Breaking News: NBC Has Shot Itself in the Foot

NBC announced late Thursday afternoon that it will not be renewing its contract with Apple to sell NBC TV shows through iTunes. That is, unless NBC can convince Apple to enforce stricter DRM and allow NBC to charge even more for the TV shows that iTunes has put on the map.

That’s right, I’m a little worried. But not for Apple… for NBC.

As we all know, most “good” TV has been replaced with approximately 9,435 reality TV shows that do nothing but prove that we may not be as smart as we think we are. With a lack of quality television, many networks have seen a decline in viewership. However, out of the ashes have risen a few shows that are starting to achieve a “cult” status – due in large part to iTunes.

My favorite example, of course, is The Office. One of my favorite comedy shows, The Office didn’t exactly turn into a favorite overnight. In fact, according to NBC execs, the show wasn’t necessarily going to survive another season. However, due in large part to its availability on iTunes, The Office has turned into Thursday night’s biggest hit for NBC.

“I’m not sure that we’d still have the show on the air” without the iTunes boost, says Angela Bromstead, president of NBC Universal Television Studio, which owns and produces “The Office.” “The network had only ordered so many episodes, but when it went on iTunes and really started taking off, that gave us another way to see the true potential other than just Nielsen. It just kind of happened at a great time.”

According to the WSJ, NBC’s move appears to be a negotiating tactic. Months away from a joint-venture online video site, Hulu.com, NBC is feeling like it can muscle a few more dollars out of the iTunes giant. After all, estimates from Forrester Research put TV show downloads through June at only 50 million. Either NBC thinks its scare tactic is going to work, or they truly believe they’ll make up the revenue from online ads at Hulu.com.

I believe there are plenty of people who will catch a missed episode or two online, even if they have to put up with embedded advertisements. However, there are apparently a few million people who actually want to own their digital content to watch again and again. Having those digital downloads available turn ordinary computers into home media centers. Somehow I just can’t picture watching NBC shows via my Apple TV on an ad-saturated Hulu.com.

So if NBC goes through with its threat and pulls all NBC shows in December, I’ll be sad. But I believe NBC will be the one kicking themselves in the a** when they see a perfectly good revenue stream dry up. And who knows how many other sleeper shows will go unnoticed because they never had a chance on iTunes. Oh, the tragedy!

UPDATE: Just after finishing this post, Apple issued their own press release stating that NBC wanted to double the price of TV downloads from $1.99 to $4.99! And, in a proactive effort on Apple’s part, they’ve decided not to offer any NBC downloads for the coming fall season so that fans (and season pass holders) don’t get screwed come December.

“We are disappointed to see NBC leave iTunes because we would not agree to their dramatic price increase,” said Eddy Cue, Apple’s vice president of iTunes. “We hope they will change their minds and offer their TV shows to the tens of millions of iTunes customers.”

I sure hope they do too Apple. I really do.

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