Apple's iTune and SAP
Read a very interesting article today in the International Herald Tribune (IHT) regarding how the Movie Industry is evolving and hoping to avoid a Napster moment and hoped to match Apple’s iTune operations. Watching this video, “The Many Faces of SAP at Apple, Part I”.
Learn why the movie industry must get the payment bundling process right using Apple iTunes as an example and how SAP can help which is a very interesting presentation on how SAP is used at Apple, a key message jumped out with regards to what the movie industry has to get right: The way credit card charges are handled by Apple.
How Do Sell at .99 Cents?
Though the presenter doesn’t go into too much detail, what is stated is that at .99 cents a clip, and many thousands to millions of these tiny charges being made per day, if Apple had to pay the per charge processing fee usually charged by the credit companies, they would not be able to make this business model work.
How does this apply to the Movie Industry?
It is simple, really!
They must get two elements right to stay in the game and remain profitable:
- Distribution (which they got right before with the multiplex)
- Payments
Necessary But Not Sufficient
There are, of course, many other necessary conditions which are not sufficient by themselves to enable the movie industry to avoid getting Napstered:
- Rights Management
- Content Management
- Production Cost
- And Many More
The Price is Right
The price point needed has already been found-the Red Box Movie rental model seems to have hit it. However, it has a couple of limitations:
- Limited to Customers who walk by
- Limited in so far as quantity of DVDs in the machines, therefore, not really a fully digital distribution (meaning unlimited, self-replenishing, inventory that has only a vague shelf-life, i.e., older movies tend to decline in popularity, yet if somebody wants to watch them, they need to be available on-demand at virtually no additional production cost)
Bundled Payments
Now that the price point has been found, the next step will be for the Movie Industry to arrive at the same ‘bundling’ of payments deal with the payment networks, i.e., Mastercard, Visa, American Express, Paypal.
Of course, all of these business processes need a highly advanced IT infrastructure, led by an end-to-end Business Intelligence system.
