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Apple Could Be Pushing for $0.99 TV Downloads

Friday, September 7th, 2007 at 10:15 AM - by

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.

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vasic said:

member since 09 Aug 2005 with 279 posts, unranked, send him a message or view his profile

Fri Sep 07, 2007 12:14 pm

The problem is, Apple has an enormously strong hand here. Over the past four years, they have demonstrated that they are the only ones capable of figuring out the music download market. NBC/Universal and others don't really have many choices. It essentially boils down to two options: either stay in the download market or abandon it. If they want to stay in the download business (free money for them, and the wave of the future), there's Apple and nothing else. And with Apple, it is their way or no way. Since no other competitor in the DL business is of any consequence, NBC going with Amazon will not really do anything for them. Their millions of dollars of revenue from iTunes Store will simply evaporate; Amazon will not generate any meaningful money.

Again, the studios have no choice but to go along with Apple's price reduction. They sould actually accept it not as a monopolyst bullying them into dropping prices on their precious property (like Wal-Mart or Target); instead, they should trust Apple; they will make much more money if they only listen to what SJ has to offer. It is obvious they have NO CLUE about the digital entertainment business. It is also crystal clear that Apple and Steve Jobs have actually figured it out. They know what they are saying. Again, trust them, studios (and labels), you'll make a lot of money, and your consumers will be much happier (not that any of you guys actually care at all about that...).

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Tiger said:

member since 17 Jun 2003 with 1018 posts, unranked, send him a message or view his profile

Fri Sep 07, 2007 12:55 pm

Too late for the studios. We already think that box sets are overpriced. Not only that, we KNOW they are. And with the Internet's perpetual longevity, who the heck needs to buy a box set anymore anyway?

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Tiger said:

member since 17 Jun 2003 with 1018 posts, unranked, send him a message or view his profile

Fri Sep 07, 2007 1:05 pm

Oh, and I bet the music labels are in a panic 'cause they see the writing on the wall. If Apple can cut the price of video content in half and get away with it, how long will it be before they cut the price of music content too?

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Terrin said:

member since 29 Jan 2006 with 414 posts, unranked, send him a message or view his profile

Fri Sep 07, 2007 1:08 pm

That is classic negotiating tactics. Apple wants the price to stay the same. So it gives a lower number.

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A guest said: (hide)

Wed Sep 12, 2007 4:27 pm

vasic wrote:

Again, the studios have no choice but to go along with Apple's price reduction. They sould actually accept it not as a monopolyst bullying them into dropping prices on their precious property (like Wal-Mart or Target); instead, they should trust Apple; they will make much more money if they only listen to what SJ has to offer.

Do you see a lot of the irony in your post? Calling a couple of box stores a monopolist kind of misses the definition of a monopoly. And suggesting that they just follow the whim of one company means they should give into the anti-competitive practices of an actually monopoly.

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