CBS staying clear of iTunes price war as NBC intros new service

[AppleInsider]

CBS Corp. said this week it has no interest in joining the ongoing battle against Apple over the pricing of television shows on its iTunes Store. Meanwhile, ringleader NBC has taken the first step towards launching its own, ad-supported service.

"We're sort of staying out of the battle," CBS chief executive Les Moonves told a Merrill Lynch investor conference on Tuesday. "We like our relationship with iTunes."

Moonves went on to say that iTunes is not a significant source of revenue for CBS, but that the network looks at the Apple download service as much as a promotional means for its shows as a financial vehicle.

Following a standoff in negotiations last month, NBC Universal -- which accounted for 30 percent of iTunes TV show sales -- decided not to renew its agreement with Apple after the iTunes operator declined to allow the TV studio more leeway over the pricing of its content sold through the service.

Although Apple claimed NBC's ultimate goal was to drive the cost of its shows from $1.99 to $4.99 a piece, NBC later disputed the claim, explaining that its intention was to institute "flexibility in wholesale pricing" and bundle shows together in more "attractive" ways.

Said NBC vice president of communications, Cory Shields, "It is clear that Apple’s retail pricing strategy for its iTunes service is designed to drive sales of Apple devices at the expense of those who create the content that make these devices worth buying."

Fox Television content supplier NewsCorp., which had appeared as if it was taking a neutral stance in the matter, later echoed NBC's call for a more flexible iTunes pricing structure, arguing that it should be the ones determining what the fair price for its content is, not Apple.

"We have a pretty limited relationship with Apple and we'll see how it goes," said NewsCorp. chief operating officer and president Peter Chernin. "I assume it will be prickly and dicey and contentious like all negotiations are and like all negotiations should be."

NBC and NewsCorp have stated that they plan to band together to form a new, ad-support online video venture called Hulu later this fall. Though CBS had been invited to join the upstart as a third partner, it declined the offer.

But in an unexpected move on Wednesday that has left more than a few industry watchers scratching their heads, NBC announced plans to also launch its own "NBC Direct" service through NBC.com. The on-demand service (also due this fall) will reportedly offer Heroes, The Office, Life, Bionic Woman, 30 Rock, Friday Night Lights, Late Night with Conan O’Brien, and The Tonight Show with Jay Leno at launch.

In an e-mail release, NBC said the first version of NBC Direct will enter beta testing in October under an ad-supported model, and will cater only to Windows PC users. However, subsequent plans call for a DRM-protected model that will also be compatible with Apple's Mac line.

What's more, NewsCorp. will reportedly follow NBC's lead, and launch its own digital download service in addition to its joint Hulu venture with NBC. The service will compete not only against iTunes, but also NBC Direct and Hulu.

[ View this article at AppleInsider.com ]

[anantksundaram]

Hulu sounds totally lulu.

[anantksundaram]

Wouldn't you know.... Hulu is already being sued by Lulu...

http://mashable.com/2007/09/05/hulu-lulu/

[walshbj]

What makes these people think all their half-baked solutions will succeed when they watch service after service fail and fold? Sony couldn't do it. Microsoft can't even do it. What makes NBC think they can do it?

[grifmx]

What makes NBC think they can do it?

Prideful 30-year-old execs!

[JeffDM]

Originally Posted by grifmx

What makes NBC think they can do it?

Prideful 30-year-old execs!

Maybe you should look up their ages before making such a simplistic claim.

[Rot'nApple]

Originally Posted by AppleInsider

NBC Universal -- which accounted for 30 percent of iTunes TV show sales -- decided not to renew its agreement with Apple

NBC Universal on iTunes equals 30 percent of tv show sales

NBC Universal on Amazon.com + Hulu + NBC Direct equals hopefully 30 percent of tv show sales...

Good Luck with that!

[ALPICH]

iTunes is a great way to get music in Australia but video has not even started yet. But listening to all that is going on over your way makes me want to buy DVD's that I can rip to my HDD. Really. The quality is better and although it might cost me a few more bucks it is something that I will never loose. Its not that I think Apple is doing anything wrong but the reality is that until the fracturing slows down and starts to converge again to just a couple of video providers I don't want anything to do with digital downloads. Music is different. Many independent artists are easily got from iTunes here so I buy them. But video can wait another decade when it will be HD download, available on my Mac always, downloaded in 10 sec and for some reason no one has worked out how to rip HD DVD or Blue ray. That is when it will be worth getting.

All this video stuff serves to do is make Apple look fractured as if they are starting to loose the media market. The reality is that iTunes is great to sort your collection of purchased music (either CD or downloaded) and it is far easier in most parts of the world to use Handbrake rip your purchased DVD, sort them on iTunes, watch most of them on my iTV and 32in LCD, and watch a few on my iPod Tubbi.

[S10]

Ok, so I don't want to watch TV because I HATE publicity and I watch series on iTunes, because it is without advertisements... and NBC thinks I'm going to download stuff with publicity?
I rather get a TV.

[amcan]

I pay $1.99 (Apple wants me to pay $0.99 soon) per show, which I own, it never expires, I watch it without ads when I want to watch it. I buy it because I travel a lot and can't carry PVR with me.

NBC not only wants me to pay for the show, but also they want to include ads just like in TV broadcast (TV broadcasted show is free!) and want to limit my watching time to 1 week per downloaded show.

PVR records shows for free, I can burn them to DVD, I can keep them as long as I want, I can watch them when I want, I can skip ads.

Why would I buy from NBC???

[kaioslider]

Finally, TV with commercials! I'm so going to use the NBC service. All I've been waiting for is to download commercials on my dime. I mean lets face it commercial free TV is just not the same. Now Broadcasting Commercials, home of the pea-cock.

[bostran1]

What NBC is not realizing is that the allure to the iTunes store for TV and movies is the ability to put those TV shows on your iPod to watch. I've watched many a downloaded TV during my morning and evening commutes. I'm sure as heck not going to lug my laptop around with me when I have the shows recorded on my DVR and can watch them in true HD!

[McDave]

Originally Posted by JeffDM

Maybe you should look up their ages before making such a simplistic claim.

He doesn't have to because he knows you will

[digitalclips]

Originally Posted by kaioslider

Finally, TV with commercials! I'm so going to use the NBC service. All I've been waiting for is to download commercials on my dime. I mean lets face it commercial free TV is just not the same. Now Broadcasting Commercials, home of the pea-cock.

[digitalclips]

Originally Posted by ALPICH

iTunes is a great way to get music in Australia but video has not even started yet. But listening to all that is going on over your way makes me want to buy DVD's that I can rip to my HDD. Really. The quality is better and although it might cost me a few more bucks it is something that I will never loose. Its not that I think Apple is doing anything wrong but the reality is that until the fracturing slows down and starts to converge again to just a couple of video providers I don't want anything to do with digital downloads. Music is different. Many independent artists are easily got from iTunes here so I buy them. But video can wait another decade when it will be HD download, available on my Mac always, downloaded in 10 sec and for some reason no one has worked out how to rip HD DVD or Blue ray. That is when it will be worth getting.

All this video stuff serves to do is make Apple look fractured as if they are starting to loose the media market. The reality is that iTunes is great to sort your collection of purchased music (either CD or downloaded) and it is far easier in most parts of the world to use Handbrake rip your purchased DVD, sort them on iTunes, watch most of them on my iTV and 32in LCD, and watch a few on my iPod Tubbi.

I kind of agree with current resolutions. I do hope Apple offer higher quality soon for the Apple TV ... then the argument is over. Who would rip a 480p DVD if Apple offered 720p? I have my 20 Mb/s FiOS optical fiber download ability waiting Our local DVD store has closed down so it can't happen soon enough for me.

[McDave]

I was going to ramble on (as ever) about how TV Networks should look beyond their monolithic approach. The only bit of the whole TV system they don't control is the badge on small window to it sitting in your front room. Other media experiences blossomed but that 'window' started looking a bit old especially as we've been asking to time-shift TV for nearly 30 years. As the 'window' evolves into a whole device eco-system they're paranoid about losing that control and have partnered with one of the least successful players in the consumer media device field (MS) so the consumer is, again, left with having to watch content on sub-standard devices compared to what else is out there.

I was going to say TV companies need to change their ways but Apple too have to come to the party, they too are showing a monolithic approach. Where are the show bundles inspiring me to send my sky decoder back? Where are the rentals? (most movies & shows are entertaining but aren't 'keepers') Where are the promotional video podcasts with snapshot purchasing in AppleTV/iPod/Computer, Where's are the HiDef content?

Of course all of this is redundant as I'm in NZ so we have nothing (hopefully the Aussies will convince Apple to think down-under but they seem to be a nation of Apple-haters). The question should be 'where's the global iTS?' I'd like to think they're testing it out on you guys but Apple need to strike back against errant networks by improving the value of their service (get ABC/Disney to release HiDef - the rest will have to follow) I fear iTS video will be dead before it gets here.

McD

[shamino]

Originally Posted by amcan

I pay $1.99 per show, which I own, it never expires, I watch it without ads when I want to watch it. ...

NBC not only wants me to pay for the show, but also they want to include ads just like in TV broadcast (TV broadcasted show is free!) and want to limit my watching time to 1 week per downloaded show.

PVR records shows for free, I can burn them to DVD, I can keep them as long as I want, I can watch them when I want, I can skip ads.

Why would I buy from NBC???

A Star Wars paraphrase comes to mind:
"The more you tighten your grip, NBC, the more revenue will slip through your fingers."

Originally Posted by digitalclips

I have my 20 Mb/s FiOS optical fiber download ability waiting

20Mbps? That's interesting. Who is your FiOS carrier? 20Mbps isn't an option for me. Where I live (near Washington DC), Verizon's FiOS offerings are 5M, 15M and 30M (for $40, $50 and $180/mo, respectively.)

Next month, when I have time to be home and supervise the installation, I plan on buying the 15M plan. I'm really looking forward to a 10x speedup over my DSL line for the same price.

[vinea]

Originally Posted by shamino

A Star Wars paraphrase comes to mind:
"The more you tighten your grip, NBC, the more revenue will slip through your fingers."
20Mbps? That's interesting. Who is your FiOS carrier? 20Mbps isn't an option for me. Where I live (near Washington DC), Verizon's FiOS offerings are 5M, 15M and 30M (for $40, $50 and $180/mo, respectively.)

Next month, when I have time to be home and supervise the installation, I plan on buying the 15M plan. I'm really looking forward to a 10x speedup over my DSL line for the same price.

Some parts of the FiOS network have newer gear and because of competition from cable they upped plans by 5Mbps. Some parts of N. VA has 10Mbps and 20Mbps service but I don't know where.

[McDave]

Originally Posted by ALPICH

But video can wait another decade when it will be HD download, available on my Mac always, downloaded in 10 sec and for some reason no one has worked out how to rip HD DVD or Blue ray. That is when it will be worth getting.

Aren't there Blu-ray rips of Casino Royale all over the torrent sites? I don't need them streamed or instantly available just delivered to my AppleTV with a little blue dot is fine by me.

Originally Posted by ALPICH

All this video stuff serves to do is make Apple look fractured as if they are starting to loose the media market. The reality is that iTunes is great to sort your collection of purchased music (either CD or downloaded) and it is far easier in most parts of the world to use Handbrake rip your purchased DVD, sort them on iTunes, watch most of them on my iTV and 32in LCD, and watch a few on my iPod Tubbi.

The media market is in uncharted waters and the fog banks are rolling in. Apple need to soften up until they have a handle on the video market & the providers need to grow up and realise that 'good' content is highly subjective and if it ain't on the new 'TV' - it ain't on. If they don't get their act together they'll blow it.

McD

[drblank]

Who wants ad supported in the first place? Isn't that why people want to pay for these programs in the first place is to not have advertisements?

Sorry NBC, I think that maybe NBC stands for Nothing But Crap.

[ALPICH]

Originally Posted by digitalclips

I kind of agree with current resolutions. I do hope Apple offer higher quality soon for the Apple TV ... then the argument is over. Who would rip a 480p DVD if Apple offered 720p? I have my 20 Mb/s FiOS optical fiber download ability waiting Our local DVD store has closed down so it can't happen soon enough for me.

Fair point. I can see how 720p is so much better than 568 @ 25 frames per second. Ok it really is better. But my issue is that the H.264 codec is absolutely average in fast moving scenes. As I said, I will be sticking to normal DVD's until either Blue Ray or HD-DVD wins and then I will decide if I prefer legal downloads or Purchased movies on media.

I am sure this argument could keep on going but let me just say that the answer to what is right for what person will probably only be answered once all the options are actually available.

[ALPICH]

Originally Posted by McDave

Aren't there Blu-ray rips of Casino Royale all over the torrent sites? I don't need them streamed or instantly available just delivered to my AppleTV with a little blue dot is fine by me.

McD

But I am not after a once off option but an option that is a choice for all my media like Handbreak... or at least most of my media collection anyways

Originally Posted by McDave

The media market is in uncharted waters and the fog banks are rolling in. Apple need to soften up until they have a handle on the video market & the providers need to grow up and realise that 'good' content is highly subjective and if it ain't on the new 'TV' - it ain't on. If they don't get their act together they'll blow it.

McD

I agree. If they don't soften up then we are going to see the wonderful rise of Apple start to slide.

[Dave K.]

Originally Posted by AppleInsider

Said NBC vice president of communications, Cory Shields, "It is clear that Apple’s retail pricing strategy for its iTunes service is designed to drive sales of Apple devices at the expense of those who create the content that make these devices worth buying."

I have to agree statement with this 100%.

[drblank]

Originally Posted by Dave K.

I have to agree statement with this 100%.

I don't know if I agree with NBC. Remember, NBC has an affiliation with Microsoft and Microsoft is trying to get content away from Apple over to the Zune. So far, everyone has tried and failed to take down the iPod as the media player of choice and Apple's product line is more mature and is selling quite well.

Apple is just trying to get affordable content and as much as possible on it's iTunes platform. Apple doesn't really make much money from iTunes sales. Yes, they are trying to sell iPods, but I'll bet that NBC will sell less content and try to rely on selling advertising which just pollutes our brains and media players.

I personally don't really watch much, if anything on NBC these days as the content isn't what it once was.

Where are the classic sitcoms like Seinfeld? The TV shows these days aren't really worth watching more than once, if at all.

[amcan]

You gonna love this:

http://tinyurl.com/2aes44

"The programs, including “Heroes” and “The Tonight Show With Jay Leno,” will be offered for a week immediately after their initial broadcasts. Commercials will be embedded in the programs and viewers will not be able to skip through them."

For our own money we'll be forced to watch commercials? I see class action lawsuit here...

[BlackSummerNight]

It's free
"NBC announced today that they will be launching a new service called "NBC Direct" which will allow users to download and view NBC's popular primetime shows to their desktops for free and watch them for up to one week after broadcast.

The first version of this software will launch in October for Windows PCs only, but "future versions" are said to add Mac compatibility.

At launch the shows will include "Heroes," "The Office," "Life," "Bionic Woman," "30 Rock," "Friday Night Lights," "Late Night with Conan O'Brien" and "The Tonight Show with Jay Leno."

I'll take free with some ads anyday. I do this with ABC's streaming of Lost the day after it's televised. I think it's a move in the right direction.

Originally Posted by amcan

You gonna love this:

http://tinyurl.com/2aes44

"The programs, including “Heroes” and “The Tonight Show With Jay Leno,” will be offered for a week immediately after their initial broadcasts. Commercials will be embedded in the programs and viewers will not be able to skip through them."

For our own money we'll be forced to watch commercials? I see class action lawsuit here...

I can understand why NBC is trying to do this. I bet all the other networks are trying to get rid of the middle man.

[monkeyastronaut]

Originally Posted by McDave

He doesn't have to because he knows you will

spot on lol

[digitalclips]

Originally Posted by shamino

A Star Wars paraphrase comes to mind:
"The more you tighten your grip, NBC, the more revenue will slip through your fingers."
20Mbps? That's interesting. Who is your FiOS carrier? 20Mbps isn't an option for me. Where I live (near Washington DC), Verizon's FiOS offerings are 5M, 15M and 30M (for $40, $50 and $180/mo, respectively.)

Next month, when I have time to be home and supervise the installation, I plan on buying the 15M plan. I'm really looking forward to a 10x speedup over my DSL line for the same price.

Verizon in FL.

If you went to Verizon's national speed test site here you see the options ...

http://speedtest.verizon.net/SpeedTe..._speedtest.jsp

BTW it seems Macs and PCs need a patch to TCP/IP to deal with these mega speeds and even with it (I used Apple's TCP/IP patch from their web site) I cannot get close to the 20 Mb/s I pay for although it did increase my download speed from 3 Mb/s to about 12 Mb/s. Anyone shed light on this? I am using ethernet directly for some Macs and the 802.11n wi-fi from Apple for MacBook so it is not my network slowing this down.

UPDATE I take that back! It was Safari beta 3 causing the problem. Use Firefox for the above mentioned test site ... I do get 20 Mb/s ....

[Dave K.]

Originally Posted by drblank

I don't know if I agree with NBC. Remember, NBC has an affiliation with Microsoft and Microsoft is trying to get content away from Apple over to the Zune. So far, everyone has tried and failed to take down the iPod as the media player of choice and Apple's product line is more mature and is selling quite well.

Apple is just trying to get affordable content and as much as possible on it's iTunes platform. Apple doesn't really make much money from iTunes sales. Yes, they are trying to sell iPods, but I'll bet that NBC will sell less content and try to rely on selling advertising which just pollutes our brains and media players.

I personally don't really watch much, if anything on NBC these days as the content isn't what it once was.

Where are the classic sitcoms like Seinfeld? The TV shows these days aren't really worth watching more than once, if at all.

The problem is that NBC is selling content and Apple is trying to tell NBC what their content is worth.

I don't believe for a second NBC wanted to charge $4.99 per episode for their content. I believe Apple was trying to strong-arm NBC to adjust their prices so that Apple's service would be more attractive to consumers (i.e., cost) and therefore sell more iPod products.

Apple, iTunes, and iPods are in need of serious competition. I think studios like NBC (and Universal) no longer trust the model proposed by Apple and what to shop around their content (especially since the studios don't receive a dime off of the iPod product revnues).

Dave

[JCG]

Originally Posted by Dave K.

The problem is that NBC is selling content and Apple is trying to tell NBC what their content is worth.

I don't believe for a second NBC wanted to charge $4.99 per episode for their content. I believe Apple was trying to strong-arm NBC to adjust their prices so that Apple's service would be more attractive to consumers (i.e., cost) and therefore sell more iPod products.

Apple, iTunes, and iPods are in need of serious competition. I think studios like NBC (and Universal) no longer trust the model proposed by Apple and what to shop around their content (especially since the studios don't receive a dime off of the iPod product revnues).

Dave

I agree with your assertion that NBC is jockying for position and was not seriously looking at increasing their price enough to push it up to $4.99 after Apple's mark-up. I do think that they were trying to push prices up, but it is probably due to their percieved value of HD content vs. the current resolution. There are probably other factors as well.

NBC is testing the waters and trying to find a way to make money on downloaded content that they are loosing in lost ad revenue due to lower viewer numbers (due to internet downloads, timeshifting with DVR's and other ways people watch the shows that are not counted in the numbers that the industries calculate their total viewer counts for a show and use to set and justify the price of advertiesing which is used to finance the shows as well as bring in profits to the company.

As for the industry not trusting Apple, I think that this is a given. They do not like the power that Apple has over the music industry and want to find ways to limit it in video. The problem is that they will not be able to do this unless they agree to sell their content through other sources for less than Apple, who has set the market price. Even with that Apple's price is not much better or worse than what you can get if you buy a season of TV shows on DVD through a retail source like Amazon or WallMart and comes with fewer bells and wistles. It also costs less to produce and distribute (at least for NBC) than a DVD does. The only advantage that iTMS has is that you can get the show during the current season instead of waiting untill after it is over for the DVD's to hit store shelves.

[aresee]

Wasn't there talk about NBC wanting to bundle shows together? Kind of like getting three for the price of two? The problem with this is that if you are not interested in two of the shows but can only get the show you want via the bundle, it is a price increase.

My issue with the NBC business model is the one week viewing window. I can go weeks without watching TV. This model will not allow me to catch up on missed episodes. And for the new continuing story shows this is a failed model. Take a few weeks of vacation and you lose the story line. Why bother watching? At least with iTunes I can go back and buy the missed episodes. -- I hear that this is what happened with "Lost" and "Heros". initially low watched shows that picked up viewers as the buzz grew. I wonder if the buzz would had occurred if the new viewers had no way to go back and catch up with the story.

[shamino]

Originally Posted by digitalclips

BTW it seems Macs and PCs need a patch to TCP/IP to deal with these mega speeds and even with it (I used Apple's TCP/IP patch from their web site) I cannot get close to the 20 Mb/s I pay for although it did increase my download speed from 3 Mb/s to about 12 Mb/s. Anyone shed light on this? I am using ethernet directly for some Macs and the 802.11n wi-fi from Apple for MacBook so it is not my network slowing this down.

Something's fishy here. When I move content over my LAN (100M switched Ethernet), I easily get speeds above 20Mbps. But I usually use file sharing to move content over my LAN.

It's likely, however, that the internet services you access can't keep up. Even if they have an OC-12 (622Mbps) circuit (which nobody ever uses, because it's insanely expensive), that won't leave you anything close to 20Mbps if 100 people are downloading content at the same time. There's also the matter of CPU load and disk speed on the remote servers.

And, as you discovered, your own CPU load, browser choice, and hard drive speed also have an impact.

[McDave]

Originally Posted by ALPICH

But I am not after a once off option but an option that is a choice for all my media like Handbreak... or at least most of my media collection anyways

But if it's on the torrent networks it must have been ripped as you're doing with DVDs

[JeffDM]

Originally Posted by aresee

Wasn't there talk about NBC wanting to bundle shows together? Kind of like getting three for the price of two? The problem with this is that if you are not interested in two of the shows but can only get the show you want via the bundle, it is a price increase.

The whole thing is probably double-speak on both sides, so we can't be sure. The bundles that showed up on Unbox supposedly were multiple episodes of the same show, such as 3 episodes for $4.99 (rather than $5.97), as well as discounts for the rest of the season so you aren't paying twice for the episodes you already have to get the whole season.

[McDave]

Originally Posted by Dave K.

I have to agree statement with this 100%.

I have to agree only 50%. In the brave new world of TV devices like iPods, AppleTVs etc. will have an increasing part to play and NBC don't seem to be getting this. Because their view is content-centric, they really think all they have to do is put another website on the service and that's it. This isn't so as most of the TV websites' downloads are free catch-ups not purchases and who really wants to watch TV on their computer anyway?

To NBC Apple's view will always be device-centric so their statement makes sense. The big question is how much of our decision to buy shows will be based on how that show is being delivered? You could have a great new TV series but if it's only available on Betamax will it sell?

Poorly implemented technology has the ability to greatly reduce viewing pleasure which will cause consumers to walk away or not bother after a while. The case in point is the TV website. With old TV to change channel you push one button or push another to go to a simple EPG and select what you want. With the website, changing channel means going to a whole new design of EPG, navigating it differently, selecting, waiting....it'll never work!

The networks need to acknowledge TV is changing and they don't know what will work so rather than throw their toys out of the pram they should acknowledge impending marginalisation, be covering all bases and letting the public vote with our wallets

McD

[McDave]

Originally Posted by Dave K.

The problem is that NBC is selling content and Apple is trying to tell NBC what their content is worth.

Of course, Apple are the retailer. They should have control over the price they sell things in their shop for. Especially as they've publicly admitted trying to push the prices down

Originally Posted by Dave K.

I don't believe for a second NBC wanted to charge $4.99 per episode for their content. I believe Apple was trying to strong-arm NBC to adjust their prices so that Apple's service would be more attractive to consumers (i.e., cost) and therefore sell more iPod products.

I'm not privy to the details of the negotiation but given everyone else has rolled their agreements over so I think it's NBC who tried to effect a change. This was always going to be a game of who needs whom the most - NBC tried it on & lost. Network content will come & go just as it does with any other TV service

Originally Posted by Dave K.

Apple, iTunes, and iPods are in need of serious competition.

And they already have it. The technology underpinning all new web TV efforts is Microsoft - another closed system with inferior products.


QUOTE=Dave K.;1145528]I think studios like NBC (and Universal) no longer trust the model proposed by Apple and what to shop around their content (especially since the studios don't receive a dime off of the iPod product revnues).[/QUOTE]

Of course, they've had it their way for too long & we've had to sit in front of a box at a specified time to watch ads interspersed with TV shows because of it - time to change. How much revenue do networks see from any TV, DVD player or PVR manufacturer right now? Do Tivo pay all the networks a royalty just incase it's used with their content? I don't think so.

McD