Filed under: Analysis / Opinion, Apple Corporate, iTS, iTunes
Report shows Apple needs NBC back, like yesterday
A report issued by Forrester Research suggests that contrary to conventional wisdom (or at least the comments here at TUAW), Apple is the loser in their feud with NBC-Universal. The on-going fight, which reached fruition last week, as all all NBC-Universal content was removed from iTunes, hurts Apple more than it hurts NBC. James McQuivey, an analyst for Forrest Research, urges Apple to make-up with NBC, otherwise they risk losing their spot as a major source in the distribution of online broadcast content. Why? Because although iTunes dominates the world of digital music sales, the same cannot be said for iTunes video downloads.According to the report, which was quoted by CNET, Apple relies on NBC to deliver 30% of their video download sales. This is in line with the 40% figure claimed by NBC in October (I say we split the difference at 35 or call it a third). Furthermore, a Forrester study revealed that only 19% of users buy video content (either TV shows or full length movies) from iTunes and of that 19%, the average amount spent on videos is $30. Meanwhile, competing pay services like Amazon Unbox and the free offerings provided by the networks own websites and through services like the Fox and NBC collaboration Hulu.com make paying for an iTunes download, just so you can watch it on an iPod or Apple TV, less inviting or appealing to users.
To me, as an avid television watcher/fan and an avid gadget junkie, this makes complete sense. I have a truly frightening collection of TV shows on DVD (just the TV show sets take up almost an entire IKEA Billy Bookcase), I'm also a full-fledge iTunes addict for music -- but I can't recall ever buying a TV show or TV episode from iTunes, even though I've had a 60 GB video iPod for two years. Instead, I have two TiVos, but in the event that I do miss an episode of a show, I am more than fine with streaming that episode on my computer (where I would be watching the iTunes video 99% of the time anyway). If I want to buy the content, I'll buy the DVD, not a lesser quality DRM-ed digital version that doesn't have any extra features and that can't be easily moved place to place. I think the big argument of, "oh, you can watch TV shows and DVDs on your iPod" is better in theory than in practice. In theory, I'd have tons of videos on my iPod. In practice, I have the Guy Love video promo from NBC/Scrubs last year (oh, the irony), an episode of the Squadcast and a video clip of Blake Lewis from American Idol that I put on my iPod, just because they (meaning Fox) said it couldn't be done.
Furthermore, while some of the streaming or direct download programs are un-Mac friendly, Hulu, though still in beta, works great on my Mac, features new episodes and tons of older TV shows - many of which are currently (or were previously) available on iTunes, with minimal advertisements and streaming quality that is, I've got to be honest, absolutely as good as what you get from an iTunes download. And it's free. As I said, if I'm going to be watching the content on my laptop anyway. Certainly, this isn't the case for every user out there, but this report indicates that as it stands, not that many customers are buying video content off of iTunes anyway.
I would love to see NBC and Apple make-up -- if only so the NBC-branded podcasts would return to the iTunes directory or so that we could get free episodes every now and then -- but I tend to agree with the outcome of this report, even if Apple isn't the "bad" guy in this war, it's still the company that has more to lose from this break-up. Maybe Steve Jobs and Jeff Zucker should take negotiation advice from 30 Rock's Jack Donaghy (Alec Baldwin). Then again, maybe not.
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Reader Comments (Page 1 of 3)
Mystic said 5:47PM on 12-06-2007
The loser here is NBC because IMO most of the people who bought their shows on iTunes are not going to be buying them elsewhere, but rather downloading them for free.
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dashiel said 5:51PM on 12-06-2007
macworld 2008: apple introduces a dvr breakout box for apple tv along with quick and easy software to remove commercials. done. thanks for playing nbc.
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willy the impeached said 9:58PM on 12-06-2007
I can see it now ....
Jobs: "So you have the features of TIVO only better ... and the ability to download from iTunes and sync with your macs. So what do you pay for this? Well TIVO HD is $899 and AppleTV is $399 and this is much better than both so .. only $1499!!! Folks its a steal! Now go get some Koolaid ladies .."
Ryan said 6:03PM on 12-06-2007
I'm not fond of the idea of paying for a copy of a program I could otherwise get for free unless that program is extremely enjoyable/memorable. The weekly episodes of 30Rock or Scrubs, for example are enjoyable only as long as they remain on television. I never find myself wanting more episodes or wanting to relive something I saw months back. As such, a web-only version of the show works just fine for me.
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Adam said 6:33PM on 12-06-2007
unfortunately the web only versions have ads and low quality
lakiolen said 5:54PM on 12-06-2007
Please read http://www.roughlydrafted.com/2007/12/06/forresters-james-mcquivey-announces-the-death-of-itunes-again/ if you have any inkling of actually believing what McQuivey spouts.
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Michael Long said 6:06PM on 12-06-2007
Your point only pertains to all of the available options for obtaining television. If, however, other rumors pan out and Apple brings Fox and the other studios online for MOVIES, then the need for NBC's television content is reduced considerably.
See: http://www.iSights.org/2007/12/higher-prices-o.html
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Stephen Antonucci said 9:20PM on 12-06-2007
Apple does not need NBC back at all the loser is clearly NBC who has lost access to the entire iPod-iTunes user base that were paying to download for content NBC already aired for free. NBC seems to only understand the old broadcast model of ad based content.
Now P2P and PVRs are busy receiving the NBC content they want for free. iTunes was never a big seller of TV shows as they are too expensive, too low quality, and full of DRM. Apple will not lose any sleep over this.
NBC will when they lose not only the "few millions" they were making, but lose the promotion they were getting from the huge base of iPod users. It will be years before anyone will knock iTunes off the top, if ever.
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mabhatter said 2:07PM on 12-16-2007
Exactly, NBC just lost all those sales of it's shows RIGHT NOW. Apple only makes money off itunes to cover server and bandwidth costs.. iPods are the moneymaker. NBC saw that iTunes was competing against Walmart and Target for DVD sales... and NBC figures they can cut out Apple for doing a good job and make more profits than from retail or itunes!
NBC planned to leave Apple before they ever negotiated. Everything in the press was a lie because NBC had already agreed behind closed doors to set up Unbox. They were pulling a marketing stunt of asking for stuff they knew they wouldn't get, only to turn around and then declare Apple's counter offer "unreasonable" as well. NBC wants to own the digital distributor, when that is established they'll cut out the Retail vendors as well.
J said 6:31PM on 12-06-2007
Case in point why Hulu sucks:
When I attempt to watch your probably genius negotiating example I get the following message -
"Unfortunately this video is not currently available in your country or region. We apologize for the inconvenience."
They just don't get it do they?
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Tony said 7:04AM on 12-07-2007
"When I attempt to watch your probably genius negotiating example I get the following message"
Now try to get any of the programmes mentioned on itunes from outside the US. Oh wait, you can't.
This is not Hulu's fault (or itunes for that matter).
Shawn Harstad said 6:32PM on 12-06-2007
Forget iTunes.
hulu.com is awesome.
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John R said 6:41PM on 12-06-2007
You are kidding when you say you buy into McQuivey's crap?
Forrester Research is routinely wrong. Remember
The Register's - iTunes sales 'collapsing'
quote: "The leading DRM digital download service, Apple's iTunes, has experienced a collapse in sales revenues this year according to analyst company Forrester Research."
They are so wrong that I suspect they may be in someone's pockets (who shall remain unknown!)
And have you tried Hulu? It may be free (for now) but my family don't want to sit around my laptop to watch 'House', do yours?
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Mtirv said 7:11PM on 12-06-2007
And they do want to sit around your iPod and watch House?
John R said 6:45PM on 12-06-2007
Sorry screwed-up the url for the Register's article
http://www.theregister.co.uk/2006/12/11/digital_downloads_flatline/
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fishbert said 8:12PM on 12-06-2007
Any drop in iTunes TV show sales can't possibly have anything to do with the on-going writers strike... must be the NBA/Apple fued...
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Tom Reeves said 6:49PM on 12-06-2007
I put a few snarks about this inane article on my blog - pwnership.com, the most relevant titled, Costly And Hard, The New Easy. The main point:
Costly: On iTunes I can by an ‘hour-long’ TV show for $1.99. Its actually only 42 minutes long. So I can pay $2 or pay 18-minutes of time to watch ads. I will always pay $1.99. My time is even more costly.
Hard: I cannot watch ad-based, platform-restricted programs on my iPod. I cannot watch those programs on my TV. I cannot watch many of those programs on my Mac. Those problems are hard to solve when starting with ad-based, platform restricted programs.
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Edsel said 6:48PM on 12-06-2007
I haven't watched television in well over ten years. The Internet, and before then, CompuServe, have served my news, entertainment, business and social networking needs better than any old fashion television studio. NBC and the other studios are dinosaurs ambling toward extinction.
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KF said 7:01PM on 12-06-2007
Have you guys actually tried Hulu? NBC will be coming back to Apple in no time. That service is going to completely tank. If they had something close to the HD streaming that ABC does, I'd say there might be some worry.
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Machole said 12:55PM on 12-07-2007
I've tried it. What exactly do you feel is the problem with their service (other than the lack of an Apple logo)?
I think it's bad for everyone that NBC decided to split. And the timing of it with the writing strike really hurts everyone more so hopefully everyone (on both sides) will grow up and play nice.