Apple-NBC War Continues

Jeff Zucker, head of NBC Universal, wanted a piece of Apple's iPod sales in return for a deal to sell NBC's programming on iTunes: 

"Apple sold millions of dollars worth of hardware off the back of our content and made a lot of money,” Zucker said. “They did not want to share in what they were making off the hardware or allow us to adjust pricing."

“We don’t want to replace the dollars we were making in the analog world with pennies on the digital side,” he said.

So, let me get this straight Jeff.

You want Apple to pay you a percentage of each iPod sale for the right to sell, for $1.99, an episode of the Office on iTunes.

Now, this is the same content that you give away for free every week. 

The same stuff that anybody with a TiVo can record and then skip all those commercials when they watch it later.  

Are you the dumbest guy on the planet? 

Good luck with hoho or whatever you call it. HoHo is not exactly burning with buzz but I'm sure it's just what everyone wants - the ability to watch streaming TV and movies with commercials on their PC. 

Oh yeah, and another thing Jeff. Apple didn't sell iPods off the back of your content (which you already give away for free). Apple sold iPods off the back of the Big 5 music label's content (LOL). 

Seriously, Zucker's thinking is the problem here. He believes that his viewers will just watch where and when and how he says they will. It is a pre-digital mindset. The problem is that as DVD's, TiVo and iPods and iPhones have become common place, viewers have realized that they like the ability to choose the time and place and medium to watch TV shows and movies. That's why the movie theaters are slowly dying. Its why TV ratings are steadily declining. Its why DVD, iPods and TiVo sales are increasing.

Zuckers mindset conveniently forgets that iTunes sales saved his bacon:

"I'm not sure that we'd still have the show on the air" without the iTunes boost, says Angela Bromstead, president of NBC Universal Television Studio, which owns and produces "The Office." "The network had only ordered so many episodes, but when it went on iTunes and really started taking off, that gave us another way to see the true potential other than just Nielsen. It just kind of happened at a great time."

I think Apple should do one of two things - either seriously look into buying NBC Universal from General Electric or, drop the H-Bomb and release a version of iTunes that will rip DVDs in the "it just works" Apple way. I'm sure either move would get the movie studios and networks to play ball.

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iTunes Needs Movie Rentals

With the exception of the iPod Shuffle, all of Apple's iPods and the iPhone support video playback. Yet, the movie and TV sections of the iTunes store have become stagnant with little new content. While iTunes has millions of songs for sale, it has less than 1,000 movies. The Apple TV, Apple's "hobby", appears to be going nowhere. Apple needs to do something soon to step up its video content market. But what? 

Well one of the things Apple seems to be doing is to go after short films. But this is not a viable long-term solution. Apple needs video content soon to help fill up all of those iPods and iPhones that will end up in stockings this Christmas. Many of those iPods are going to be replacing ones that can't play video. Come the end of January, unless Apple has something up its sleeve, people are going to start asking why there's no content. 

Apple's position seems to be that the iTunes movie and TV sections are still young:

“We’re really at the beginning stage in the movie space,” said Eddy Cue, Apple’s vice president for iTunes, adding that iTunes had sold more than four million movie downloads...but still had fewer than 1,000 titles for sale.

But this is simply not a reasonable argument when all of your products support video playback.

To further put the heat on Apple, the infamous NBC-Apple feud has apparently ended badly for Apple as talks between NBC-Universal have broken down. Thus, come December 1, all NBC shows, many of which are iTunes top sellers, will be pulled from iTunes.

Unlike the music business, Movie and TV producers seem to have Apple's number:

NBC Universal spokesman Cory Shields said his company's programs help drive the sales of iPods. "The iPod is only as good as the content on it," he said.

I suspect NBC's challenge to iTunes will eventually fail. Although (unlike the music business), NBC does not get any significant portion of its revenue from iTunes sales, it does get buzz among the people it most wants to attract with its shows. Not to offer it on the iTunes store is just foolish. But, the fact that NBC can even think it is possible to challenge Apple and the reason Apple's movie selection is so meager can probably be pinned on one person: David Porter of Wal-Mart. 

It seems Mr. Porter has clubbed the movie studios into submission in order to protect Wal-Mart's multi-billion dollars in DVD sales. As a result, digital movie sales are stuck in the mud with limited selection and insistence by the studios on high prices and ridiculous digital rights management (DRM) restrictions. 

But there may be a way out for Apple: Movie Rentals.

Apparently studios that had been reluctant to make their digital content available for sale through Apple are considerably more enthusiastic about video-on-demand (VOD) rentals because they wouldn't compete directly with Hollywood's own DVD sales operations.

There has been some speculation that Apple will soon be ready to roll out movie rentals. If true, then expect Movie rentals to be the main attraction at January's Macworld.