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September 7, 2007

video

Peacock-a-thon: NBC may have left over proposed price cuts

Posted Sep. 7, ’07, 9:40 AM PT by Dan Moren
Category | Video

Price cuts?Like a private eye digging into the sordid tales of a recently-ended relationship, Variety has come up with some information that might shed light on the dark crevices of NBC and Apple’s recent breakup. According to “three people familiar with the proposal,” Apple is considering lowering the price on their TV offerings from $1.99 an episode to $0.99. NBC balked at the suggestion—their position on pricing is pretty clear—and the conflict precipitated the messy end to an otherwise profitable relationship.

Now, I know there are definitely people who always want things to be cheaper. I guess the question for me is: what is a “fair” price for a television episode? People are used to subscribing to their TV content; breaking that down into a per-show cost is hardly straightforward. Plus, as the Variety article notes, the bread-and-butter of TV right now is DVD sales. Pricing iTunes’s content at $0.99 and episode would, for most shows, significantly undercut the price of season boxsets. Though, I have to point out, I think there’s a substantial value difference between the two. For one thing, DVD sets don’t take up hard drive space, and they usually come with special features. And, for that matter, despite the Apple TV and the prevalence of video-capable iPods and iPhones, it’s still easier for most people to just pop a DVD into their home theater. Still, it seems to me the two can continue to exist side-by-side, even with a price difference: Apple uses the same principle to differentiate its hardware lines. You pay more, you get more features.

I won’t say that the extra dollar is what keeps me from downloading TV on the net—especially when so much of it is freely available, legally and illegally, elsewhere. But while, as Variety suggests, networks seemed to be convinced that digital downloads are the future, they’re not quite ready to embrace that future yet.


7 Comments

fletcher Author Profile Page said:

I have found it odd that half hour and full hour TV shows both cost $1.99. Indeed, even some multi-hour news shows and some very short shows like Aqua Teen Hunger Force cost $1.99 per episode.

On the Music side, tracks longer than about 7 minutes are now all album-only. This means some albums like Neroli by Brian Eno, which is just one long track, are $9.99.

I think it would make a lot of sense for Apple to make shows half an hour or less $0.99, full hour shows $1.99, and multi-hour shows proportionally more.

Shows on iTunes should be cheaper than the same shows on DVD since they are downloads, have no packaging, and have no special features.

Did you know you can get America's Funniest Home Videos at iTunes? Finally, we can experience where America got their fill of shots to the crotch before YouTube.

September 7, 2007 11:16 AM
Paul said:

I love that people believe that a show is worth money, when (for better or worse) the current lowest point is free.

September 7, 2007 11:53 AM
Donn Author Profile Page said:

I agree, it definitely makes sense for downloads to be cheaper than DVD on a per-episode basis. I have always thought of the $1.99 episodes (and would doubly so for $.99 episodes) as almost disposable. Yes, they add up when you are talking about a whole season, but if you download an episode or two that your TiVo or what have you missed (as I have definitely done), you don't even notice the two bucks. But you don't get the sense of permanence of a handsome boxed set, with art-decorated discs holding special features like making-of and commentary.

Bottom line for me is, any show that I want to keep for posterity, I'm buying the DVD set anyway. If I'm just watching it, and avoiding Comcrap, that's what iTunes is for.

Too bad NBC doesn't see it the same way.

September 7, 2007 2:26 PM
Donn Author Profile Page said:

I have to add, there's no reason NBC should have to struggle to sell DVD boxed sets of TV seasons, even if they are priced higher than their iTunes counterparts. They will sell if the production values are high enough and there are great exclusive features.

How many times have many of us bought Star Wars (or some other cult favorite)? VHS, letterbox VHS, THX certified VHS, laserdisc, DVD... even taped off TV for free. We already had the content. By NBC's logic, there's no way re-releasing the original trilogy in other formats, over and over, should have sold very well. (SE notwithstanding, let's leave that out of it.)

Buying shows on iTunes is as bare-bones as you can get. It wouldn't be that hard to come up with features for a DVD boxed set that would compel a fan of a show to buy the DVDs after he/she has bought them on iTunes. You just have to actually care about the product you are selling, and make it worthwhile.

September 7, 2007 2:37 PM
PT said:

Sounds like all this talk about NBC doubling the prices was just Steve Jobs work the Apple fanboys up. Why isn't Jobs lowering the prices of the Disney movies?

September 7, 2007 4:50 PM
Greg said:

Standard corporate greed. They think lowering prices reduces profit. What they don't understand is that lowering prices increases demand (but conversely lowers supply in a truly free market). We're seeing economics at work here.

If the lower price happens, NBC pulling out would in fact be that lower supply. But demand for iTunes video increases. This means the other video vendors here will see an increase in sales and in turn, profits.

September 8, 2007 7:45 AM
George said:

The downside is that at 99 cents, Apple effectively prices all competition out of business. Apple doesn't need to make a profit off of videos since they can only be played on Apple hardware or software. If you want these videos with you when you travel, you WILL be using an Apple product. If you want to watch it on your TV without stringing a video cable from your computer, you WILL be using an Apple product. That is something no other download provider can compete with at the moment. Lowering the price to 99 cents would make it unprofitable for anyone to enter the market and could kill off most current competing services.

Steve Jobs has already stated he has no interest in asking the studios to remove DRM from videos (he had no real interest in removing it from music either except for the EU objections). Therefore videos will always be locked to Apple products.

With it both unprofitable for other companies to enter the digital download market and it uneconomical for consumers to switch away from Apple products because of DRM'ed music and videos, it puts Apple into a position to have a monopoly. And the only Monopoly I know of that doesn't harm consumers is the boardgame published by Hasbro.

September 10, 2007 4:00 AM

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