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Summary:

Apple just a few years ago became the leader in online music sales by offering a cheap, easy way to purchase songs and an attractive device on which to listen to them. Now, by halving the price of TV shows sold through iTunes, Apple is looking […]

Apple just a few years ago became the leader in online music sales by offering a cheap, easy way to purchase songs and an attractive device on which to listen to them. Now, by halving the price of TV shows sold through iTunes, Apple is looking to corner the digital video market in the same way, by giving consumers an inexpensive way to buy TV shows, and with its new iPad, an attractive device on which to watch them.

When Apple first started asking its content partners to lower the prices of their TV episodes, it was met stiff resistance from broadcast and cable companies that didn’t want to cut into their (already meager) electronic sell-through revenues. But in the past three weeks, some have warmed to the idea, with the FT reporting that some TV networks have finally agreed to the price cut after months of negotiations.

So what changed? The release of the iPad, for one thing.

The iPad has some limitations, of course. Its 4:3 aspect ratio results in a tremendous loss of screen real estate when viewing video in the 1.85:1 or 2.35:1 aspect ratio in which most movies — and now TV shows — are shot. And the iPad doesn’t support Adobe Flash, which has more or less become the de facto standard for video delivery on the web.

Apple hopes to circumvent lack of Flash support with the App Store, which would enable content companies to build and monetize video apps for the iPad much like they did for the iPhone, and of course, through iTunes, which would enable them to sell their videos directly onto the new device. And by tying video viewing to a download marketplace, Apple could (arguably) be providing TV networks with a better way to cash in on their video assets than through Flash-based advertising.

We’ve already argued that the iPad was designed to change the way consumers watch digital video, and lower prices on TV shows is just an extension of that. By cutting prices to 99 cents, Apple hopes that it can capture the online video marketplace in the same way that it cornered the market for sales of online music.

Related content on GigaOM Pro (subscription required):

Web Tablet Survey: Apple’s iPad Hits Right Notes

  1. Whoops, your editor needs to sharpen up his eagle eyes. There’s a glaring typo in the 4th paragraph above. I noticed it in the NYTimes reprint of your posting in GigaOM.

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    1. D’oh! The error was mine. Should be fixed now.

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  2. This pricing is reasonable for a song. It is not reasonable for a TV show which will be watched once in most cases. I can buy the DVD in most cases for less than the cost of watching the show online on iTunes. Pricing around .49 ->.69 cents is more like it.

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  3. I can’t imagine TV networks and studios would let their content be priced below what those yokels in the music biz charge for a song ($1.29).

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  4. It does seem unlikely they’d allow the prices to go that low, but from an impluse-buy standpoint, it’s the right price. TV is disposable in a way that music & movies are not. At $0.99 or $1.29, I’m still thinking “Eh, I don’t know…maybe I’ll just settle for a small screen and some ads on Hulu.” At $0.50, I’ll say “What the hell” and buy it.

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    1. Agreed. I wonder if SJ knows this will fail and is using this to push networks towards a all-you-can-eat model.

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      1. I’m even ok with watching commercials if the price is low enough.

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  5. $1 for one hour of standard definition digital versions of TV for purchase would sell some shows that are worthy of being watched more than once.

    $0.50 to view and delete shows watched once would be the best strategy and make a season pass available for $10-12US.

    Give the viewer the option to buy and retain the episode for an additional $0.50 ($1 total per episode) and archive at their own expense.

    Viewers wish the entire season in HD could order it on a single physical blue-ray disc with special options for $20.

    If one were to watch 40 hrs of TV per week for $1000 per year and or archive it on Blue-ray or SD cards for about $1000 per year.

    That would be ownership of all they could possibly watch for about $20 less per month than they pay the cable company for HD programming.

    Or we could all buy decent antennas and go back to free broadcast DTV with a built-in ATSC tuner that we pay for once.

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    1. I got fed up shelling out $60 a month for DirecTV when there is so little content worth watching. I have canceled in favor of free HDTV that has the very few shows I really want to watch (Super Bowl, Olympics).

      I admit that I am cheap, but I won’t consider a TV show for $1.99. $0.99 is still probably too high for me considering it is just a TV show. If it was a good program, I would pay $0.99 for the HD version, but I haven’t seen a good TV program for 10 years or so.

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      1. Yes, I’d be better off with an OTA TiVo, but I like shows on SyFy, USA, and TNT.

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  6. they need to offer rentals… who wants to own a TV show?

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    1. Exactly! Who want’s to store 2 TB worth of things per season they may never watch again?

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  7. 1.85 is common aspect ratio now for TV but no one shoots 2.35 except huge budget action/effects movies. And even those directors (Cameron etc.) often don’t shoot that wide anymore because they want the option to project on IMAX, which is the same as old TV (4:3). It’s not a tremendous loss of screen real estate, at least I wouldn’t call it that. Would you propose to make the iPad 12.5″ long instead of 10″, and 2″ narrower?

    Also important to note that when one quotes that most of web video delivery is Flash, that is correct but the vast majority of that is YouTube itself, and both the iPhone and the iPad ship with an YouTube app. And as a non-US citizen, Hulu doesn’t mean much to me.

    You make it sound like Apple refuses Flash support because it locks people into iTunes, but it doesn’t work that way. It might be partly political, but there are huge technical issues with Flash that are well-documented.

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  8. It is nice to see an on line chat about the content and not the other angry and blaming stuff. I don’t have a TV, but will have an ipad and content will be important to me. .99 works as an option.

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  9. Does anyone else other than me think it weird that the ipad is 4:3 and doesn’t support flash? I realize it’s probably planned obsolescence as the follow up to the first version of the ipad will probably be the “ipad 16×9″ so we have to buy another one. It seems like the same trick they pulled with the iphone. The first two versions of the iphone couldn’t play video, then along comes the 3Gs. Yay. But shouldn’t that have been first out of the gate? Lack of Flash support on the ipad seems like another way to steer people away from Hulu or broadcaster’s websites (where episodes are rebroadcast in Flash) and coax viewers to the apple store where they pay 99 cents or more to download each episode.

    So, I guess I’ll wait for the Ipad HD-s to come out which will play 16×9, flash video, and other obvious upgrades.

    Or maybe I’ll just stick to my laptop. It’s already optimized.

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  10. [...] the launch of the ABC iPhone app comes just as Apple is reportedly pushing content partners to lower the price of TV episodes in iTunes to 99 cents from $1.99 for standard-def versions, which it argues would make them more [...]

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