Breaking News: NBC Has Shot Itself in the Foot

16 Comments

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.

16 Comments

Steve Mage

This Article Was Almost Dead Right In Hindsight!!!

Here is the bottom line: NBC’s SEASON suffered last year. That is at least partly attributed to not being on iTunes. And while profits for Studios from iTunes are not CURRENTLY anything that warrants a second glance, fast forward a few years when 50 million or more Americans have iPhones or iPod touches… This landscape is changing fast, and NBC knows it.

Let’s recap last year, shall we? Jeff Zucker made a complete IDIOT of himself when he threatened (unfortunately for NBC, very publicly) to remove all NBC content from iTunes by the end of the year. Apple, instead of cowering in dismay, did Mr. Zucker one better: They immediately and unceremoniously removed all NBC content post haste (Early Sept. 07).

Here is the word on the street: Apple made the decision to completely ban NBC content from the iTunes store for a period of exactly one year. That is why even though Apple and NBC appeared to “make nice” in January, you haven’t seen NBC content back on iTunes until now (Early Sept. 08).

Apple approached this issue in this way in order to send a message to the other networks that might be contemplating doing the same. “You’re free to leave whenever you want, but chose wisely, because it isn’t so easy to come back once you decide you want back on the gravy train.”

Apple’s financial reports never registered even the slightest blip from a missing NBC over the last 12 months. In fact, their growth has been unprecedented and their profits have been Apple’s largest in history.

NBC made a massive miscalculation. End of story.

minikperi

No NBC shows on iTunes this fall? No Office, Heroes, or Battlestar Galactica?

I bought season passes for all three last fall, and it looks like it’s off to bittorrent this fall.

steve

I think this is a really dumb move by NBC. The fact that they will be charging more for thier shows and selling them on a less popular and unknown video site will make them far less money than if they had stuck by itunes and not been so greedy.

Christian

Pirating via the well known torrent websites will grow again…
That’s all what happens.
I’m sick of the tv networks and publishers. Not only that i can’t watch heroes legally here in germany (they start broadcasting season 1 in low-def tv this autumn here) in HD or even native language.
I can’t buy it on iTunes. I have to import the DVD (which is technically blocked for RC2).

It is SO STUPID. Same for music. Why can’t i just buy the stuff in any format i like for reasonable prices without DRM!?
I do not want to give it away – i want to own it!

Honza

$1.99 to $4.99 is >2.5x price increase!

Shameful behaviour, but really most of corporate America subscribes to these practices…

For the answer, get an account on demonoid.com ;-)

Jeff

No NBC shows on iTunes this fall? No Office, Heroes, or Battlestar Galactica?

I bought season passes for all three last fall, and it looks like it’s off to bittorrent this fall.

Colin

Well, for those of you fast enough you can still catch most shows (of any show) for free on alloftv.net.

They don’t always have ALL of the episodes from EVERY show but they’ve got enough to make it worth a look.

I’m currently getting caught up on Prison Break, but I agree with everything said so far. I watch Heroes, The Office and occasionally 30 Rock off of iTunes and I’m not sure that’d I’d be willing to pay more than $1.99 for any individual episode, especially considering that I intend to buy it on DVD once it comes out. I may as well just wait.

Pete

Great…so now that I moved to Europe there is no way for me to watch The Office and Heroes. This is just sad. I downloaded every single episode of every single season and probably have seen every The Office episode around 5 times.

Thanks NBC for making decisions that will only hurt your network, your shows AND your viewers.

Kelly

I’m in the camp that this isn’t good for anyone. I’m also in the camp of watching TV shows you missed on the network’s website is just doesn’t make a great deal of sense. Typically the encoding is of a low bandwidth variety designed for streaming. Typically fullscreen options are limited. Oh, and for us Mac users, serious problems getting them to work all the time. I’m sure some of this has gotten better and will get better, but there are still sites (TNT) that require a Windows computer.

All that is being said to make a point. Downloading the content is by far the best option. So far there has been only one good place to get this content, Apple. At a $1.99 for content with no commercials and a bitrate and resolution that works well on my iPod, 15″ PowerBook and 42″ DLP 720p TV, I’m happy to pay; even experiment with shows I’ve not yet watched and have no commitment to watching. As the price goes up, my dedication to the program will also have to go up.
From what NBC is now saying, the increase would not have been across the board. It seems they were looking for ways to bundle programing and have “variable” pricing. I still think that means they were looking to make more money not less money. Also variable pricing basically exists today; although to a small extent.
In the end, most people still watch programing on their TVs live or using a DVR; not with iTunes. They use iTunes as a back-up when they miss a show or for a show they get hooked on after episode 1. Heroes for me was that situation. I also watched episodes of Lost & 24 that I missed first time around.
Lately I have starting watching MadMen from AMC only on iTunes as a bit of an experiment. It’s been enjoyable, allowing me to watch the episodes at work during lunch or on the road traveling; my DVR doesn’t give me that ability.
I do think that Apple will be hurt more by this than NBC. Apple needs the content and NBC makes up a huge portion, some 30%, of available programing. in the end though, we all lose!

Comments are closed.