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“Unveiling a new Apple TV product Wednesday, Steve Jobs said he had hopes for ‘other studios to see the light.’ But sources at other content companies believe Disney and Fox are moving like moths to a flame,” Wallenstein reports.
“At issue is the 99-cent price tag that represents a steep discount from the TV episodes already offered on iTunes. Multiple executives described it as an unacceptable devaluation of the content that puts in jeopardy the so-called ‘downstream’ windows crucial to generating profit including DVD and syndication,” Wallenstein reports. “One studio chief drew a comparison between the new arrangement and the damage done to the music industry when Apple disaggregated the traditional album-oriented business model in favor of a singles-centric approach.”
MacDailyNews Take: Apple gave choice back to consumers. In general, an “album” is a forced bundle masquerading as “art.” The smallest salable unit of music is the song. Consumer should have the ability to purchase music in such a way. Albums continue to exist for consumers who want them. Most don’t. The smallest salable unit in TV is the episode. Plus, as opposed to songs, TV shows almost always are watched only once. 99-cents seems to be the high-end for what an average consumer would consider acceptable. Even that price makes it dicey as to whether the average consumer would make it a habit. It’s still more of a catch up price (your DVR missed it, you weren’t home that night, etc.) What does the above studio chief want, exactly? TV shows sold only by the season? Some of these luddites cling to old models (DVD boxed seasons in Wal-Mart) as desperately as the most myopic music labels. Successful businesses adapt to change, not try to ignore it or stifle it. Let’s put it this way: It’s no surprise that Jeff “Spell it with a capital F” Zucker is currently on the wrong side. Note to other execs: If your standing next to Jeffie, it won’t bode well for your business in the long run.
Wallenstein continues, “While few were surprised that Disney again joined forces with Apple, the emergence of News Corp. as a willing partner this week raised eyebrows. The deal reportedly was made at the behest of Rupert Murdoch, who overruled the objections of News Corp. executives because he is trying to advance his company’s interests in the digital news business. Noting the lockstep in which Disney CEO Bob Iger has moved with Jobs, the company’s largest shareholder, one exec cracked, ‘If Steve Jobs jumped off a cliff, Iger would hold his ankles on the way down.'”
MacDailyNews Take: We don’t see Steve doing much cliff diving. About all he seems to do is make tons of money for Apple and their partners. Steve Jobs is all about moving into the future. On a road paved with gold, no less. Iger is smart to follow. Those who don’t will be left in the dust.
Wallenstein continues, “Cable and satellite operators could be particularly steamed as TV networks are perennially embroiled in tough negotiations with them over retransmission fees for the same content they are making available to the competition. ABC is now engaged in such a standoff with Time Warner Cable, which likely will count Apple TV as a threat to its upcoming TV Everywhere initiative. “
MacDailyNews Note: ABC and TimeWarner announced the end of their standoff and a new multi-year agreement this morning.
Wallenstein continues, “Although Apple is touting the inclusion of Disney and News Corp., the holdouts are hoping their absence from iTunes rentals will weaken it. Already they’re taking pride in having successfully prevented some of Apple’s previous efforts, including a 99-cent download (as opposed to rental streaming) and a bundled monthly offering.”
MacDailyNews Take: Viacom, CBS, NBCU, Warner Bros., etc. are “proud” of not offering potential customers the choice that ABC, ABC Family, Fox, Disney Channel and BBC America offer. Remember that.
Wallenstein continues, “Disney strategy in particular was described by one rival exec as ‘schizophrenic,’ considering its series pop up on ABC.com, Hulu, Hulu’s iPad offering and now Apple TV.”
MacDailyNews Take: That’s simply moronic. Disney’s strategy is the proper one: Make your content available in as many places as you can at reasonable prices. That’s not “schizophrenic,” it’s just smart business.
Full article here.
MacDailyNews Take: These fat cat holdouts seem to have completely forgotten the value of a dollar. There are only so many entertainment dollars to go around for the average consumer. How many subscriptions and plans and crap are people supposed to be able to afford? The ISP, SiriusXM, TiVo, Cable TV, Hulu Plus, $15 3D movie tickets, and on and on and on. The holdouts just don’t get it. Make your content easily available at a reasonable price, don’t throw up artificial roadblocks and make it difficult/expensive. BitTorrenting TV shows is not that hard and it’s free.
1. Apple helped the music industry, not damaged.
2. TV execs are crazy if they think 99¢ “devalues” their product. I cringe at the thought of paying a buck for 1x viewing of a television show.
3. Yeah, “Dark Side of the Moon” is a piece of art that requires an album, but that doesn’t make MDN’s generalization untrue or unfair. In fact it is the existence of “exceptions” that prove the generalization.
4. TV execs are being smarter than the record execs, but I think that they are deluding themselves if they think that they are in ultimate control of the content distribution process. It is almost as easy today to obtain pirated video content as is music. Don’t get greedy or too controlling guys; it will backfire.
Quite frankly, soon this won’t be about their content, but how easy people can get it. The holdouts lose.
I’m getting an AppleTV and watching what’s there. CBS will get my coin if they choose, and anyone else willing to jump in will be considered. NBC, I’ll do without or catch you on super-cheap basic cable.
With Netflix around… Do they REALLY think people are going to keep buying seasons of DVDs? I have in the past (though I think the last one might have been Firefly) but I certainly never will again, unless there is a show I love and want to have it as a collection item, like Firefly or Twin Peaks.
I was going to buy The West Wing at one point, but I’ll just get it from Netflix now. I think the days of selling all those box sets are numbered shorter than the studios think.
@RicMac
“Wow, is Network TV still around?”
Yes it is. It’s HD,over the air,and FREE.
My time too is ‘valuable’. I don’t waste
16 minutes watching commercials. I get
up to take a pee,make a sandwich,open
a beer. In fact, my time is so much more
infinitely ‘valuable’ than yours that,if I’ve
already done all the things above,I’ll read
a couple pages of “War and Peace” that is
next to my remote control so that,heaven
forbid,I would ever spend a second of my
life in idleness.
@ C1
Yay! Another Firefly fan. You are so right, there a few box-sets in everybody’s culture-base. But most stuff is a one-time only rent. I’ve not bought anything since Firefly, oh yes I have: Spaced.
But that’s another point, box sets are FAR less than 99 cents per episode. I’ve never bought any TV from iTunes cos it’s just too expensive.
We also get a lot of Disney ABC TV Network shows for free on the free ABC Network application for all the Apple iOS devices.
Actually I have bought something since Firefly… Season 8 of Red Dwarf… Which I regret and was a total waste of money. Compared to how great the rest of the run was, season 8 was a total letdown. Again… It’s nice to have the whole collection… But I see it’s now on Netflix instant, and if I would have seen it first, I’d never have bought it.
Correction: That’s with the ABC Player only for the iPad not the iPhone or Touch.
The studios are practicing what economists call “rent seeking behavior”: http://en.wikipedia.org/wiki/Rent_seeking
Networks do not want to lose the bundled “album” sales revenue stream from cable companies like the Music industry lost when people started buying digital singles instead of CDs. Until that network cable relationship is broke – nothing will change… Apple with the $99.00 Apple TV is on the best path possible. Make the hardware an impulse buy and start “teaching” consumers there is an alternate way…
For me free OTA HD, apple TV, mac mini and Netflix have replaced my monthly cable bill…
Strange I don’t hear the “full album purists” demanding that full albums be played on radio, no single songs.
See how that would go over.
If I want to make money, I’d follow Rupert Murdoch around. And if Rupert is following Steve Jobs, then that’s a path where you can’t help but make a buck. If the other TV mogals don’t see that then they are dumber then the shows they put on the tube.
@Predrag
Great insight. 100% right…
I bittorreny most shows, like Family Guy etc because can’t rent or buy via iTunes in Sweden.
Just stupid. I may consider paying $.99 to rent a tv show if my DVR misses it, and its not on my hulu desktop or cable on demand. It had better be exceptional must see TV to pay more than a buck for a frakkin’ show.
@clyde2801 – Yeah, I think you would be crazy to buy an episode if you were already paying 90 per month for cable on demand.
@ET
Here’s where I think the Apple experiment can succeed: let’s say a show’s been running for a while, but you didn’t watch it from the pilot, but then your friend says, “Hey, have you been watching XYZ? It’s the greatest new series this year!” You go and you check out the latest episode on hulu for free and decide you like it, and you want to go back and watch the rest of the episodes. Oh, wait, hulu doesn’t have those episodes. So you go and you rent them from iTunes. Hopefully it will drive more quality shows to be produced when studios see that those are the ones people are paying money for instead of just watching the latest episode for free and getting bored with it.