“Apple is mulling a plan to cut the price of TV show downloads in half — an idea that’s not going over too well in Hollywood,” Josef Adalian reports for Variety.
“According to three people familiar with the proposal, 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 99¢ — the same as what Apple charges for most music singles,” Adalian reports.
“But entertainment companies don’t seem to be rushing to embrace the idea. Indeed, the half-price plan may have contributed to NBC’s decision last week not to renew its current deal with Apple (though if NBC had simply let its contract automatically renew, the current price of $1.99 would’ve stayed in place),” Adalian reports.
“Apple’s argument to studios and nets has been that they will end up making more money from digital downloads under the new proposal. Company believes the volume of sales for TV shows will rise dramatically, offsetting the impact of the price cut,” Adalian reports.
“Among the concerns is that at 99¢, iTunes downloads could impact sales of DVD boxed sets, an important revenue source for TV congloms. While many congloms believe digital distribution is the future for TV shows, retail sales of DVDs are of primary importance for now, along with protecting partnerships with giant DVD sellers such as Wal-Mart and Best Buy. Those retailers would likely scoff at selling DVD boxed sets at a price point significantly higher than what iTunes effectively charges,” Adalian reports.
Full article here.
Why Apple has to continually smash paradigms and drag obtuse people and organizations kicking and screaming into the future while generating profits for them is beyond us. 
We imagine that NBC fled at the first mention of halving the price. The others probably just wet their pants. Can’t you just hear them? “Oh, no, oh, no, we can’t upset Wal-Mart! Let’s try to stave off the inevitable for as long as possible with higher prices, more DRM, protracted negotiations, opening and moving to also-ran online outfits that nobody uses, and/or general do-nothingness. Yeah, that’s the ticket!”
Hopefully, Jobs will be successful in persuading the networks and studios* to allow him to stuff their bank accounts full of profits.
*We do have faith in Job’s trump card, Disney/ABC – based completely on the fact that Jobs is the company’s largest individual shareholder.
Yep, good ol’ reliable Disney/ABC. They’ll stick around, make a ton of money, and the other networks will sheepishly follow their lead back into the iTunes fold.
I’d sure be more inclined to buy them at $.99. Then, when the DVDs come out I wouldn’t even mind buying the box sets if they were reasonably priced. Instant gratification for $.99 and then get all the extra goodies later with the DVD release.
.99 is a good price. How many times am I going to watch it. Twice max.
The studios are being short sighted. DVDs have extras and better quality. I will pay for that if the original show isn’t crap (like a lot of tv is.)
Believe me, I’m an Apple fan through and through, but I stopped for a minute and thought about the other side.
If I were a producer of shows and I would like to set it’s price for downloads but some other company who I use as the vehicle to distribute tells me what to price it at, I would be quite irritated.
There has to be some middle ground. Seems a distributor shouldn’t have full say on pricing over a creator of that content.
Thoughts?
I’d be far more willing to purchase TV shows at $0.99. As it is I generally stick with the South Park season pass and nothing else. If the price was reduced I’d certainly look at more purchases such as The Daily Show.
I’m not sure that keeping Disney/ABC would singularly support iTunes TV downloads if all other networks started pulling out; simply because people often like the one-stop shopping scenario and might tend to go where they can get most of their shopping done all at once.
Having said that, it sure does look like Apple’s got something up it’s sleeve again, and I’m really curious what the real issues are for Apple and its desire to halve its TV download prices. What’s the plan man – I know from experience that there almost certainly is one. Maybe SJ is moving slowly toward free downloads in exchange for advertising within the download stream or within the program itself – I really dislike that idea, but again, I’m just wondering what the real goal is – ’cause I’m pretty certain there is one [a goal]. Advertising dollars almost always mean more money for the producer and the distributer, one of the reasons we see more and more advertising when we go to the theater (I’m not refering to trailers), and more and more when we pop a rental DVD in to watch at home too.
Fixed costs vs variable, and algebra. A x B = C.
$0.99 x gigantic number. It’s a threshold consideration. AAPL just understands it’s about behavior modification – lower the price, establish an impulse to buy rather than steal, and repeat.
Seems simple.
Pirates Bay, ahoy – torrents, rum sodomy, and the lash!
This is nothing but negotiation. Studios want the moon and Apple wants $0.99. Maybe they end up at $1.29, who knows. It appears that SJ has the upper hand at present so he should come close to what he wants. If all the studios say no then the studios could have the upper hand and the price could go way up.
No matter what it will be interesting to see this unfold.
“Number One, Apple spilled the dirt of our little plan to radically increase TV show prices”
“Dr. Evil, we should counter Apple with a lie saying it was Apple who wanted to cut TV shows to 99¢”
“Huh?”
“It will make the other networks reconsider their contracts with Apple”
“Ahhh good Number One, muhhahhahaaa!”
I have never been on the studios’ side for any of this, but that one thought did make me pause. I can see DVD sales taking a hit if shows were available on iTunes for a buck. (Now, whether the studios would make back the money is another story.)
As for adding advertising, I think it’s very unlikely. Apple has made the correct financial decision so far to throw their lot in with charging for ad-free content (the HBO model) rather than the continuously-proposed idea that people prefer free content even if they have to watch ads (the network model). Plus I think that the idea of commercials embedded in iTunes-sold content offends Steve Jobs’ sense of taste — a very powerful decider in Apple’s design and product offerings.
At 99c I would treat downloads like a rental and delete it after viewing. Anything worth watching twice is worth buying on DVD.
WalMart needs to push HD as the differentiator for physical sales, since DVD is a dead end for them and it is not worth the effort for consumers to download and back up HD content.
to M.A.D.:
In principle, I agree with you regarding the concept of the content creator having the ultimate control over pricing of their product.
However, much bigger thing is at play here. Digital downloads (an oximoron; what other kinds of downloads are there? Analog ones??) are a very new, emerging technology. Nobody knows how to operate it. The original business model has been out there for 7 or 8 decades (even more, for movie theatres). This is all new and right now, Apple seems to be the only one that shows understanding of the market. Therein lies the problem; Apple is forcing everyone to play by its rules, since it seems that the past four years showed that it is the only one in town that has figured it out correctly. Apple is saying: “You must listen to us! You’ll thank us later! Let’s first build this market as fast as we can! Our rules seem to be working, so let’s not mess with them!”. Meanwhile, studios are seeing rapid erosion of their level of control over their own content. Record labels have already gone through this and many secretly with they could do what Universal is trying to do — wrestle back at least some of the control over their ditigal distribution from Apple.
Until this market is fully mature and consumers completely are familiar and comfortable with downloading their entertainment, labels and studios have no other choice than to listen to what Apple says and do what Apple wants. It is, at this point in time, in their best interest to do this in order to build this thing up fast. Once it is finished, let them maneuver around pricing, bundling, subscriptions and other concepts.
Just a small thought here for all to consider.
We are talking a re-broadcast of a TELEVISION show are we not???
The show was broadcast FREE. NO COST. TAPE it ( VHS or DVD) and give a copy to your friend.
And now you want HOW MUCH to let me watch it again or for the first time cause I missed it???????? HMMMMM????
Lets see, does it include “Reverse-ie”? Does it have games included??? Does Ballmer sell it on TV?? LOL
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I will agree that for 99 cents, I would consider downloading a lot more shows to watch that I have missed. Hmmmmm?
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Simple truth: he’s right! $0.99 is probably the sweet spot if you’re going to start charging for something people are used to receiving for free. I know I balk at numerous shows simply because I know I’ll never…EVER…watch it again. I probably would have bought a season of 24 @ $0.99 an episode…no way in hell is it worth $1.99! Wake up Hollywood!
Gotta agree with M.A.D.
It’s always fun to see someone else’s rice bowl get pissed in, but never fun to get YOUR rice bowl pissed in.
I wonder what MDN would think if Apple released an update to Safari that would completely eliminate all ads on a web page. All of a sudden we could read MDN free of ads. I don’t think they would be appreciative of that.
Just see how you feel when someone takes your income stream away or reduces it in the name of “the future”.
Why doesn’t Apple just cut their entire product line pricing in half. I mean “they will end up making more money from [volume sales] under the new proposal.”
Apple will make more money in the long run from this deal by selling more iPods and such. And that’s good, for Apple. However, if someone was “proposing” to take my money. I’d object furiously too. So don’t be so quick to judge the studios. They’re doing what anybody would do.
Just don’t buy their junk food entertainment and read a book, that’s how you’ll really show them.
I wonder what MDN would think if Apple released an update to Safari that would completely eliminate all ads on a web page. All of a sudden we could read MDN free of ads.
Install Pithhelmet, done. Takes only a second and it’s donationware.
Use a proxy server if you want the proxy to receive the ads and not you. This way MDN gets a hit count on the ads.
There are all sorts of tricks, just take the time to learn.
Maybe this is part of a bigger plan. Like offering standard def shows for $.99 and HD shows for $1.99?
So, what do you think of the price in the UK, £1.89 – that’s $3.84 currently.
Sure aren’t going to sell many in the UK market, that’s for sure. At 99 pence, possibly.
@MDN
“Why Apple has to continually smash paradigms and drag obtuse people and organizations kicking and screaming into the future while generating profits for them is beyond us.”
It is very simple. The people in control at any of these companies have large vested interests in not changina paradigm. They are worried about their jobs and bonuses this year and next year, and that means not risking sales or profits inthe short term. And you really can’t blame them.
It is easy for Apple to innovate in areas where they have absolutely nothing to lose.
Just see how much puch back you get at Apple when anyone suggests giving up hardware manufacturing and licensing the OS. That is a change in paradigm.
How about .99¢ for a half hour show, $1.99 for an hour show and $2.99 for full length movies?
Wouldn’t that be close enough to the DVD prices.
More DRM, please!!!!!!!
to M.A.D.:
I do agree that the content providers are unhappy for that very reason. However, the content providers have proven that have no interest in what the consumer wants, which is very relevant to sales figures. Should the consumer be able to set the price and the rules? No. However, the price should be set so that consumers use the system enough to make profit for both the content provider and distributer (in the long run) and successully grow the system. Here, Apple is saying that they think $0.99 an episode is better for the long-term growth of the system.
While I do believe the DVD angle is a legitimate consideration for them, another factor here is their absolute fear of this kind of distribution. These are people that for years dictated when and how often you would see their content. Only on their terms. The VCR make them quesy. DVD collections of series (the thing they are trying to protect) gave them acid reflux. DVRs are causing massive GI episodes since this really gets at their money (advertising). DVDs are difficult to rip for the average consumer. DVR content is difficult to transfer from the DVR for the average consumer. However, the average consumer can use iTunes and download invididual episodes. They can watch them on mulitple devices and whenever they want. This is anathema to the networks. Once they get over the distress, though, they will enjoy this just as much as they now love DVD box sets.
Personally, I don’t understand why more shows are not on iTunes. I know that there are problems in some cases because the studio and the network have to agree. But they act as though putting a show on iTunes kills all their other options. For instance, Daybreak. ABC killed the serialized drama in mid-season, they spent fucking forever trying to decide what to do with the episodes. They already had the episodes done, but waited weeks to put them on their website. OMG! They’re free! If you enjoy your HD shows on a 3 inch screen in flash with ads you cannot skip. Put them up on iTunes already! The money has already been spent on production. You can take them off later. Oh, the DVD sales. Whatever. Stupid network choads.
M.A.D.:
As an independent filmmaker, believe me, you are at the mercy of your distributor.
MW: “need” as in “I need to make money.”
The $.99 price tag is purely aimed at removing user’s reliability on broadcast TV and making it affordable to watch all your shows on the Net.
I’m still of the opinion that until you get live news and sports streaming on iTunes, it will be very difficult to get people to sever their broadcast cable/satellite ties….
Still, this goes a huge way in getting adoption….if only they could bring it to Canada….
We’re crazy! We’re Insane! We’re slashing prices down here at the iTunes Emporium!
Bad credit? No Problem!
iPhones for $399! TV shows for a buck! You’d have to be CRAAAAZY not to buy!