lordjedi said:
If you had asked the same thing back in 1996 about downloading music, I would've totally agreed with you. Why would any recording studio distribute singles at 99 cents each instead of the full album for $15? It just doesn't make sense. Fast forward 10 years and that's exactly what happened.

The $9.99 film wouldn't come with any extras beyond the cover art. I suppose they could include a commentary track, but you wouldn't get any behind the scenes videos. That'd be perfectly acceptable to me, but it would have to have nearly the same portability as current DVDs and it would be nice to be able to buy the behind the scenes stuff at maybe an additional $5. Bandwidth costs a lot less than shipping, printing, and packing, so they'd make a ton more money. And they wouldn't have to use any content providers other than themselves if they didn't want to. I'm more than willing to buy direct from Universal, WB, Fox, etc, etc for that price.

I didn't say studios wouldn't get their prices down to $9.99 eventually. I said they'd make more profit from Blu-ray if HD downloads are at $9.99. Digital distribution does cost less, but I don't think the costs of physical production and distribution are so high that HD downloads at $9.99 become a more profitable venture than Blu-ray discs at $19.99.

How much do studios make from music downloads versus physical media?

And ask NBC Universal how pulling out of iTunes and providing their own content worked out for them. They greatly underestimated the difficulty of developing a reliable, well-designed marketplace that's appealing to consumers. The NBC Universal catalog is significant, yet it still wasn't enough to draw users away from iTunes. If all providers pulled out, the average consumer would have no idea where to get their favorite movies without Googling it, which is a shitty experience, which will hurt sales and adoption.