You're missing the fact that they're unlikely to rent an episode more than once and the $1.50-$2.00 may be more in line with what they'd like to see as a minimum sale. On a dvd you're obviously buying the whole seasons, even if half the episodes sucked, so it's not really the same thing. The extras and stuff are just there to entice people who are fans of the show that have already watched most of these on cable. Having rentals at numbers like $.99 is obviously designing to a price point, which may or may not accommodate the margins they are used to. I have a feeling they want to maintain some kind of precedence in pricing here as it may be harder to increase pricing over time than it is for cable companies to raise the subscription cost. You may eventually see a subscription model emerge from one of these sources as it guarantees a minimum sale /season.
But they have to think about volume. Sure, HD TV episodes are $2.99, so you make gross revenue of $2.99 per episode.
But... If 4 people rent the episode compared to 1 person buying the episode, then you've made more revenue.
It is true that it can be difficult digitally to increase prices, but at the same time as the Internet spreads in reach, bandwidth, and so on, more and more torrenting happens.
So it's a decision the media companies have to make. Just like the publishers. Steve suggests price it affordably and go for volume.
Is 1 person buying 1 HD episode good? Or is 10 people renting it better because it is more affordable, makes more sense to the market, and media companies make more money.
Perhaps at the end of the day the resistance is because they don't want to cede more control to Apple, even though it shouldn't be thought of that way.
Give AppleTV and TV rentals (remember iPad has no access to TV rentals *yet* because it needs at least iOS 4.1) until June 2011 and when WB and others see the numbers ABC and Fox are doing with their TV rentals, they'll relent. Either way by then these TV media excess probably would have golden-parachuted out the window for whatever reason.
Remember the TV rental ecosystem is not just about AppleTV. It covers Mac, PC, iPhone, iPod, and most importantly, starting in a few months time, iPad... I can't imagine a better platform for HD TV show rentals than an iPad for catching up with a few episodes you missed, or a season, it you're the iPad demographic. AppleTV is the sharp point of the spear but iPad is the shaft in this case.
LIke most things with Apple, all it needs is someone (in this case Apple, ABC and Fox) to prove a point and the dominoes will fall in due time. Or, to repeat myself, there'll be so much management change at various companies anyway things will be different through 2011.
Hindsight is 20/20.