Apple Seeking Price Cuts on iTunes Television Episodes?

[bdj21ya]

Your analogy doesn't quite hold up it the real world. I understand exchange rates fluctuate and are volatile but if you compare average income percentages then in Thailand a TV show would cost .04

I can't believe you're doing the math right on this one, so help convince me.

What you're saying (if you understood the post you were replying to) is that $1.99/(Average U.S. income) = ($.04/(average Thai income)).

If that's the case, I'm moving to Thailand, they sound rich. Exchange rates are not a terrible measure just because they are volatile. They are a bad measure because they don't tell you anything about purchasing power. If you're using the exchange rate to convert the price of shows in Thailand (I'm not sure how you're doing this, since I didn't know iTunes offered TV shows in Thailand) then it falls apart. The idea was to use only local income vs. local price of iTunes tv show to better measure the fairness.

 

[bdj21ya]

And at that point DVD sales are cannibalized. Look at the looky-loos who aren't sure what to do. Before, the cost of the DVD was so close, that it was worth it to just by the stupid box. Drop to 99, and a lot of casual users will just buy the show off of iTunes. DVD sales drop, and profits are lost...



...but you are getting the episode soon after airing rather than waiting until 9/4 for The Office Season 3 and I'm-still-not-sure for BSG Season 3. That's a big thing for a lot of people. My wife is going to miss the season premiere of the Office and until the NBC thing shook out, was planning on buying it off of iTunes (would have done so even if they had split the hour into two episodes).QUOTE]

Thank you for making some sense. Just to make sure everyone knows, the premiere will probably be available on iTunes, I suspect Apple will honor their portion of this contract through December (why go to court over this or have to pay NBC a settlement?)

 

[Scott982]

If the price dropped to $0.99 then I would probably start buying shows from iTunes but as of now I would rather purchase shows in HD from the xbox live marketplace.

 

[phytonix]

I would definitely buy more if they slash the price. I usually watch TV episodes once. $1.99 for watching it once is too much. That's why I only buy TV episodes, normally, in the airport while I have hours of lay over.

 

[ShavenYak]

This is the way the studios should be going. Sales volume would more than double. The resolution is only 640 x 480, after all, not the 720 x 480 of a standard DVD.

It's even worse for widescreen shows - the download is 640x360 I think. At least they aren't still 320x180 like they were before the 5.5G iPod and TV came out.

It looks small, but it's significant, especially when you know that you're also dealing with a lower bitrate mpeg 4 compression. Plus, the copy protection, which you don't have if you record the program on a TiVo, and you can't burn it to DVD.

But, MPEG-4 is more efficient than MPEG-2, and DVDs of TV shows are typically encoded at very low bitrates to fit the episodes onto as few discs as possible. I think if Apple gave us DVD resolution and bumped the bitrate up in proportion to the resolution increase, the shows would look just as good.

Or, you can take the NBC route: go to the Undead at Unbox and charge what you want.

Yep, I'm sure they're going to do so much better selling their shows at higher prices on an inferior service.

 

[ShavenYak]

I can't believe you're doing the math right on this one, so help convince me.

What you're saying (if you understood the post you were replying to) is that $1.99/(Average U.S. income) = ($.04/(average Thai income)).

If that's the case, I'm moving to Thailand, they sound rich.

You're the one who's not doing the math right. If the US price is 50x the hypothetical Thai price, the average US income must be 50x the average Thai income. If the average US income was $30k/yr, the average Thai income the original poster used for the calculation would be $600/yr. That's not rich by any standard except maybe some of the sub-Saharan countries.

 

[atari1356]

At $0.99 an episode I would definitely buy shows... especially Heroes (but I guess not anymore since NBC isn't going to be on iTunes any more )

$1.99 per episode is too much, I'd rather just wait for the DVD since it's of better quality and has bonus features.

 

[jgerry]

I think $.99 per episode is the sweet spot. Good luck convincing the content producers though.

Along with the $.99 price point, I still want a discount if I buy a whole season ahead of time. I'd also like to see a 720p HD version for that price, but I'd settle for $1.49. It's getting ridiculous that there's no HD downloads yet.

 

[motulist]

I would love it if they would offer the option to "rent" the show at a lower price. All I need the show for is for maybe about 2 days to watch it with my family. I don't watch TV shows again. It's all too familiar the second time around.

Hear hear! If they made 2 day rentals and priced it low enough that I didn't even need to think about it, then they'd make a TON of money! If they made it like 15 cents per rented episode then i'd constantly be renting tv shows and giving them tons of my money - as opposed to now, where I dl tv shows and they get zero cents per episode from me.

 

[nickane]

Also regarding the US//UK price comparisons; you cant base it on the exchange rate because it fluctuates and is volatile.

A better way to work it out is to see what % a $1.99 show makes up of the average US income, and what % a £1.89 show makes of the average UK income. Its about relative expense, not absolute expense based on currency rates.

Aside from the Thailand argument stated earlier, those prices still wouldn't be in line if apple was following your pricing strategy. It's no coincidence, that the US-UK % difference on these TV shows is far greater than that on ipods, macs and displays.

Yes, we do earn much more money than ppl in most other countries, especially the US lately, since the dollar longsince slipped from £0.70 to £0.49, but both then and now, $30000 gross annual income could probably buy as much if not more than £30000 gross annual income in our respective countries, and if the pound is now worth far more than $1.40, that fact can't be explained away by talk of VAT and higher income tax.

Petrol doesn't even come into it tho, US petrol is cheap because it is vital to the economy that transport costs remain low in such a big, spread-out country (and the fact that the people who run the US all run a few oil firms on the side means they have a vested interest in setting taxes low enough to keep the nation happily using way more than they need to, as LA Story pointed out so hilariously all those years ago).

 

[Zadillo]

I think this is the fundamental problem with their logic.

They seem to be saying that the only way to ensure that people value the DVD boxset is to make sure that the cost of buying the episodes individually online isn't much cheaper.

But I don't think this really works. Right now, I'm not inclined to pay $2 an episode for exactly that reason - because I know that for that money, I might as well wait and buy the DVD when it comes out.

But at 99 cents an episode, it would be cheap enough that I could more easily justify the expense, and I'd STILL be willing to fork over money for the full DVD when it came out.

With the downloadable episodes, you aren't getting the same quality, or the same bonus features.

I think the ideal situation, and what the networks should be hoping for, is this:

1) Consumer pays 99 cents to purchase individual episodes as they air. After a 23 episode season, they have paid $23....... about half the price of the DVD boxset.

2) When the DVD boxset comes out, the consumer thinks to themselves "Hrmm, I really liked that show, I'd like to own it on DVD and have the higher quality, extras, etc. I only paid $23 to buy the individual episodes, so it doesn't seem so bad".

This is much better I think than the alternative - a consumer who has maybe paid $46 for the downloadable episodes, but then doesn't want to buy the DVD because they know they already paid the same amount.


-Zadillo

 

[Epicurus]

Since I was never one to buy TV shows a la carte anyway, the per unit cost hasn't been $1.99 for me for a while. At $34.99 for 21 episodes, Scrubs only cost $1.67 per unit. At $9.99 for 16 episodes, The Daily Show was even cheaper at $0.62.

Now if Apple drops the price to $0.99 for all the standard definition shows they've got on the store now and keeps the $1.99 price point for HD shows... then I'm hooked on digital and DVD/Blu-Ray/HD-DVD will be long forgotten!

 

[BKKbill]

I can't believe you're doing the math right on this one, so help convince me.

What you're saying (if you understood the post you were replying to) is that $1.99/(Average U.S. income) = ($.04/(average Thai income)).

If that's the case, I'm moving to Thailand, they sound rich. Exchange rates are not a terrible measure just because they are volatile. They are a bad measure because they don't tell you anything about purchasing power. If you're using the exchange rate to convert the price of shows in Thailand (I'm not sure how you're doing this, since I didn't know iTunes offered TV shows in Thailand) then it falls apart. The idea was to use only local income vs. local price of iTunes tv show to better measure the fairness.

No what I'm saying is what % a $1.99 show makes up of the average US income (.00461 in 2003 $43,318), and what % a $.04 show makes of the average Thai income($2,453 not sure the year). It really comes to about $.11 if you go by % of annual income. Or as you said "if you understood the post you were replying to"

 

[jackc]

House rules! I agree, at $0.99, the decision to buy is a lot easier. I don't think it'll happen, but it would be nice.

Yeah, I'd start buying a lot more TV shows too.

Consider House. I'm just discovering this great show. To buy season 3 on DVD costs about $50. To buy all 24 episodes on the iTune store at $1.99 currently costs $48. Hmm. Decisions, decisions - do I want the higher-resolution version on physical media with bonus features, for the same price? Of course I do.

But at $0.99, I'd probably buy them now, watch just to get caught up on the soap opera bits in time for Season 4 to start in a few weeks, and then worry about buying the DVD later.

 

[sterno74]

NBC and Apple

This explains Apple's claims that NBC wanted to double prices. No, NBC didn't want to double prices, NBC just didn't want to HALVE prices. That's a ridiculous bit of spin on Apple's part.

 

[Consultant]

Hear hear! If they made 2 day rentals and priced it low enough that I didn't even need to think about it, then they'd make a TON of money! If they made it like 15 cents per rented episode then i'd constantly be renting tv shows and giving them tons of my money - as opposed to now, where I dl tv shows and they get zero cents per episode from me.

The thing is credit card companies usually charge 20 to 30 cents per transaction + a percent of the charge. So individual price of 15 cents will not happen.

 

[Darkroom]

NBC (and others) don't seem to understand modern living. who watches TV anymore? it's either TiVo or Torrents... i downloaded the entire season of Heroes (thinking i should probably check out what all the fuss is about)... but if each episode was $0.99 via iTunes, i probably would have bought the season instead of steal it (although "steal it" is a bit of an overstatement, since NBC aired it for free previously)...

as for owning the season on DVD... sure, that would be nice... if i was like a big fan of the show (which i'm not after watching the season)... DVD seasons are collectors items... and they're also like physical music CDs... NBC needs to look closer at all the music sales iTunes manages...

NBC (and others) also need to realize that myself and millions of others are a modern audience... we don't watch TV, we watch the internet.

 

[jackc]

This explains Apple's claims that NBC wanted to double prices. No, NBC didn't want to double prices, NBC just didn't want to HALVE prices. That's a ridiculous bit of spin on Apple's part.

I don't think that's quite what happened. NBC was talking about how it wanted to bundle shows together.

 

[Consultant]

This explains Apple's claims that NBC wanted to double prices. No, NBC didn't want to double prices, NBC just didn't want to HALVE prices. That's a ridiculous bit of spin on Apple's part.

No, NBC wanted "flexible" pricing. Think about it, would NBC's reason for flexible pricing is for them to make less money? NBC wanted to CHARGE MORE for their better watched shows. (Just like music companies wanted to charge $3, $4 for a hit single).

 

[Unspeaked]

For once, I think the networks are right on...

Look at CDs - they've stayed the same price (if not less) than iTunes prices. If they cost twice as much as downloads, it would be suicide for the record industry, even worse than it now!

I think the folks saying they'd buy 99 cent downloads AND the DVD later down the line are in the minority...

 

[Zadillo]

NBC (and others) don't seem to understand modern living. who watches TV anymore? it's either TiVo or Torrents... i downloaded the entire season of Heroes (thinking i should probably check out what all the fuss is about)... but if each episode was $0.99 via iTunes, i probably would have bought the season instead of steal it (although "steal it" is a bit of an overstatement, since NBC aired it for free previously)...

as for owning the season on DVD... sure, that would be nice... if i was like a big fan of the show (which i'm not after watching the season)... DVD seasons are collectors items... and they're also like physical music CDs... NBC needs to look closer at all the music sales iTunes manages...

i'm a modern being... i don't watch TV, i watch the internet.

Yeah, this is the big thing. So far, Apple has been almost always right when it comes to pricing.

We can argue endlessly about what prices various parties want (obviously the music labels and studios and everyone else would love to charge much more for their content), but the thing is, they are competing against freely available downloads of stuff.

I've heard so many people who say that they used to download music from Kazaa, etc. but at 99 cents, it's a good price point for them to download a song and not worry about the hassle of illegal downloading.

Now, obviously TV shows are different than songs (certainly there's a difference between a 42 minute show with video and audio vs. a 3 minute audio file), but the pricing issue is still similar. And there's also the factor that many people think of TV shows as a different commodity, as something they can watch for free on TV (or heck, for free on the sites of the networks now). Of course, you can hear a lot of music on the radio for free too, but whatever.

But anyway, I think it's the same thing with TV shows. At $2 an episode, a lot of people will still just go ahead and pirate it, just like they did with music before. At only 99 cents an episode, I think you'll find a lot more people willing to take the plunge.

So in the end, what is better for the networks? Maybe 10,000 people paying $2 for an episode of a show, or 100,000 people paying $1 an episode?

 

[davekarn]

If not an overall price cut, I think they need to start discounting the older seasons as well. Why pay $42 for season one of 24 when I can go to WalMart and pay half that? Also, I was surprised to see Amazon selling Heroes season 1 for only $31 (of course they're downloads don't work with iPods or iPhones) but that is more then $10 cheaper than iTunes. I just need more of an incentive to buy off of iTunes as opposed to owning the actual disk and this seems to be the first step in the right direction.

 

[LagunaSol]

$1.99 has always been too much for TV shows. $.99 is just right. If the studios would embrace this model, they'd see sales skyrocket. And become less dependent on advertisers in the process.

I could definitely kiss my cable subscription goodbye under such a model. This is certainly the future. Now we'll see if the studios boldly charge into the future or get dragged there kicking and screaming (NBC).

 

[Zadillo]

For once, I think the networks are right on...

Look at CDs - they've stayed the same price (if not less) than iTunes prices. If they cost twice as much as downloads, it would be suicide for the record industry, even worse than it now!

I think the folks saying they'd buy 99 cent downloads AND the DVD later down the line are in the minority...

But the bigger problem is, it's clear that the number of people willing to pay $2 an episode is pretty small.

Again, what is better? A small number of people willing to pay $2 an episode, or a m uch larger number willing to pay $1 an episode?

CD's aren't quite the same thing - the big thing is, CD's as a format are dying. They don't offer any tangible benefit to downloads (which is why the record industry is still trying to do these gimmicky CD's with video content, wallpapers, etc. on them).

DVD's of TV shows on the other hand are a booming market.

Moreover, DVD's offer bonus features, etc. than TV purchasers don't get.

Finally, downloadable TV episodes are different because part of the whole point is being able to download them as soon as the episodes air. The motivation to download an episode is different, and I don't think people see the downloadable TV content as being as "permanent" as they would TV shows.

Music (downloads vs. CD's) doesn't work this way.

You can't really compare the pricing issues of music and TV shows, as a result of this.

-Zadillo

 

[Buschmaster]

The only non-NBC show I've ever bought it Monk... I don't see myself buying many more episodes.

Come back NBC, I'll be more than happy to pay .99 per episode of Scrubs and the Office. Otherwise, I'll still be watching them...