Movie Studios May Sell Downloads Before DVDs

Flat DVD sales and higher download margins increase pressure to make the switch.

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Movie studios are studying how they might undercut the disk business in favor of digital downloads, and there's a report from ContentAgenda.com that moviemakers may release movies to cable and satellite companies before they even appear on disk.

As it is now, a few movies make it to cable systems on the same day they are released on standard or Blu-ray DVDs. Warner Bros. has released movies on the same day to cable for on-demand viewing, and other studios are testing the same thing.

And big studios recently agreed to sell movie downloads through iTunes on the same date that disks go on sale. They had done the same thing earlier with other download services, such as CinemaNow and Movielink.

Selling downloads before disks would be a big step forward. DVD sales have flattened, so studios are willing to experiment. Plus, digital downloads cut out several middlemen.

Warner recently reported that its margins in selling to video-on-demand services run as high as 70 percent. That's several times the profit from disks, whose margins typically run 20 to 30 percent.

The studios want to explore deals with cable and satellite operators "to potentially create exciting new services for subscribers that will revolutionize home movie viewing," the Motion Picture Association of America said in a recent petition to federal regulators, according to ContentAgenda.com.

The new services would offer "high-definition digital movies to consumers for enjoyment in their homes sometime prior to release on prerecorded media such as DVD."

The MPAA is asking that the government first allow tighter copy protections on cable and satellite boxes.