One would think that Apple would want to pump as much video material as possible onto iTunes as they promote Apple TV and launch a new and improved video iPod, but in a surprising turn, Apple announced that it would be cutting NBC programming from their lineup.
Apple claims that NBC refused to renew its contract after Apple balked at paying fees that would more than double the retail price of episodes from $1.99 to $4.99.
Cory Shields, executive vice president of communications for NBC Universal said “It is clear that Apple’s retail pricing strategy for its iTunes service is designed to drive sales of Apple devices, at the expense of those who create the content that make these devices worth buying.”
Their contract ends in December, but Apple has announced that it will not be selling episodes from the new fall season because it did not want to have to pull programs midway through the season. Old episodes will continue to be for sale until December.
This means that popular programs including “The Office” and “Heroes,” both of which rank in the top-10 list of iTunes sales will no longer be sold. Apple says that NBC content accounts for 30 percent of its video sales.
NBC has less reason to be concerned. They have been successfully streaming many programs including “The Office” and “Heroes” from their website, and in the fall NBC is planning on launching an online video portal called Hulu, which will feature some of NBC’s shows.
This dissolution questions the future of online video content. Apple may not be able to maintain its near monopoly on legal downloads.
“Apple must face the fact that charging flat rates for television programs of varying lengths and vintage will not resonate with an industry for which advertising is its lifeblood,” Allen Weiner, an analyst with Gartner Inc., said. “This is especially true with the number of competitors who are streaming the same programs for free.”
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