Does Apple need NBC back?

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Forrester Research firm analyst James McQuivey thinks that Apple is on the losing end of the NBC/Apple troubles, and that they need NBC back – FAST. “Don’t let the Macgeeks posting angry blogs against NBC fool you,” McQuivey’s report reads, “The loser here is Apple, which relies on NBC Universal to deliver 30 [percent] of video download sales. Any supposed backlash against NBC will not materialize because NBC has made its content available, for free, on NBC.com and six other major portals sites.”

He thinks that Apple needs NBC back — and FAST.

He’s wrong, though. Here’s why.

For Apple to get NBC back in the fold for iTunes store downloads, Apple is going to have to make some serious concessions to NBC/Universal.

I wonder if this analyst has ever heard of a little thing called the domino effect?

Because what would happen here is that if Apple caved to NBC for their television programming, then not only would other networks follow suit in demanding the same deal, but that effect could even tumble over into music – since Universal is one of, if not THE, largest music companies in the world.

For Apple to retain control over pricing in the iTunes store, it is essential that they not give in to NBC’s demands. The loss of that 30% of revenue would be nothing compared to the loss of control over the pricing within the iTunes store.

Apple has already recently made concessions within the iTunes store for feature film pricing, which could negatively impact the entire pricing structure, which makes it all the more essential that they not back down on this issue now.

As McQuivey points out, NBCs content is going to be available in no less than 6 other places or methods. Those other download methods would not go away if Apple suddenly let NBC charge more for episode downloads – so that even lessens the chance for Apple to retain that ever important 30% of sales. In fact, it’s highly likely that even if NBC shows had stayed in the Apple store, that sales numbers would drop dramatically from NBC’s half dozen alternative methods of download (not counting Bittorrent).

NBC is going to have to go out into the world and try this thing on their own. If they are successful, then we’ll probably never buy another NBC show in iTunes – and I can live with that. If there not (and with the ridiculous DRM – and constant commercials on their other offerings, how could they be?) then NBC shows will one day return to iTunes.

We’ll just have to wait this one out.

Comments

  1. I think at this point, despite whatever “insight” anyone thinks they have, it’s really just a matter of taking a “wait and see” approach. Whether you like it or not, Apple has pretty much cornered the market on downloadable media content for the past couple of years, and of course, that’s going to make any company like NBC nervous.

    I say, let them step out and take the chance. If it fails (which, from what I’ve seen and heard, it’s heading that way), then chalk it up to a learning experience. But if it succeeds, then it will just make for better product for us down the road…hopefully.

    But that’s just my $.02

  2. Bryan Gibson says:

    @Drew: I agree. I hope they fail miserably.

    I for one purchase 100% of my TV content from iTunes. I refuse to purchase TV shows on DVD because I don’t need a case and a booklet, and most of them come in boxed sets, which I don’t need cluttering my already over-filled DVD cabinet. Idiots….

  3. I agree. I think Apple needs to rectify this.

    Sure I can watch NBC shows online for free, but what about Bravo?

    The loss of that might single handedly make me have to get the satellite back on and stop getting my television from Itunes.

  4. Gary Morgan says:

    I’d like to see the day when Apple produces its own movie content (other than Pixar) capable of competing with the big boys. Apple World Wide Productions. Sounds great to me.

  5. I’d like to see them do what Gary Said with music.

  6. I think that NBC totally misunderstands what’s been going on with iTunes and their market in general.

    First, the fact that their content was on iTunes did little, if anything, to spur sales of the iPod. As many studies have shown, the vast majority of content on iPods is from the owners’ own CDs or downloded ‘freely’ from the Internet.

    Second, offering their content for free in a number of different locations doesn’t help anyone. It just confuses things even more. Also, as it’s not moveable to iPods, the majority of those that would be interested in viewing it will never look at, or for it, again. If they can’t get it for viewing when and where they want it, they simply won’t bother with it.

    As our economy moves further and further into being service-based, does it make sense to have dozen’s of different places to go to find what you need and want? Don’t they wonder why Wal*Mart is so successful?? Why are they so willing to give their content away for free–yes, they’ll get some ad revenue from the mandatory commercials, but that’ll dry up as soon as the number of viewers sinks–when they know that people are willing to pay for the convenience of accessing what is already free to them anyway? Just to spite Apple? That makes good business sense, all right.

    They just don’t seem to realize that the industry has changed dramatically. Cable channels and the Internet are rapidly encroaching on their primary audience and all they can do is run to their advertisers trying to get more dollars for a smaller and smaller audience share. That, and produce TV shows that are inane and not entertaining, which shrinks their audience even further.

    They should be much more worried about pleasing and not alienatiing their remaining audience.

  7. Bryan Gibson says:

    They’re totally insane now…they’re blocking ads which support the troops and send them holiday greetings. Friggin’ commies….

  8. The Wizard says:

    @Bandito, I totally agree with you.

    @Michael, Excellent critique of Forrester’s argument. I bet you would score at least a 5.5 if not a 6.0 on the GRE exam’s critical writing section. Good job.

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