The Wall Street Journal is claiming this week that Apple (s aapl) 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.