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Thy're not saving money, they're making it. They're invested in the snapper.
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Yeah, I've heard this arguement before, but it really doesn't make any sense to me. The only people who use the snapper is WB and it's associated movie brands. So, they make the snappers, and sell them to themselves, and somehow they're making a mint doing it? They're just pushing money around internally! If pay myself $1000 to wash my car, does that mean I profited wildly from the carwashing business? No, it means I washed my car by hand because it was cheaper than taking it through the carwash, and then I also moved some money from one pocket to another.
If WB sold snappers to themselves at cost, it would be effectivly the same deal, except then the reason to do it would be that it is more cost effective than a keep case, ie cheap. The only other reason I can think to do it the way they do would be to screw someone out of royalties, assuming they have any royalty arrrangement based on whether the DVD was profitable. "Well, the packaging on these discs costs $10 each and we sell 'em for $9.99, so we lost money on every disc we sold, no royalties for you! Incidentally, WAMO made a MINT!"
As for the argument that WAMO (the division who makes and sells the snapper) is too invested in the snapper to stop making them, nothing says they can't come out with something different and possibly more keep case like.
Personally, I'm hoping the fact that AOL 'merged' with Time Warner is a good sign. AOL uses a massive amount of cheap keep cases to distribute AOL CDs. They must be getting a killer deal on them, and even a cheap keep case is better than a snapper. Alos, AOL is a much more consumer opinion aware company than the Warner boys have ever been, and maybe the corporate culture will rub off a little.