Apple is hyping its iTunes movie service to fanboys everywhere, saying that it will be the first to be able to offer the service on the same day as the DVD release.

While it is true that the deal is a coup in that it managed to get Apple and six major film studios to agree on digital downloads, it seems that the deal is a poisoned chalice for Apple. From this week you will be able to buy new movies for $14.99 on iTunes, but, according to ZDNET, it seems that Apple is paying around $15.50 for each movie. The question is, why is Apple prepared to take a 51 cent loss over millions of downloads?

It is possible that Apple sees itself as on the leading edge of movie downloads.  If, over the next year it sells enough DVDs on iTunes, it can go back to the movie studios and get a better price, claiming that it is now a bulk distributor. In short, it cannot be as arrogant as it is with the music industry because it cannot prove it has a market yet.

More here.