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Summary:

The Wall Street Journal is claiming this week that Apple is testing out 99 cent episodes of TV shows on iTunes with the intent of offering the same deal much more broadly across its library when the iPad launches in late March. The information comes courtesy […]

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The Wall Street Journal is claiming this week that Apple is testing out 99 cent episodes of TV shows on iTunes with the intent of offering the same deal much more broadly across its library when the iPad launches in late March. The information comes courtesy of people familiar with the talks between Apple and the networks regarding pricing changes.

Shows already being offered at 99 cents are cited as examples of testing for this new scheme, but the shows in question aren’t exactly the most popular, so it seems almost as likely that the discounting is designed to stimulate sales in these specific cases. MTV’s “Wonder Showzen” and Warner’s “Children’s Hospital” are among those on offer at the reduced rate.

Still, we’ve heard rumblings of this before, and the article in the WSJ fits almost exactly the description of what an intentional leak from Apple looks like. Also, I have no doubt that while networks might not be that crazy about this idea, there’s no reason Apple wouldn’t want to see the price of standard definition TV shows cut in half (they currently cost $1.99 per episode).

There are plenty of reasons why they would want that to happen, though, and the biggest of all is iPad marketability. To people who, for example, think a ReadWriteWeb post is actually the Facebook login page, the iPad is a mysterious device indeed, with few sellable qualities. Why would such people pay for the ultimate web browsing experience, for example, when they’re terrified of the web? What they will pay for, and what they do understand, is TV.

Bestselling shows offered at a dollar isn’t only an attempt to woo iTunes TV-viewers to the new platform, although it will probably help do that. The advantage of such competitive pricing for a single, popular type of media is that it will make the iPad a destination device for said media, in the same way that the iPod has become the digital music player. Apps might sell the iPod touch and iPhone now, but make no mistake, what sold their predecessors and allowed them to even exist in the first place was music.

TV could do for the iPad what music did for the iPod, and Apple knows it. Sure, the iPad has apps, but I’d be willing to bet that apps still remain mostly untouched territory for a massive number of people who use the media playback capabilities of their iPods and iPhones. Books aren’t priced competitively enough, nor do they appeal to a wide enough market to create the kind of consumer rush Apple is looking for with its new device. No, it has to be TV, and for that to become a reality, consumers have to see prices that compete with or improve upon cable subscription models.

Offering cheaper TV is a step in the right direction, but there is an alternative if talks break down and Apple can’t offer steep discounts on its current TV prices, which by all accounts are fairly high. Apple should merely open the platform a little by either developing easy conversion options itself for .avi files and other formats, built right into iTunes, or by encouraging third-party companies to do so. In short, make it easier for users to get their own files onto the device, and you broaden the hardware’s appeal immensely.

Apple currently makes it somewhat difficult to get your own differently formatted media onto its devices because by doing so, it encourages content providers to offer their media for licensed use with the device. It gives Cupertino the ability to negotiate with those providers, since Apple is actually protecting their interests by discouraging piracy.

But if networks don’t begin to take Apple seriously as a contender to cable companies and other TV service providers by offering competitive prices, I say the Mac-maker is well within its right to go its own way and open the platform up. Consumers will reward them with big hardware spends to make up for lost media revenue.

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  1. $0.99 won’t entice me. The only way I start buying episodes is if I could watch everything I would normally watch on TV for a price that is LESS than I pay now for cable. My internet allows me to see shows online for free when I missed it on the TV or DVR. I also watch a lot of sports and have a tendency to watch a lot of sports regardless of the sport or the teams playing. None of this is possible through Itunes and the iPad.

    iTunes worked because they offered music at prices BELOW normal consumer prices. No one cared to have the CD anymore because it was so much easier to have a small iPod with all of the music on it.

    The networks should get in bed with 3rd party providers and not allow free streaming of TV episodes on their own websites. If they do this and then make a show cost $0.25, I bet they get more money overall than relying on $0.99 purchases and still allowing free streaming.

    iShows would also need to have access to Premium content from sources like HBO.

    The final dynamic that could be overlooked or underestimated is this: A large percentage of the target demographic splits the cost of cable with 1,2,3,4 etc. roommates so now rather than giving me about 100 $0.99 episodes to choose from, I only have a fraction of that cost that I normally put towards cable and now to get me to see the value, the costs need to be real low…

    Bottomline is this, unless iShows can move to a competitive subscription model and offer live sports and premium content, you won’t be getting many 18-35 year olds to actually adopt it. Since this demographic has been responsible for most technologies being adopted and then spreading them younger and older, it’s bound to fail.

    My $0.02

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  2. I’m thinking along the same lines as Matt. TV at $1.00/hour would cost me less than cable, because I watch less than 40 hours/month. I wonder how many people can say that. Perhaps singles like myself, but what about families with multiple viewers watching different shows? (I mention families because I was originally thinking that someone watching more than 2 hours/day needs to discover iBooks or a hobby).

    On the other hand, a subscription or metered access along the lines of Zune points or pre-paid cellular might be a winner. I’m thinking that $0.01/minute or $0.50/hour could be the magic number.

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  3. For anyone wondering, Wonder Showzen is awesome.

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  4. Sure the 1USD price is great, but I wonder when Apple is going to pressure content providers, so that the TV episodes and movies will be available in many more countries around the world. I’m often frustrated by the fact that these amazing new technologies we have to connect the world, are held back by stoneage licensing laws. I think apple has the power to push the content providers to release all their material internationally simultaneously and at a reasonable price.

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  5. I think Matt and Steve are totally right on this. Apple season passes to shows now currently cost more than DVD box sets of the same show and watching a lot of shows from iTunes is also usually more costly than cable. Besides, you can see a lot of high-res episodes for free on Hulu and networks sites.

    Apple’s also been trying to get TV programmers to support a subscription TV deal where for $30/ month customers would get a “best of TV” package that included popular network and cable shows. Right now programmers have little incentive to join Apple since cable programmers get a lot of money from cable subscriber fees and ad sales. Joining a low-priced Apple plan could potentially cannibalize cable revenues, so Apple would have to make the deal really attractive to programmers. Check out these articles if you’re interested in a more in-depth look at why Apple hasn’t been able to break into TV: http://bit.ly/cZ3nvk and http://bit.ly/b6lu2C

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  6. [...] even apps, depending on what you fancy. Especially if rumors prove true and TV show prices drop to just a dollar. And at the current pace of around 100 songs per second, it will be just under two weeks until that [...]

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  7. [...] even apps, depending on what you fancy. Especially if rumors prove true and TV show prices drop to just a dollar. And at the current pace of around 100 songs per second, it will be just under two weeks until that [...]

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  8. [...] even apps, depending on what you fancy. Especially if rumors prove true and TV show prices drop to just a dollar. And at the current pace of around 100 songs per second, it will be just under two weeks until that [...]

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  9. [...] lives, Cook also couldn’t stress enough the significance the Mac maker has in terms of its viewing on mobile devices. Much of the talk focused on the iPad, which is rumored to be gearing up for pre-sale later this [...]

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  10. [...] lives, Cook also couldn’t stress enough the significance the Mac maker has in terms of its viewing on mobile devices. Much of the talk focused on the iPad, which is rumored to be gearing up for pre-sale later this [...]

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