However, movie studio executives don't agree with what the major retailers are doing for DVD prices. "It's a negative precedent in the business to do that type of lower budget pricing outside of the fourth quarter," Warner senior VP Jeff Baker said. "You would need to see some uplift in unit volume velocity to compensate for that lower pricing to maintain profit margins, and I have not uniformly seen at retailers the necessary uplift in volume."
Keeping prices of DVDs attractively low adjusts consumer expectations of DVD prices. Retailers benefit from offering great discounts to their customers as it brings them to the store, where they hopefully will not just leave with a couple of DVDs.
Source:
Ars Technica