NBC strongly opposed to Apple's 99 cent iTunes rental model - Page 3

Originally Posted by Porchland

That's a smart way to get a lot of TV without paying a lot of money, but too few people are doing that to move the needle.

That fact is the networks make as much money from cable retransmission fees as they do ad sales, and they're not going to worry much about people getting digital antennas and ditching their cable until a measurable number of people actually do that.

Originally Posted by AppleInsider

NBC Universal is unlikely join a pair of its peers in serving up a la carte TV show rentals to Apple TV users for 99 cents for pop through Apple's iTunes Store later this year, according to comments from the company's top executive.

"We do not think 99 cents is the right price point for our content," NBC Universal Chief Executive Jeff Zucker said on Wednesday at Goldman Sachs investor conference. "We thought it would devalue our content."

NBC currently offers iTunes customers the option of purchasing its shows outright for $1.99. But like the vast majority of networks that also distribute their content through the digital download service for the same price, it has balked at Apple's new 99 cent model announced earlier this month alongside the revamped Apple TV set-top box.

Thus far, only Walt Disney's ABC and News Corp's Fox have agreed to the price cut, though News Corp President Chase Carey similarly told investors at the same conference Wednesday that its participation in the matter is only a "short-term test."

For NBC and Zucker, this isn't the first time they've entered into a stalemate with Apple over digital download pricing on the iTunes Store. After accounting for roughly 40% of video downloads through the service in 2007, the network abruptly pulled its video library from iTunes after Apple wouldn't agree to a reported 100% increase in the wholesale price of each show.

During an October 2007 breakfast hosted by Syracuses Newhouse School of Communications, Zucker even went as far as to single out Apple for 'destroying' music pricing and urged his colleagues to take a stand against the company's iTunes Store, alleging that the service was undermining the ability of traditional media companies to set profitable rates for their content online.


NBC eventually caved to the popularity of the iTunes Store, signing back on with the service to sell its standard definition content for $1.99 an episode and HD content for $2.99 an episode less than a year later.

Originally Posted by Programmer

Can somebody help me out with this NBC-math?

$0.99 / episode viewing, Apple keeps 30%, NBC gets $0.69 / viewing.

Netflix = $8 / month. Netflix has many other sources, so they will pay <$8/month to NBC... but let's say that somehow $4/month of that goes to NBC (and if that's the model, it isn't sustainable!).

That means that NBC is expecting each viewer will watch less than (absolute, unimaginably best case scenario here) 5.5 episodes / month, on average. Given that they are producing new episodic content for about 5/12ths of the year, if we ignore any old content being consumed that means they think that each subscriber will follow 1.25 of their shows. And this is the valuation they have for their own content? Keeping in mind that I've assumed zero old content viewed, and an impossible Netflix business model... any changes there swing the balance sheet toward the Apple proposition.

Sounds to me like NBC is hugely devaluing NBC's content. What a bunch of idiots. Have they even consulted with their accountants?

Originally Posted by Programmer

Can somebody help me out with this NBC-math?

$0.99 / episode viewing, Apple keeps 30%, NBC gets $0.69 / viewing.

Netflix = $8 / month. Netflix has many other sources, so they will pay <$8/month to NBC... but let's say that somehow $4/month of that goes to NBC (and if that's the model, it isn't sustainable!).

That means that NBC is expecting each viewer will watch less than (absolute, unimaginably best case scenario here) 5.5 episodes / month, on average. Given that they are producing new episodic content for about 5/12ths of the year, if we ignore any old content being consumed that means they think that each subscriber will follow 1.25 of their shows. And this is the valuation they have for their own content? Keeping in mind that I've assumed zero old content viewed, and an impossible Netflix business model... any changes there swing the balance sheet toward the Apple proposition.

Sounds to me like NBC is hugely devaluing NBC's content. What a bunch of idiots. Have they even consulted with their accountants?

Originally Posted by dfiler

lol. I can't believe someone is arguing with this math. Of course it isn't precise. But it does show pretty clear bounds to the comparison.

My bet is that they don't want Apple to gain control of video distribution like Apple did music distribution. They would likely be ceding away control if Apple were to have access to all of the content at a marketable price. The mindshare, technology, and expertise is already in place. All that Apple lacks is the content at a reasonable price. For some reason, NBC doesn't see Netflix as posing that same threat. From a business perspective, it is probably the right thing to do for NBC, but it sure does piss me off at the same time. If only they had a viable and streamlined system like apple, then they'd be happy to offer rentals at a reasonable price.