CBS Digital President considering selling TV shows via Apple’s iTunes

“CBS is crossing another digitial threshold – literally. The broadcast network, Wednesday unveiled plans to distribute three episodes of prime-time sci-fi series “Threshold” online via CBS.com… It also follows ABC’s surprising deal with Apple Computer to distribute episodes of some hit prime-time shows as paid downloads via iTunes,” Gavin O’Malley reports for MediaPost.

CBS Digital President Larry Kramer “said he has had talks with Apple about distributing CBS shows on iTunes. When Apple CEO Steve Jobs unveiled the video iPod in early October, Apple had already struck a distribution deal with rival network ABC. Consumers can now buy episodes of five of ABC’s premiere shows, including ‘Lost’ and ‘Desperate Housewives,’ through iTunes for $1.99 each,” O’Malley reports. “Subscription and ad-supported models, as well as selling content piecemeal via iTunes, are all options being considered by CBS Digital. Kramer said a partnership with Apple is a strong possibility as long as the ‘economic proposal is fair enough.’ Perhaps a indication of things to come, soon after the video iPod debuted, Kramer announced that CBS would distribute its free podcasts, from ’60 Minutes’ to the long-running soap ‘Guiding Light,’ on Apple’s iTunes Music Store.”

Full article here.

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CBS features episodes of ‘Threshold’ TV series on Web – November 02, 2005
We’ll just repeat a large portion of our take from yesterday regarding CBS’s “Threshold” online episodes: Take a look at the video CBS is offering (for a limited time only) here – don’t worry, you’re not going legally blind, it really does look like crap using Microsoft’s Windows Media Player plug-in.

Now, even Microsoft’s WMP can look better than that, we must admit. CBS needs to stop being afraid and embrace new media. Give us good quality video, forget about the “driving traffic to the website” foolishness, and drop the “limited time only” nonsense. This is typical of network TV thinking: too limited, virtually useless and sucks as a promotion. It’s also a prime example of why the old guard media should thank their lucky stars for Steve Jobs’ Apple.

CBS, the answer has already been provided for you. It’s called iTunes. Gather up your courage to make a real decision for once, give Apple a call, then go ahead and make Threshold available in good quality, sans the ads, for $1.99 an episode. That way we can buy it, catch up on back episodes of a show we think we might like and perhaps begin to watch it regularly.

15 Comments

  1. What to consider?

    The most they need to do is get the episodes uploaded and collect money. they dont advertise, package or market in any way; they let Apple do it all for them.

    Its probably the safest investment they may be making ever with the highest return for doing practically nothing.

  2. Cable will be made irrelevent. Only download the shows you want to watch. Now all I’ll have to pay for is internet access. But, I won’t be paying for DRM’d shows from iTMS. I’d rather wait for the end of the season and purchase the DVD’s and then convert them myself.

  3. some of the networks fear that people will buy these shows without the commercials and in the end will loose revenue because the add agencies will look at other ways to advertise instead of TV commercials.

  4. MDN is right..the quality is laughable at best. CBS is acting stupidly here. What is the fear here? That people will download and SELL these videos? Uh….ok…or is it that this show will suffer in the re-runs thus cutting into advertising revenue? I’m guessing this is it. The bean counters did an analysis of potential revenue from sales of each episode at $1.99 and network ad revenue won. So…this only bolsters the idea that Jobs is working the ABC/Disney/Pixar deal to attract other content creators. There has been no information as to revenue from ITMS for video in terms of who gets what. How much of the $1.99 does ABC get for each episode of LOST? WILL that impact the re-run potential. If you noticed, LOST has been in reruns the last three weeks. So..what are the upside and downside potentials for a network going to direct sales with a new show? It’s clear that CLASSIC shows have a huge potential…but new network shows? Those are far more accessible and network television ad revenue is huge. Something to think about.

  5. Loose revenue through iTunes? For a product that takes very few resources to put out on iTunes, take out Apple’s cut of the profit (30-40¢), and you have a profit of $1.50 – $1.60 withouth having to do much. You sell enough of the episodes and you can probably cover the cost of your episode all together — without having to sell air time for advertisements! Why wouldn’t you sell them on iTunes?

    The only fears that the studios should have is having to subsidize their local staions more for any reduced advertising revenue from downloads, but this will still have to be seen.

    The broadcast companies are at an advantage over the music industry at this point. They have an option drive online demand through pricing and convenience. They should grasp this before broadcast downloads without payment becomes more and more out of control as home bandwidth use increases as well as more convenient viewing abilities (mobile viewing).

    I say start early, convert your video, and see how much you actually sell. I think they would be pleasantly surprised…

  6. I can already see it – the network execs all refusing to play along with Apple because ABC got there first. At least, they will hold out until it is morbidly too late and then they’ll come over to iTunes. Why are these corporate types so myopic? Apple has the infrastructure and name-recognition already in place. How long before CBS, NBC, and Fox all see the light? Probably too long.

  7. HopeItWorks wrote:
    If all this succeeds Apple’s gonna do an end-around TiVo

    Agreed. FWIW, Apple aborted a deal with TiVo last year (or 2003 – I forget.) We had stacks of TiVos in the back of the Apple Store, to be rolled out pending some announcement deal. But we were then told that the deal was cancelled and all the TiVos had to be shipped back – and no, the employees couldn’t purchase them, either.

    I’ve always been curious what that deal was about. As far as I know it never hit any of the rumor sites.

  8. It’s important to understand the size and scope of the television production, distribution, and revenue model. Network television makes a large amount of revenue from advertising on both the first run and reruns of popular shows. This isn’t about covering production costs. It’s about cash flow and profit. Advertising makes them the most money…at first. But if they OWN the show and can syndicate it to run on televison stations around the world (think Friends, MASH, Third Rock from the Sun, That 70’s Show) it can go on producing an enormous amount of revenue for a long time at a very low cost. Would you buy an episode of Friends right now for $1.99 even though the show is on five days a week in most major markets? What about the last season of “24”? How about Everybody Loves Raymond? That’s a pretty fundamental question. Would enough people buy episodes to view on their home or portable systems to offset the potential profit they could glean from syndication? I think if it cut into syndication money in any way it simply will not happen. Syndication is worth many millions per show. They would have to sell quite a few episodes of each show to make it worthwhile. Not very likely across the board.

  9. Cable will be made irrelevent. Only download the shows you want to watch.

    Cable will continue to exist, just as commerical (ad filled) TV will continue to esixt, BECAUSE, you won’t know which program you like (want to download) until after you have seen it.

    Commerical TV will continue (forever) to be the primary way that programs get viewed. Once the program establishes itself as a “want to watch”, it will become a hit on iTunes.

    iTunes will always be a secondary source of revenue for TV programmers. The question is about the extent of that volume. Right now Syndication is the #2 source of revenue, but only because there are stations buying content to broadcast, using the same formula as the networks, only they don’t have to pay as much second or third time around.

    Over time, it will be the syndicators that will feel the pinch. Initially, because they own all that legacy stuff, they will be the big winners.

  10. This has got a long way to go. Certainly the networks should use iTMS to sell programs. Media distribution will certainly change in the future, how? who knows.

    My best bet is that a smarter DVR will rule the world. With archiving capabilities and compatabiliy with both cable and satellite feeds.

    Once HDTV takes hold then any service will need to cope with the bandwidth needed.

  11. p2p and now iTMS are speeding up the upheaval among TV content producers, broadcast networks, local TV stations, and cable networks.

    Eyeballs lead to advertising revenue. Advertising revenue allows for purchasing of content (first-run, live, or syndication) from producers, or networks.

    Alternatively, eyeballs lead to content sales revenue (DVDs, now iTMS). But how will the eyeballs come to desire the content? Internet, networks?

    How do you do the second without killing off the first, especially if the time lag for the second heads to zero days? Or is it inevitable as advertising shifts to targeted advertising (i.e., Google) and social networks over the Internet? How big is the market going to be for each of these channels (first-run, syndication, DVD, iTMS)?

    Tough questions that need to be answered.

  12. Apple aborted a deal with TiVo last year (or 2003 – I forget.) We had stacks of TiVos in the back of the Apple Store, to be rolled out pending some announcement deal. But we were then told that the deal was cancelled and all the TiVos had to be shipped back

    As they say in Poker circles, that is a big tell. Remember Apple asking Adobe to do a low-grade video app? No thanks? Presto: iMovie and its professional counterparts.

    Whatever it is, I can’t wait.

  13. Apple aborted a deal with TiVo last year (or 2003 – I forget.) We had stacks of TiVos in the back of the Apple Store, to be rolled out pending some announcement deal. But we were then told that the deal was cancelled and all the TiVos had to be shipped back

    This may have been when Apple and Tivo announced intercompatibility (Tivo live? Tivo 2 Go? I don’t remember.)

    I don’t understand why Apple didn’t ship the new iMac with a built-in TV tuner. It’d go perfectly with FrontRow, and all this other stuff.

    I used to think they should buy Tivo, but it makes less and less sense.

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