Originally Posted by bruceames
Interesting. Thanks for pointing that out Mal. So if rentals average $1.50 and sell-through $15, then sell-through costs 10x more on average then kiosk or subscription. And as stated if profits are 20-30 times more on sell-through, then sell-through revenue as a whole would be 2-3 times more profitable per dollar spent. Unfortunately for the studios, the OD rental pie has increased from around 30% in DVD's heyday, to around 40% now (thanks to steep sell-through declines while rental remains relatively stable).
I've always wondered what the profit margin is on rental vs. sell-through.
OD sellthrough is like money printing machine. The actually physical product is dirt cheap. Its basically almost like Royalty revenue. The costs stay the same and the revenue pretty much all goes directly to the bottom line. This is why the decline in OD is hurting the studios more than they are telling. This is why they have been laying off so many people and having 28 day rental windows and why Warner increased that window to 56 days. It shows how desperate they are in.
It can't be denied, the rapid fall in OD sales is taking a HUGE toll on Hollywood. They want to hide that and SELL everyone a story that Blu-ray is doing well, when we have showed over the years it is not.