Apple vs. NBC: Who’s the biggest loser?
I was hoping it wouldn’t come to this.
Over the weekend Apple removed most of the remaining NBC Universal video content from the iTunes Store. No longer can fans download episodes of The Office, Heroes or Battlestar Galactica.
The falling out between the two companies has been public since August when NBC Universal announced it would not renew its contract to sell content on the iTunes Store. Apple retaliated the very next day with a biting press release announcing that iTunes would not carry new episodes of NBC programs premiering in the fall season.
Many observers (yours truly included) thought the bluster was mostly public posturing and that the two companies would resolve their differences before the December deadline.
But when NBC CEO Jeff Zucker launched another verbal tirade against Apple and iTunes a month ago, any prospects for a deal evaporated. “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.”
That statement made it clear Zucker had declared Apple the enemy and had no interest in further negotiations. Apple has claimed NBC wanted to raise prices too high and objected to variable pricing, which contradicts the general iTunes Store policy of uniform pricing.
Now that this game of corporate chicken has ended in a head-on collision, pundits have tried to sort out who has suffered the most damage.
According to Forrester analyst James McQuivey, it’s Apple. In a report released Monday, he wrote: “Don’t let the Macgeeks posting angry blogs against NBC fool you [DZ: should I be insulted?]. 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 portal sites.”
Maybe so. But without iTunes, viewers have no option for downloading shows to watch them on an iPod or other video device. I won’t go so far as to predict a “backlash,” but if you don’t give the customer what they want, they’ll seek it elsewhere. And when I say elsewhere, I’m talking pirate sites. And it’s unlikely the pirate sites will be sending NBC Universal millions of dollars – as did Apple -- when its users download NBC shows.
I’m not saying losing NBC’s content won’t hurt the video arm of the iTunes Store. It obviously will. But it won’t have that much impact on Apple’s bottom line, either. Video is Apple’s least successful venture so far (see: Apple TV). As long as the Mac, iPod/iTunes music combo and iPhone businesses are thriving, video is not critical.
The situation as it stands leaves both companies worse off. NBC Universal, for all its trash talk, will lose money while angering viewers. Apple will lose money in addition to some of its stature as a provider of video content.
But by far the biggest losers are the fans of the TV shows who would rather legally download their favorite programs from iTunes as opposed to the inferior options NBC is giving us.
That’s you and me, dear reader. And sadly, there’s not much we can do about it.
Comments
Can't we start a letter writing campaign? Email campaign? Signature drive?
I've considered taking NBC off my list of channels but I am not sure how they would ever notice. Normally you go after the advertisers but because iTunes locks them out too, I'm doubting you will get much traction.
Posted by: Doug Petrosky | December 5, 2007 1:18 PM
Apple needs NBC as much as it needs advice from Redmond.
NBC has no new product (writers' strike) and it has limited its online distribution prospects.
Tell me again who has lost this one?
Posted by: mackowen | December 5, 2007 1:36 PM
The thing I don't get with NBC is that supposedly they are mad at Apple for not charging enough and not sharing enough revenue with NBC for their content. So they pull their content and then give it away for free??? Why not do both. Give free content on NBC.com and Hulu.com. But for those with iPods and iPhones that want to watch on the road they can pay $2 to see last nights Heroes episode. Seems like a no brainer.
I think the real reason behind all this is that its a test by NBC to see how NOT having their content on iTunes but available on free sites affects ratings. Many people give iTunes credit for saving shows like "The Office" and "Heroes" from initial bad ratings. And exposing those shows and others to atypical viewers that Nielson ratings normally don't account for.
Posted by: ck | December 5, 2007 1:44 PM
Don't care...
I don't watch their crap on TV why would I watch it on my iPod.
Posted by: Robert Mancini | December 5, 2007 2:12 PM
Considering that NBC is last in the ratings, and iTunes is credited with saving the few hit shows they do have, it's not too hard to figure out who the loser is here.
Think about it -- is Apple going to lose even one iPhone/iPod sale because NBC shows are no longer on iTunes? Didn't think so.
From his public statements it is clear that Mr. Zucker is so jealous of Apple's success, he wants to take his ball and go home. Fine. My reaction was to turn to Elgato's EyeTV DVR products as I can no longer download from iTunes. No doubt Mr. Zucker will be knocking on Elgato's door, demanding a percentage of their sales next. Good luck with that.
Posted by: Ted T. | December 5, 2007 2:52 PM
Here's the latest on all of this:
http://m.paidcontent.org/entry/317496
No one "lost" here - this story ain't over yet...
Posted by: CJ | December 5, 2007 3:50 PM
I really believe that NBC is jealous of Apple's success. What makes them think that their programming is so much better than the rest of the programming on iTunes Store? If Apple had to negotiate with NBC then they'd have to negotiate with all the other stations about variable pricing. Keep it simple. Once price for all videos and TV shows.
NBC seems to be anti-Apple. NBC sucks and I hope they fail on their own. NBC is plain greedy. We'll see how much money they make now.
I feel sorry for those iTunes Store viewers that lost future episodes that NBC provided.
I don't give a crap because I have a TimeWarner Cable HD-DVR and I can record all the shows I want, run them through my Plextor ConvertX and play them on my iPod if I desire. I don't need NBC's tailored videos.
Posted by: Constable Odo | December 5, 2007 4:41 PM
NBC...."Seinfeld" stands out, but that was almost a decade ago.
Apple...Macs, iPod/iTunes, iPhone....I have no doubt that their success and innovation will continue.
Posted by: Ivy Claire, RN | December 5, 2007 4:46 PM
congratulations.
this is the most intelligent reporting i have seen yet regarding video distribution online.
its my belief that online video demand will skyrocket after xmas due to nearly every MP3 player being sold now supports video playback.
NBC's strategy does not fulfill users needs to placed the content on their new devices. so logically they can only go to itunes or bit torrent.
ultimately video publishers will lose just as the record companies did.
Posted by: steve | December 5, 2007 5:23 PM
Google McQuivey and Apple. Read anything he's written about Apple, and draw your own conclusion. He's always wrong when it comes to Apple. Clueless is an appropriate word here.
As DZ noted, video sales have negligible impact on Apple's bottom line. Doesn't NBCU or McQuivey know how easy it is to pirate (rip DVDs and convert to iPod format)? Don't they realize how easy it is to record from TV (even HD) and convert to iPod format? NBCU is fearful of Apple and its impact on the TV industry, but they better move fast if they want to survive, since no one else followed them out of iTunes.
Posted by: mark | December 5, 2007 7:55 PM
A combination of greed and lack of vision of the Internet market are becoming an Achilles heel to the TV and song industry.
As they continue to be stubborn about providing their content they will find more and more people turning to bit torrent and other pirating technologies to get it anyway.
Posted by: Todd | December 6, 2007 3:44 PM
NBC has made a major bloop - they are sitting in a office with Zucker trying to figure out how to come back to iTunes w/o looking like complete idiots.
Posted by: Amish | December 8, 2007 9:19 AM
Well maybe I'm just weird, but anyone who watches TV shows on a less than 2 inch screen is very strange... And if I remember correctly they charge $2 a episode... Also expensive if you ask me, especially so considering you can watch most of these shows on the channel's website eg. nbc.com, abc.com etc...
But all that is beside the point, if people actually pay for that I suppose its up to them. I personally think that the media industry (abc, nbc,cbs etc... and especially the record labels) is all a bunch of greedy people who have lost site of what they are actually trying to do which is to entertain. How many good TV shows have been cut short just because after a few episodes it didn't catch on like they hoped? Too many; they really ought to give the shows a chance... And Nielson ratings are crap! You can't represent the whole nation on just a few thousand of those boxes.
Posted by: Nori Silverrage | November 28, 2008 10:26 AM