Apple may be looking to drop the price of TV show downloads at the iTunes Store from US$1.99 to $0.99. If so, that may have contributed to the company’s negotiation breakdown with NBC Universal, according to Variety.

People familiar with the proposed price drop claim that Apple expects studios to make more money from cheaper downloads because consumers will buy more episodes. Networks, however, appear to be skeptical.

The networks may also be concerned that less expensive show downloads would diminish the perceived value of DVD box sets. Under the current pricing scheme, downloading a complete TV show season at the iTunes Store can cost about the same as a season on DVD. Even though consumers get extra content with DVDs, studios fear that cheaper downloads could make the discs seem less enticing.

Big box retailers like Wal-Mart, Target, and Best Buy sell the majority of DVDs, and upsetting them with competing download sales could backlash onto the studios as well. The big retailers have already balked at downloadable movie prices that are lower than DVDs.

Both NBC Universal and Universal Music refused to renew contracts with Apple because they wanted more control over download pricing. If Apple really is pushing for $0.99 TV show downloads, it could lead to more defections from the iTunes Store even though consumers would likely purchase more than they do now.