Apple Boots NBC Off iTunes

28 Comments

There is a game of corporate chicken going on. Hours after NBC decided that it was going to pull its shows from the iTunes store at the end of this year, Apple (AAPL) trumped them and will not sell shows from the upcoming TV season on iTunes, the largest online music and video store.

Apple declined to pay more than double the wholesale price for each NBC TV episode, which would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99. Apple’s agreement with NBC ends in December. Since NBC would withdraw their shows in the middle of the television season, Apple has decided to not offer NBC TV shows for the upcoming television season beginning in September. NBC supplied iTunes with three of its 10 best selling TV shows last season, accounting for 30 percent of iTunes TV show sales.

28 Comments

bob

Put your shows back on Itunes for the fair price of 1.99 an episode. The reason 1.99 works is because it’s cheap enough that people will pay it. I’ve purchased hundreds of online shows and I tell you now that I will not pay one penny more than 1.99.

You’re making a foolish mistake to think you can charge more. I have about as much sympathy for your “profit” loss as I do for the oil companies who are cashing in on the public fear of terrorism.

Rance Downer
rancedowner1234@hotmail.com

Wael Binali

I don’t understand NBC. Can’t you just go to their website and watch the last episode you missed for free? Don’t others download stuff for free from torrents and other means? Why would you be so greedy over price when you are at least getting paid for your shows with iTunes….. Ridiculous. Most people are not going to go grab a different video device. iPod is it, that’s what people want, you don’t go with iTunes, you loose, and what NBC is basically telling most consumers out there is to not buy NBC, just download it for free, convert it to your iPod and go watch…. Why waste money….

Lucy

I was under the impression NBC never intended to renew because they are launching their own ad-supported software platform with Fox which has been underway for months? The price hike sounds like a PR leak from Apple, simply to make Apple sound like the bigger consumer advocate. Then Apple PR ambushes NBC by dumping them before they are dumped themselves. It’s all about message control. Plus, forces NBC to get their platform rolled out faster and its not ready – again, makes NBC look inept.

nae

I would like to think that NBC is the stupid one here, but after seeing Virgin (a cable provider) tank after they played chicken with Sky here in the UK I’m not too sure.

Sky hiked their rates on the SkyOne channel (which had BSG, Lost, etc.) much like NBC, Virgin balked and told the public why, Sky disappeared from Virgin channels, and now Virgin is looking into bailing out of the TV business less than a year later. Apparently they hemorrhaged subscribers after the Sky pullout. Not an encouraging precedent.

shekyboy

This is becoming quite a catfight. NBC now says that they did to explore alternative biz models. This is a growing trend among media entities. I am sure more content producers will go down this route. Apple does have a monopolistic position in the online media commerce, which is not conducive to these media entities.

Also this will allow alternative business models and may make content cheaper for us consumers. Universal did the same.

Read more of my thoughts here:
http://abhishek.tiwari.com/2007/09/02/growing-ihate-for-itunes/

David Mullings

(1) I didn’t realize so many people actually pay $1.99 for a show – most of those people will probably not migrate to more expensive options because they are technology savvy and can find cheap alternatives which means lost revenue = dumb

(2) NBC is greedy – no real news there.

Try to gouge customers = increased piracy = dumb

Why don’t these companies learn from the record labels? – they have kept CD prices ridiculously high even though the cost of manufacturing and production have come down tremendously – so people find ways to pirate the music.

(3) I don’t see how losing NBC as a partner will hurt iTunes at all – there will be other content for sale and someone else will provide content that people are interested in.

So all in all, I expect to see this on the “Dumbest Business Decisions of 2007” list in a magazine next year.

I use my DVR religiously and there would be no way in hell you get me to pay $4.99 instead of $1.99 for the same thing, even if I didn’t have cable – no tv show is that good.

Michael B Wood

Cant mess with the MAC Attack.. Apple is on a rampage to revolutionize the way we use computers. I love how they are looking out for their customer and not allowing a company as big as NBC that has 3 episodes in the top 10 to dictate to them what they will or will not do…If apple went for this deal it probably would have started a domino effect and apple would lose huge revenues due to the fact that no one will pay 4.99 an episode. One reason itunes is so successful is beacuse at a 1.99 you are still getting it cheaper than buying the box set on DVD but if you raise it up to 4.99 you will paying two and a half times for the season. ex.. the office season 3 had 23 episodes, the season pass goes for 34.99 but buy them separtly will run you 45.77 w/out tax but if you paid 4.99 for each episode individually you would pay 114.77 w/out tax and the DVD set runs 37.98 w/out tax from NBC ,which will be realeased on sept 3…. People would just buy the dvd sets and scratch using itunes for tv shows if everyone tried to sell their stuff for this 4.99 price…I dont see why NBC would try to jack the price so high, its not like there not getting paid for the episodes form cable and satelite providers..The way that I see it itunes money is just extra gas money for them…

John

I think NBC is being ridiculous. It is common knowledge that Apple makes its money from iPods, not the iTunes store. I totally expect NBC to take it in the shorts due to piracy. Why does no one remember how damn scared the record labels were when the iTunes store opened? It was like pulling teeth to get content in the store! Now Apple is the “bad guy” because the greedy record labels don’t get the cash they want. A word comes to mind… Douchebag!

Om Malik

sorry i also wanted to add that it is a good idea to not leave people hanging in the middle of the season. either kill the deal before the season starts or after it. i just want to make sure pysch and monk are available.

Om Malik

Dudley

i agree with you – i think both companies are at fault here. I think this is indeed not good for the consumers. the two companies should try and resolve this and not have all of us suffer.

Timothy James McNeely CFP®

Feeling shafted by NBC’s proposed $4.99 an episode price hike that got their new fall season kicked out of iTunes?

Kevin Wick has been kind enough to look up the contact information for the NBC Executives that are key to getting this situation reversed.

Amy Zelvin, NBC Universal Digital Media Communications, (212) 664-7436 amy.zelvin@nbcuni.com
Joe Libonati, NBC Universal Television Group Publicity, (818) 840-3050 joe.libonati@nbcuni.com

(edit) Some additions-

Jeff Zucker, President and Chief Executive Officer, NBC Universal (212) 664-4444 jeff.zucker@nbcuni.com
Ben Silverman, Co-Chairman, NBC Entertainment and NBC Universal Television Studio ben.silverman@nbcuni.com

Now, please don’t call these people and threaten them, cuss them, or yell at them. That’s not going to get anything accomplished.

If, however, you want to politely let them know how you feel about their suggested price increase, and subsequent removal from iTunes, it might actually have some affect.

If enough people call, NBC just might listen…you never know.

Dudley Bryan Jr.

OM, Derren…

Let’s keep it straight. It’s not BOTH companies hurting consumers. It’s totally NBC, folks. Don’t get it mixed up. It makes no sense for Apple to cause consumer confusion and carry the new season knowing that customers will #1.) Not be able to purchase a season pass (and save money), as some will want. #2.) Those regularly buying will have some NBC shows dissappear mid-season.

This only HURTS customers if Apple moves forward until December. If customers will NOT be able to purchase the ENTIRE new season, best they make other plans now and not mid-season (many would be shocked). NBC wants to double its wholesale fees to Apple, pushing an end-customer fee to $4.99 per episode. Apple doesn’t have a model for that type of price gouging. Don’t lose the details in trying to criticize both parties. This is NBC’s blunder, plain and simple. I may watch on NBC’s website, but odds are, I’ll find other shows to be interested in. Bye bye, Battlestar, Office, and Heroes. My cable-free no-DVR lifestyle apparently will have my interests turn elsewhere.

Reg

Even if NBC feels it can get the traffic to its own site, where it can offer pay per view directly through a Silverlight plugin or something, it won’t make up the loss.

By pushing away the typical iTunes customer – someone who can afford a premium priced player such as an iPod, iPhone or AppleTV – they are reducing their market no matter how you cut it.

Very few iTunes ecosystem customers are going to migrate to a different platform just to pay a high price for a TV show.

As someone currently outside the US and not invited to the Battlestar Galactica or Heroes parties anyway, all I can say is welcome to my world.

And that BitTorrent -> VisualHub -> iPod/iPhone/AppleTV becomes second nature after one or two episodes.

Does seem ridiculous that NBC would prefer to get $0 instead of a fair price.

Om Malik

I agree with you Jamie. I think this is ridiculous, and is not consumer friendly behavior on part of both the companies.

You think this is going to cause a major rethink of programming prices?

JamieK

This seems like another interesting battle b/w a distributor and a content producer.

Working in the cable biz, knowing what we pay for programming rights, I have to admit that I enjoy seeing apple ‘just say no’ to programming rate hikes.

tnwake

Are there that many people that still don’t have a DVR? I never have understood why I should pay $1.99 for a tv show when I can just record it and watch it whenever I want.

Unless you only watch 1 or 2 shows, the cost of downloading individual episodes would be more than it would cost to just get cable/satellite service with a DVR.

william sager

its about time somebody had the balls to tell a studio ‘no. being in the PPV satellite business and internet ‘rental’ biz, the studios have always believed that a venture can’t live w/o their shows. NOT TRUE! esp. now given the internet. BRAVO apple. It strikes me that the rating for these ‘shows’ on TV and any online ‘buys’ are all important. Way to go NBCU, pull the exposure for YOUR stuff right off the premier online venue of the moment. Now that’s SMART!

Darren Stuart

surely they will just go to amazon etc and they will pay the price. People that want this stuff will soon find out where to go buy it.

To be honest it just seems really childish of Apple. They are just cutting of their nose to spite their face. Ok so nbc does want to do a deal with them but to end an existing contract over it shows that the company has ego issues.

Om Malik

I am getting a little miffed at both these companies. if i am going to have Monk and Pysch cut off, then I am going to be looking at some other options. including re-signing with my cable operator. Bah!

lumi

Just what NBC deserves for trying to raise prices from $1.99 episode to $3.99 an episode:

OTHER CONTENT PROVIDERS BE WARNED:

Apple will cut you off from the world’s pre-eminent digital media download service if you try to dictate terms for the platform Apple built from scratch and is continuing to grow internationally.

This sea change is past the point of no return. Play by Apple’s terms or die a slow death without a viable online delivery model.

Alaska Miller

Apple’s margins on iTunes Store is between 4-17%

$1.99 * 85% = $1.69 wholesale price from NBC? * 2 = 3.38 so that extra 1.61 must be going somewhere right? Because that’s basically 32%

Did I do my math right?

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