Apple looking to halve cost of iTunes TV downloads - report
In an aggressive bid to push more digital video sales, Apple Inc. is reportedly talking to television networks about cutting the price of TV show downloads through iTunes in half.
Citing three people familiar with the proposal, Variety claims that Apple has told networks and studios that it would like to slash the cost of most TV episodes sold via iTunes from the current $1.99 to just $0.99 -- the same price it charges for most music singles.
Apple reportedly believes the move will spur a more than a twofold increase in sales of the digital television downloads, which would effectively offset the impact of the price reduction through higher volumes.
Not surprisingly, the networks have been hesitant to embrace to the concept, which may have also played a part in NBC's decision last week not to renew its current iTunes distribution deal, according to Variety.
Of particular concern for networks is the impact such a move would have of sales of high-margin DVD box sets, and subsequently the networks' partnerships with large DVD resellers such as Wal-Mart, Target and Best Buy.
For instance, NBC Universal's just released "Heroes" on DVD is expected to retail in most stores for about $40 for the set of 23 episodes. But under Apple's proposed plan, the same set of episodes would cost less than $23, potentially cannibalizing the DVD sales.
Still, there are some studios that may be willing to entertain Apple's proposal. Variety speculates, for example, that MTV or A&E may welcome the chance to sell their reality shows at a lower price, particularly since Apple would reward them with greater promotion on iTunes.
An Apple spokesman declined to comment on the report, pointing only to a previous statement that it wouldn't agree to NBC's request for a "dramatic price increase."
Citing three people familiar with the proposal, Variety claims that Apple has told networks and studios that it would like to slash the cost of most TV episodes sold via iTunes from the current $1.99 to just $0.99 -- the same price it charges for most music singles.
Apple reportedly believes the move will spur a more than a twofold increase in sales of the digital television downloads, which would effectively offset the impact of the price reduction through higher volumes.
Not surprisingly, the networks have been hesitant to embrace to the concept, which may have also played a part in NBC's decision last week not to renew its current iTunes distribution deal, according to Variety.
Of particular concern for networks is the impact such a move would have of sales of high-margin DVD box sets, and subsequently the networks' partnerships with large DVD resellers such as Wal-Mart, Target and Best Buy.
For instance, NBC Universal's just released "Heroes" on DVD is expected to retail in most stores for about $40 for the set of 23 episodes. But under Apple's proposed plan, the same set of episodes would cost less than $23, potentially cannibalizing the DVD sales.
Still, there are some studios that may be willing to entertain Apple's proposal. Variety speculates, for example, that MTV or A&E may welcome the chance to sell their reality shows at a lower price, particularly since Apple would reward them with greater promotion on iTunes.
An Apple spokesman declined to comment on the report, pointing only to a previous statement that it wouldn't agree to NBC's request for a "dramatic price increase."
Comments
with that said, if TV networks are unwilling to go down to .99, I will be more than happy to see them cut the price to $1.29 to $1.49 range.
also, cutting into DVD market doesn't necessarily mean TV networks will lose money. They can save some good amount in DVD production, case design, marketing, etc.
for example, right now buying entire 24 episodes of 24 season 6 would be for $44.99. buying DVD at amazon.com or some other web-based vendor would be about $29.99. who da heck would want to buy from iTunes? since web vendors are selling it for about $29.99, it's clear that network is selling it to vendors for no more than $19.99.
if networks sell it for $1.29 per episodes, then total amount for a season would be $30.96. I don't see how networks would lose money on this.
... But under Apple's proposed plan, the same set of episodes would cost less than $23, potentially cannibalizing the DVD sales.
There's that word 'cannibalizing' (or if you prefer, 'cannibalising') again.
Like when someone's afraid iPod touch will cannibalize iPhone sales.
I thought cannibals ate their own kind. If that's the definition, I'd like to see
journalists, bloggers, pundits, et al, stop misusing it. A download is not a DVD.
An iPod touch is not an iPhone.
How about "preying upon". That's a creature eating a creature of a different
kind, right? That should work.
"...potentially preying upon the DVD sales."
Sounds better.
.99 for a song is reasonable compared to .99 for TV episodes. you have to understand the difference here. TV episodes are usually after it was broadcast on TV. the value of re-viewing the TV episode is significantly less than listening to a song again.
with that said, if TV networks are unwilling to go down to .99, I will be more than happy to see them cut the price to $1.29 to $1.49 range.
also, cutting into DVD market doesn't necessarily mean TV networks will lose money. They can save some good amount in DVD production, case design, marketing, etc.
for example, right now buying entire 24 episodes of 24 season 6 would be for $44.99. buying DVD at amazon.com or some other web-based vendor would be about $29.99. who da heck would want to buy from iTunes? since web vendors are selling it for about $29.99, it's clear that network is selling it to vendors for no more than $19.99.
if networks sell it for $1.29 per episodes, then total amount for a season would be $30.96. I don't see how networks would lose money on this.
$1.49 sounds about right. 20 cents more than a non-DRM'd track, stimulative to video downloads, would "feel reasonable" to buyers and at $35.76 without the "extras" on a DVD neither threat nor inducement to those who prefer to buy a disk.
If this story is anything more than speculation, that is....
.
with that said, if TV networks are unwilling to go down to .99, I will be more than happy to see them cut the price to $1.29 to $1.49 range.
also, cutting into DVD market doesn't necessarily mean TV networks will lose money. They can save some good amount in DVD production, case design, marketing, etc.
for example, right now buying entire 24 episodes of 24 season 6 would be for $44.99. buying DVD at amazon.com or some other web-based vendor would be about $29.99. who da heck would want to buy from iTunes? since web vendors are selling it for about $29.99, it's clear that network is selling it to vendors for no more than $19.99.
if networks sell it for $1.29 per episodes, then total amount for a season would be $30.96. I don't see how networks would lose money on this.
I haven't downloaded very many TV shows. Most of them were the free promo ones. If the price were based on quality of video then it should be lower than the DVDs. I just looked at Amazon.com and they are selling Heroes for 39.99 or the HD DVD version for 69.95. These are initial prices and the "new & used" section prices go down more and more afer time has passed by other vendors that sell through Amazon.
Let's not forget about all the extras on the DVDs, including behind the scenes, interviews, commentaries, etc. that you don't get with the iTunes download. I prefer buying the DVDs for those extras along with the higher quality playback. I have a 23" Apple Cinema Display and you really can see the difference between DVD and download playback.
As others have stated, the real money for Apple is in iPods, iPhones, and AppleTV's. Videos truly tie the purchaser to all things Apple. iTunes videos only play on Apple hardware and software, and there is no way to burn it as a DVD Video disc or any other format.
Meanwhile Apple gets to look consumer friendly by pushing for DRM-free music and cheaper video prices.
Sigh, it's a bit of a quandary. As much as I like things to be inexpensive, I also do not like the lack of choice that Apple/iTunes provide.
.99 for a song is reasonable compared to .99 for TV episodes. you have to understand the difference here. TV episodes are usually after it was broadcast on TV. the value of re-viewing the TV episode is significantly less than listening to a song again.
Well, that's assuming the mass purchasing of shows is from people who saw it, and want to see it again. I'd argue the cost is higher, esp. for such serialized shows as Lost, where, if you missed the episode, you REALLY need to see it to stay up-to-date on all the crap that's happening. That's what you're paying for.
also, cutting into DVD market doesn't necessarily mean TV networks will lose money. They can save some good amount in DVD production, case design, marketing, etc.
for example, right now buying entire 24 episodes of 24 season 6 would be for $44.99. buying DVD at amazon.com or some other web-based vendor would be about $29.99. who da heck would want to buy from iTunes? since web vendors are selling it for about $29.99, it's clear that network is selling it to vendors for no more than $19.99.
You're comparing apple/oranges. Buying season 3 of 24 on the iTMS vs DVD would be stupid (for $$ sake, if nothing else). But you have to wait until June/July for the season's DVD to be released. If you want to ignore the entire season until after its over, then again, OK. But a lot of people might want to actually watch a show while its topical. (Plus you don't have to tell co-workers "Don't talk about any episode of Desparate Housewives! I'm not going to see it until next summer!"
That being said. . . I think that the cheaper we make some TV (especially reality TV and other content with no real replay value) the better. ,99 is perfect for me to go out and buy an episode of 30 Days or Top Chef and watch it and then I can delete it or lose it without crying too much. On the other hand, I probably wouldn't be as inclined to buy Heroes, the Office, etc. and then throw them away. I want to maintain those. I would be fine with 1.99 for those shows.
Ultimately though, I think this points to the need for a good subscription model for TV and Movies. Music you would purchase a'la carte. But Movies and Music you would "rent" for a service fee. Something like this. . .
1. 3.99 per month - 1 Movie Rental and Unlimited "Catalog" TV (catalog meaning not from the current season)
2. 7.99 per month - 2 Movie Rentals and Unlimited "Catalog" TV (catalog meaning not from the current season)
3. 11.99 per month - 3 Movie Rentals and Unlimited "Catalog" TV (catalog meaning not from the current season)
First Run TV Shows - you would add to your monthly fee for 2.99 per show.
So assume you watch Heroes, The Office, Battlestar Gallactica, CSI, and Top Chef. You want 2 Movies per month too.
Your cost would be - $7.99 + (2.99 x 4) = 19.95 per month.
Now, in reality, the better way to go (assuming you have an apple TV) is to simply DVR the OTA shows and buy only Pay-TV Content so how about . . .
Top Chef, The Wire, Damages, Sleeper Cell, and Dexter. You want 2 Movies per month too.
Your cost would be - $7.99 + (2.99 x 5) = 22.94 per month.
Sounds good to me. . . because I can drop Cable.
But you have to wait until June/July for the season's DVD to be released. If you want to ignore the entire season until after its over, then again, OK. But a lot of people might want to actually watch a show while its topical. (Plus you don't have to tell co-workers "Don't talk about any episode of Desparate Housewives! I'm not going to see it until next summer!"
I am not in a hurry to watch the shows again (except for all of the reruns anyway) and can wait until the end of summer or September for a season. Buying an episode sooner on their new iPod Touch makes sense and they can take the show again on the road or on public transportation on the way to work for safety.
There's that word 'cannibalizing' (or if you prefer, 'cannibalising') again.
Like when someone's afraid iPod touch will cannibalize iPhone sales.
I thought cannibals ate their own kind. If that's the definition, I'd like to see
journalists, bloggers, pundits, et al, stop misusing it. A download is not a DVD.
An iPod touch is not an iPhone.
How about "preying upon". That's a creature eating a creature of a different
kind, right? That should work.
"...potentially preying upon the DVD sales."
Sounds better.
If I were a Nigerian eating you, a Dutch, I could argue I was not engaging in cannibalism but merely preying upon you because we are of different nationalities, hence not of the same stuff.
Anywho, the 'own kind' implied above is sales revenue, not the product type.
Sigh, it's a bit of a quandary. As much as I like things to be inexpensive, I also do not like the lack of choice that Apple/iTunes provide.
What exactly is the better alternative. Unbox has received NBC content. NBC gets to decide the pricing and tightened he DRM, Amazon isn't fighting them at all.
Apple is dragging the music and television industry kicking and screaming in the directions things are going anyway. The younger generation coming up will be used to downloading their content whether they pay for it or not. Would they rather people spend .99 or torrent the show for free?
For instance, NBC Universal's just released "Heroes" on DVD is expected to retail in most stores for about $40 for the set of 23 episodes. But under Apple's proposed plan, the same set of episodes would cost less than $23, potentially cannibalizing the DVD sales.
So it is bad if customers pay $23 for 23 episodes, but it is perfectly fine if the DVD hard set sells for 40 and the customers pay 45.77 for the same eposides at the 1.99 rate?
At the NBC rate of 4.99 it would be like 114.77 for the same episodes.
Talks about a download TAX!!!!!!!!!!!!!!!!!!
As NBC and other have little to no distribution cost, do not include all the same material as the box set, and the quality of the video is lower with the downloads ........ I would think it should be cheaper to download.
Maybe they are using a new form of math that I do not know yet.
$.99 would be nice - a quarter of what Apple expect us to pay in the UK.
But for a buck, I can skip the "tasty beverage" to wash down my meal, drink a glass of water, and have something different to view every day.
I'm all for this, and believe the networks would find a very positive response. Investing in DVDs is a real pain after you get about a hundred of them... they take over the shelves in your house, and you rarely watch them more than a couple times. And it's not cheap to press and package all the copies, move them into stores, and then wait to move them back out to a wholesaler when they didn't sell as well as they initially planned.
I am not in a hurry to watch the shows again (except for all of the reruns anyway) and can wait until the end of summer or September for a season. Buying an episode sooner on their new iPod Touch makes sense and they can take the show again on the road or on public transportation on the way to work for safety.
Yeah, but most people (I would assume) don't buy shows on the iTMS for replay value, but for first-play value.
What exactly is the better alternative. Unbox has received NBC content. NBC gets to decide the pricing and tightened he DRM, Amazon isn't fighting them at all.
Apple is dragging the music and television industry kicking and screaming in the directions things are going anyway. The younger generation coming up will be used to downloading their content whether they pay for it or not. Would they rather people spend .99 or torrent the show for free?
Maybe you didn't realize it, but Apple's shows have restrictive DRM on it as well. No DVD burning, which helps Apple a lot, because then it gives them the oppurtunity to sell their other peripherals.
Just remember, Apple is trying its best to make as much money as it can. Cheaper prices would mean more downloads, which mean more sales of iPods and, hopefully for them, AppleTvs, which means even more money for Apple. They're not doing this because they're concerned about you first and foremost.
So it is bad if customers pay $23 for 23 episodes, but it is perfectly fine if the DVD hard set sells for 40 and the customers pay 45.77 for the same eposides at the 1.99 rate?
At the NBC rate of 4.99 it would be like 114.77 for the same episodes.
Talks about a download TAX!!!!!!!!!!!!!!!!!!
As NBC and other have little to no distribution cost, do not include all the same material as the box set, and the quality of the video is lower with the downloads ........ I would think it should be cheaper to download.
Maybe they are using a new form of math that I do not know yet.
But maybe if they had variable pricing, it would make sense. Why should Season 3 of 24 cost the same as Season 7? You're pricing it like "Let me buy last season's Office, and it costs me $46. Or I could get the DVD right now, and pay less". Well, then don't buy the download.
But most people don't get the season pass to a TV show AFTER its completed the season. They get the season as its playing, so you're paying not just to download it, but to catch the shows you missed (or just to watch all the shows so you don't have to TiVO them, or even have cable).
But, it appears people here can't seem to get past their "Apple must be the better companyso what they want must be right" ideology. Let's say, with variable pricing, like Apple does with movies, a Tv show costs $4 the first week or two its out, then reduces to $2 for the rest of the year, then $1 when it goes into 'reruns', if you will. That makes more sense then just saying "This 20 minute comedy will cost the same as that high-production value 45 minute sci fi show".
Or paying the same amount for music from 40 years ago as you do for today's top hit record.
But we'll never get any of that. Apple's too stubborn, and the studios are too stubborn (and apple fans will never call out for it, because they drank too much kool-aid).
However, for a 99 cent TV show, I'd be all over that.