NBC Betting On Losing StrategyAug 31st, 2007 | By James Lewin | Category: Corporate Podcasts, Digital Video Downloads, Internet TV, Video
Apple today announced that it will not be selling NBC television shows for the upcoming television season at the iTunes Store. According to Apple, the move is a result of disagreements over per episode pricing, which NBC wanted to increase from $1.99 to $4.99.
“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.”
The split will take its toll on iTunes TV show sales. NBC supplied iTunes with three of its 10 best-selling TV shows last season, accounting for 30 percent of iTunes’ TV show sales.
A Losing Strategy
Revenue from Internet video downloads is still fairly insignificant, so it’s smart for NBC and other content producers to look for ways to keep Apple from dominating digital video sales like they have come to dominate music downloads.
However, NBC appears to be pursuing the same losing strategy that the music industry has taken – trying to establish new proprietary standards. NBC is a partner in a new entertainment portal, Hulu, that will offer shows via a custom player.
The problem with this approach is that people are used to getting their media in standard forms, CD & DVDs. You don’t have to worry if a CD is from Warner or Universal; if it’s a CD, you can expect it to work in your CD player. The same holds true with DVDs.
The major music labels have tried over and over to create their own closed standards for digital music downloads and failed, because nobody wants to be limited to one label and nobody wants to have to think about the underlying mechanics. People just want to buy their music.
Proprietary portals, like Hulu, also have a long history of failure. NBC would be better off keeping its content in iTunes and working with other networks to create open standards for commercial video downloads. This would create a competitive environment for digital video sales and increase competition among portable media manufactures.
Even more important for the major networks, though, establishing an open standard for digital video sales would help them avoid a digital video download market that’s dominated by a single vendor, Apple.