenwedel

Consumer spending in the United States on digital movies and TV shows reached $940 million through the first half of the year, up nearly 21% from $778 million during the prior-year period, according to DEG: The Digital Entertainment Group.

Yet despite the increase in sales of digital movies and TV shows, pricing on new releases varies widely by studio and between standard- and high-definition with little standardization, according to London-based research firm Ampere Analysis.

The average global price for a new-release HD movie (presumably with UltraViolet functionality) hovers around $19.47, which is up almost 26% since 2011 ($15.50). New-release HD title pricing averaged $19.30 in 2014, which was up almost 15% from 2013.

Ampere found since 2005 among major U.S studios the average Disney Digital HD title sold for $17.88 ($13.18 SD) compared with less than $13 for Fox titles — the latter only slightly less expensive in SD. 

Warner posted the lowest SD pricing at $11.08 ($14.87 HD), followed by Sony at $11.27 ($14.03 HD), Universal at $11.65 ($13.78 HD) and Paramount at $12 ($14.76 HD).

The research group found that most studios priced Digital HD releases from $12 to $17.99, with Sony pricing 25% of its new HD releases between $12 to $14.99, followed closely behind by Universal. By comparison, Disney priced just 13% of its HD releases within these price points.

Warner and Paramount priced 22% of HD releases between $15 to $17.99, compared with 15% for Fox, which preferred the $12 to $14.99 price range.

Disney released the highest percentage (15%) of titles priced between $24 to $26.99, compared with Sony and Fox (7.5%)

“Despite the growing numbers of users of digital retail and rental services, a standard approach to pricing product has yet to crystalize. Studios are maintaining diverse and highly differentiated pricing strategies — particularly with respect to how to price standard-definition relative to high-definition, and new-release films relative to catalog titles,” analysts Richard Broughton and Ed Border wrote in a blog post.

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