NBC, Apple sever relationship

Published by • December 4th, 2007 RSS News Feed

Well it finally happened, NBC and Apple finally broke up.

NBC’s contract with Apple has expired and all NBC-owned shows are no longer available for purchase on the iTunes store. Fans might be saddened to learn that shows from other channels such as the USA Network and the Sci-Fi network will also be part of the exodus. The two companies were apparently unable to come to a consensus regarding pricing and subsequently engaged in a public battle of contradicting accusations.

Apple maintains that NBC wanted to raise the price of TV shows to 4.99 while NBC asserts that they simply wanted Apple to experiment with a tiered pricing system for only one show as an experiment. Some also speculate that NBC wanted a cut of iPod sales, something that Apple, or any rational company for that matter, would never agree to (sorry Microsoft). In short, neither side caved and this publicity-laden game of chicken ended in a draw for the two companies, leaving us consumers as losers.

Several interesting tidbits that are noteworthy:

First there is Jeff Zucker’s (Preseidnt and CEO of NBC Universal) absurd rationalization for his company’s hardlined stance against Apple. Zucker accused Apple of using its content to further promote the sale of its iPod players. Umm, last time I checked, isn’t that what companies do to sell TVs, DVD players, and an assortment of other appliances? Then, in so many words, he accused Apple of getting rich off of other people’s creative content and screwing the studios in the process. Oh lord, where do I even begin? For starters, the overwhelming majority of iPods are filled with music, not videos. And incidentally, the current writers strike gives you a better idea as to who’s screwing who in Hollywood.

Second, NBC saw how Apple shook up the music industry with iTunes and is paranoid about losing power, and more importantly, the ability to stranglehold partners for more money. Isn’t it ironic that NBC has such a short and selective memory? If you recall, when the NBC show “The Office” first premiered in 2005 it received lackluster ratings. Any viewer of the first season can attest to the genius comedy “The Office” bestowed upon its fans, but sadly, no one was watching. Once “The Office” became available on the iTunes Store, however, ratings didn’t mysteriously creep up, they skyrocketed! Putting “The Office” on the iTunes store not only made “The Office” more accessible to those who were previously unable to watch, but also created a strong word-of-mouth buzz about the show. In a short amount of time, “The Office” was transformed into a show what was on the brink of cancellation into a national hit. Now in it’s fourth season, the advertising revenue NBC has received from the show is probably so exorbitant that it makes you wonder just how greedy these studio execs really are.

Third, there are strong rumors that NBC wanted a cut of iPod sales which only served to complicate the negotiations. Maybe NBC should also get a cut of TV and radio sales. Can you imagine Samsung giving NBC $ for each TV set it sells? Microsoft agreed to give Universal a cut of every Zune it sells simply because it showed up late to the party and had no leverage during negotiations. In effect, NBC is trying to make the “Microsoft exception” the rule and Apple, rightly so, is not playing along — I guess greed knows no bounds.

The story doesn’t end there!

NBC, along with a few other TV partners, have decided to go it alone and offer consumers online videos via their new website, Hulu.com. The website is still in Beta and is expected to be fully functional sometime soon (no date has yet been set). The videos will all be ad-supported and as of now, they only work if you’re running “Internet Explorer, the NBC Direct Player (Windows Only), and the latest .Net framework.” Huh? Also, the video will only play on the computer used for the download and can not be transferred to any type of media playback device.

Will NBC’s attempt to wrestle back control from Apple succeed?

You would think that the bigwigs at the studios would be smart enough to create a service that would run on any browser (Firefox anyone?), on any OS (Mac anyone?) and not require the latest .Net framework (what the hell is that anyways?). The fight for online dominance in the realm of video is underway and Round 1 is about to begin.

Itola Author

is a business / tax attorney from the windy city. Yoni is also a gadget enthusiast who enjoys writing in the third person.
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