Why are Digital Downloads So Pricey?


High prices will keep a good thing like UltraViolet from ever taking off.

Jan. 31, 2012 — by .(JavaScript must be enabled to view this email address)

Nothing beats having a Blu-ray disc. That said, I am enjoying the number of new titles that come packing a digital copy. Really, every movie purchase should include this little perk. Once you buy it, you should own it (within reason), right?

Well, that’s sort of the idea behind UltraViolet. This new version of the digital copy takes that idea to the next level. Once you unlock the UltraViolet code, you’ll have that movie title available for streaming and a set number of downloads.

Currently, the number of Blu-rays that come with an UltraViolet copy can be counted on your fingers and toes. To help further the format a little more, studios plan to start selling UltraViolet movies direct, and without the disc component.

Last week, we mentioned that Paramount was the first studio to start selling UltraViolet movies. Digital downloads are certainly nothing new. However, Paramount is taking this new format to a whole other level—of pricing.

HD versions of older films, such as American Beauty, Road Trip, and Shooter, will cost you $19.99. Newer titles, including Rango and Transformers: Dark of the Moon, go as high as $22.99. Since there’s no disc, why is the cost so high? At least with discs,  there are manufacturing, shipping, and marketing costs. Heck, even the movie costs have to be recouped, too. However, these movies have made their money back and then some. Most likely, a lot of them are in a bargain bin somewhere. To have the digital versions be priced so high is a bit of a smack in the face.

As mentioned in Home Media Magazine, Paramount is feeling a bit of backlash. The article specifically quotes analyst Dan Rayburn’s blog. “What studio executive thinks consumers are going to pay $22.99 to stream a movie when we can buy the DVD for $7 or rent it for less than $2?” says Rayburn. “The economics don’t make sense for how the studios price digital content and the fact they are keeping Netflix and others from even renting physical discs, only so they sell more DVDs, clearly shows where their true interest lies—and it’s not in digital.”

We can’t quite heap all of the blame on Paramount, though. A quick iTunes search found Rango and the new Transformers prices for just $3 less. That’s hardly a bargain, either. Rentals can be had for the average price of $3.99. However, iTunes recently eliminated the option to rent TV shows for 99 cents, instead opting to charge customers $3.99 to “own” the episode. At the time, a spokesperson said, “iTunes customers have shown they overwhelmingly prefer buying TV shows.” Yeah, because I really needed to own one random episode of Breaking Bad!

I would hate to see an interesting model such as UltraViolet get squashed before it has a chance. It doesn’t seem like it’s going to get much of a fighting chance, however. As Rayburn says, these studios seem to be heading down the same path as the music industry. And how’s that working out for them?

Return to full story: