Time Warner CEO says Apple 99-cent rental model 'jeopardizes' sales
Time Warner chief executive Jeff Bewkes has warned other media execs that low cost rentals from Apple threaten sales of TV shows to branded networks.
Bewkes issued the warning at the Royal Television Conference in London, according to The Hollywood Reporter.
"How can you justify renting your first-run TV shows individually for 99 cents an episode and thereby jeopardize the sale of the same shows as a series to branded networks that pay hundreds of millions of dollars and make those shows available to loyal viewers for free?" Bewkes said.
According to Bewkes, "new entrants" like Apple need to offer up a "superior TV experience" while simultaneously supporting or improving the overall economics that make the programming possible. He remains confident that revenues are on the uptake, with the number of viewers growing, paid-television penetration increasing, and advertising and subscription revenues improving.
Also of note, Bewkes candidly admitted after his speech that the Time Warner merger with AOL was "the biggest mistake in corporate history."
Bewkes is the latest in a line of media conglomerate bosses that have decried Apple's new 99-cent rental model. Although Apple CEO Steve Jobs believes the studios will quickly "see the light" and agree to the rentals, several executives from the major studios have remained vocal in their opposition of the plan.
At last week's Goldman Sachs media executive conference, Viacom CEO Philippe Dauman called the 99-cent price "not good." "We don't think Apple has it quite right yet," Dauman said.
NBC Universal exec Jeff Zucker believes the pricing "devalues" his company's content. "We do not think 99 cents is the right price point," Zucker said.
Zucker has fought long and hard with Apple on the pricing of digital media content, but his days at NBC are now numbered. An internal document from last week states that he will be replaced as CEO after Comcast finalizes its acquisition of NBC Universal, CNET reports. Comcast is currently awaiting government approval of the deal.
Not all media execs are critical of Apple's new model, though. Fox and ABC were the first studios to agree to the 99-cent rentals. News Corp President Chase Carey views Fox's participation as a "short-term test." Robert Iger, CEO of ABC's parent company Walt Disney Co., thinks his company is better off "aligning with technology companies than fighting them."
Bewkes issued the warning at the Royal Television Conference in London, according to The Hollywood Reporter.
"How can you justify renting your first-run TV shows individually for 99 cents an episode and thereby jeopardize the sale of the same shows as a series to branded networks that pay hundreds of millions of dollars and make those shows available to loyal viewers for free?" Bewkes said.
According to Bewkes, "new entrants" like Apple need to offer up a "superior TV experience" while simultaneously supporting or improving the overall economics that make the programming possible. He remains confident that revenues are on the uptake, with the number of viewers growing, paid-television penetration increasing, and advertising and subscription revenues improving.
Also of note, Bewkes candidly admitted after his speech that the Time Warner merger with AOL was "the biggest mistake in corporate history."
Bewkes is the latest in a line of media conglomerate bosses that have decried Apple's new 99-cent rental model. Although Apple CEO Steve Jobs believes the studios will quickly "see the light" and agree to the rentals, several executives from the major studios have remained vocal in their opposition of the plan.
At last week's Goldman Sachs media executive conference, Viacom CEO Philippe Dauman called the 99-cent price "not good." "We don't think Apple has it quite right yet," Dauman said.
NBC Universal exec Jeff Zucker believes the pricing "devalues" his company's content. "We do not think 99 cents is the right price point," Zucker said.
Zucker has fought long and hard with Apple on the pricing of digital media content, but his days at NBC are now numbered. An internal document from last week states that he will be replaced as CEO after Comcast finalizes its acquisition of NBC Universal, CNET reports. Comcast is currently awaiting government approval of the deal.
Not all media execs are critical of Apple's new model, though. Fox and ABC were the first studios to agree to the 99-cent rentals. News Corp President Chase Carey views Fox's participation as a "short-term test." Robert Iger, CEO of ABC's parent company Walt Disney Co., thinks his company is better off "aligning with technology companies than fighting them."
Comments
The best solution might be to run short ads like SouthParkStudios does, I don't find them annoying, I see ads as a break to run to the kitchen and reload.
"How can you justify renting your first-run TV shows individually for 99 cents an episode and thereby jeopardize the sale of the same shows as a series to branded networks that pay hundreds of millions of dollars and make those shows available to loyal viewers for free?" Bewkes said.
i beg to differ. it is NOT free. myself like nearly all other television viewers pay for cable or satellite, and nearly all the programs are peppered with commercials. whether the television is on or off, we are paying for whatever programs that are sent to our reception box. again, it is NOT free.
99 cents is too expensive for something you can get free with your DVR.
Correction. Something you've already bought and paid for with your subscription to Comcast (or another ISP).
Apple is offering content providers extra income from viewers who forgot to set their DVR or discovered the show after it had run. This is a layer of extra income and not competition.
i beg to differ. it is NOT free. myself like nearly all other television viewers pay for cable or satellite, and nearly all the programs are peppered with commercials. whether the television is on or off, we are paying for whatever programs that are sent to our reception box. again, it is NOT free.
I agree. I pay hundreds of dollars a year to watch tv shows that are are riddled with ads.
Free would be to find them via torrents.
Apple is offering content providers extra income from viewers who forgot to set their DVR or discovered the show after it had run. This is a layer of extra income and not competition.
excellent point, and i think you are right on this.
Right....
more dinosaur media ready to lose out on something that could save their own butt.
I knew this was never going to go over well or for that matter at all because the network exec's believe their content is work far more then whats its really worth. Same issue with the movie and record industry.
I knew this was never going to go over well or for that matter at all because the network exec's believe their content is work far more then whats its really worth. Same issue with the movie and record industry.
Exactly. Its only a matter of time before all the regular people out there realize their content access is being artificially limited (e.g. you have to buy a cable/sat subscription to see it) and start refusing to put up with it.
How many movies have you rented the last 5 years? How many have you purchased?
Case closed...
Bewkes elevator doesn't go all the way to the top floor.
99 cents is too expensive for something you can get free with your DVR.
Correction. Something you've already bought and paid for with your subscription to Comcast (or another ISP).
Apple is offering content providers extra income from viewers who forgot to set their DVR or discovered the show after it had run. This is a layer of extra income and not competition.
You forgot about cable customers who were screwed over by Comcast when they decided to start deleting basic cable channels from basic cable service and moving them to higher-priced tiers that coincidentally requires using Comcast's DVR equipment, forcing you to pay them too if you want DVR. That's exactly what happened in the Houston market when Time Warner Cable sold out their cable customers to Comcast: Comcast started deleting channels like NatGeo and more recently SyFy from basic package. Fewer channels for the same price.
So, I love the idea that Apple is creating a new market for TV shows delivered over broadband. Hulu and Netflix might be in this market too. If Comcast wants to screw their customers over, then fine. I'll watch my favorite shows over the Internet (legally and on demand no less, so I can control when I watch TV).
As far as I'm concerned, Comcast doesn't want Apple to use broadband to bypass their local cable monopolies and provide programming to their customers. They don't want competition. I think they're afraid that 99 cent TV show rentals might actually succeed, and start siphoning off their profits.
Frankly speaking, it doesn?t matter if the studios feel that $0.99 is too much or too little. The market will decide what the price should be. As with the music industry, if the price is set higher than what the market is willing to pay, then the market will not pay for the product - they will find a way to steal it. Set the price intelligently and the market will pay for it.
Thank you ABC for letting me watch last weeks Cougar Town for free.
... However, the third reason is one that should and probably does concern the studios. If the price to rent is inexpensive enough and I watch only a few series, then it may be worthwhile to kill the cable subscription. This would take significant revenue away from the studios. This is at least a couple of years away and I am still not sure how this will be economical for me.
Several friends of mine, myself included, have not had a cable/satellite subscription for over 3 years. I only spend 1/2 an hour a day in front of my TV so I only watch Apple TV shows and movies or DVD and Blue Rays. I don't care for TV shows anymore, they're a waste of time.
This is the definition of a disruptive technology, and the studios need to figure out a plan quickly. Their current syndication model won't hit the top or middle of the market for much longer. How much money will remain in the bottom third stands to be seen.
You got it.
These guys - Bewkes included - are dying a slow death, and they just don't want to see it coming.
Even though inexcusable, it's understandable.
i beg to differ. it is NOT free. myself like nearly all other television viewers pay for cable or satellite, and nearly all the programs are peppered with commercials. whether the television is on or off, we are paying for whatever programs that are sent to our reception box. again, it is NOT free.
You do realize that not everyone pays for their TV viewing content, right? There is such a thing as HD over antenna and it has all the local channels for FREE, now albeit with commercials but it's still Free to me. Now, let's not get into Hulu Free versus Hulu Plus.
I still say Apple should go the route of charging a $10 a month like Netflix and stream whatever you want, it would make a lot of customers happy and the top Studio Execs since it's a constant revenue.
I still firmly believe in owning my music but for shows, a rental model works best...at the right price otherwise people will torrent the stuff. When will they ever learn. That's the problem when you have prestige grad-school Execs that have no in-touch with reality, everything is about the numbers without looking at the long term goals.
Demand: STILL sloping downwards.
The wheels on the bus go round and round...