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NBC Universal Unlikely to Join Apple's 99-Cent TV Show Rental Program
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bone heads
It's entertainment in itself to watch CEOs of so many companies get it sooo wrong. Bone heads. This increases the value of shows... Do they not understand that the $.99 is a rental? That's a winning proposition for them. It's like free money! How is $.99 for a temporary view a devaluation compared to watching it for free on the web? Advertising with the free versions couldn't possibly pay that much...
They also need to keep in mind that it's a TV show, not a movie. I think they have wet dreams about TV episodes renting for $3.99 or some crazy figure customers will never go for. Customers can still purchase TV shows for $1.99 for people who want to keep the episode long term. It's all upside for the studios - advertising supported free episodes (ie: Hulu), $.99 rentals, and $1.99 purchases - 3 forms of revenue!! Are they really that dense?
It's entertainment in itself to watch CEOs of so many companies get it sooo wrong. Bone heads. This increases the value of shows... Do they not understand that the $.99 is a rental? That's a winning proposition for them. It's like free money! How is $.99 for a temporary view a devaluation compared to watching it for free on the web? Advertising with the free versions couldn't possibly pay that much...
They also need to keep in mind that it's a TV show, not a movie. I think they have wet dreams about TV episodes renting for $3.99 or some crazy figure customers will never go for. Customers can still purchase TV shows for $1.99 for people who want to keep the episode long term. It's all upside for the studios - advertising supported free episodes (ie: Hulu), $.99 rentals, and $1.99 purchases - 3 forms of revenue!! Are they really that dense?
This is what happens when Apple release a device that has extremely limited content and they don't want to play with others.
If AppleTV had Hulu+ (or one of the many, many other VOD services) this wouldn't be an issue, and when you consider how many consumer devices now offer Hulu+ the fact Apple doesn't just reinforces how limited the AppleTV is.
Again, you can buy many devices that offer more content services than AppleTV why would NBC want to be locked in to a platform that is going to be bought by only a handful of users when they could concentrate on the multitude of manufacturers shipping easy-to-integrate VOD apps built-in to their televisions, media players, game consoles and Blu-ray players?
NBC have their own on-demand service which is far more popular than AppleTV. They don't need Apple.
If AppleTV had Hulu+ (or one of the many, many other VOD services) this wouldn't be an issue, and when you consider how many consumer devices now offer Hulu+ the fact Apple doesn't just reinforces how limited the AppleTV is.
Again, you can buy many devices that offer more content services than AppleTV why would NBC want to be locked in to a platform that is going to be bought by only a handful of users when they could concentrate on the multitude of manufacturers shipping easy-to-integrate VOD apps built-in to their televisions, media players, game consoles and Blu-ray players?
NBC have their own on-demand service which is far more popular than AppleTV. They don't need Apple.
NBC really sucks.... 99cents to much for a show? Cmon!
NBC also offers... crap they should priced at 50cents!
LOL. They're killing theirself. We have seen it with music and Apps, lower price are the right answer! I would not pay more than 99 cents for a tv show.
Time is money folks.
Give me an 18-20 minute uninterrupted show for $0.99 any day over a 30 minute show full of ads.
Apple knows customers don't like that. Apple finally gave into music labels with tiered pricing.
For me NBC's shows aren't worth even 99 cents, and certainly not to rent. I'll sit through a few ads on Hulu if somehow they come up with a show I want to watch but their recent programs have been poorly written (Heroes), poorly treated (Southland) or just poor all around (too numerous to list).
I don't know how many Pagan gods Zucker made deals with to retain his Reign of Terror at NBC as long as he has, but it's got to be coming to an end soon. The guy is an absolute atrocity.
Why would you expect a television network that has been associated with Microsoft to take any risks on behalf of Apple? NBC Universal is clearly waiting for tablets with a new Microsoft operating system to appear so that it can leverage a competitor to Apple in addition to whatever it decides to do with Hulu. NBC knows that, as in the past, Microsoft will accede to whatever demands the content providers make on it and pass the cost on to the OEMs and consumers.
These media companies devalued themselves when they started producing cheap garbage reality shows...I have a DVR, and cable which I pay way too much for...If I were to rent a show it may be while i was on the road or if I forgot to set my DVR (bc Comcast has not decided to implement remote DVR in my market) I have noticed that I really only do watch 5-8 shows regularly. Most of the other time is catching something cool. ATV will never replace that. I think that NBC stands to make more per view at .99 per ep than they do from the cable companies who are the ones who make the real money.
If they assisted in marketing and eased the distribution .99 per ep would increase the value of their show...add content like a behind the scenes blah blah blah. At the end of the broadcast episode direct the viewer to itunes start counting the money
These people must live on another planet or stuck 10 years in the past.
Content is hardly worth the .99.
You would think with the so-called shape the economy is in, they would want to sales.
The thing to do is to reward companies that are doing the right thing or at least walking in the direction we would like them to as consumers.
The AppleTV is no where near conceptional perfect but, it is a step away from the overpriced Satellite and Cable bills we have today. It will not be too long where everything is or should be streamed via home computers or some type of "box".
People either need to jump on board with this and force Apple to keep working on making this the solution or come up with the device and plan/prices that can get us there.
Content is hardly worth the .99.
You would think with the so-called shape the economy is in, they would want to sales.
The thing to do is to reward companies that are doing the right thing or at least walking in the direction we would like them to as consumers.
The AppleTV is no where near conceptional perfect but, it is a step away from the overpriced Satellite and Cable bills we have today. It will not be too long where everything is or should be streamed via home computers or some type of "box".
People either need to jump on board with this and force Apple to keep working on making this the solution or come up with the device and plan/prices that can get us there.
But they won't watch those P2P shows on their Apple TV, because for some unknown reason Apple insists on limiting the codec support on that device.
If they broadened support for the formats normally available via bittorrent, then NBC would be begging for a chance to sell their shows at $0.99.
Unfortunately NBC may be right. I’ve look at some numbers and came up with the following:
Top performing shows on the big four networks can net as much as $.50 per household in advertizing revenue. At 11M viewers, a 1 hour episode could gross $5.5M
Lets assume TV renting becomes very popular and 4M of viewers stop watching this show via broadcast TV and start following the rental model. Since the show lost viewers, they can no longer charge the same rates that allowed $.50 per household. Now they can only charge $.25 per viewer (a single show with a large number of viewers is more valuable then two shows with ½ the rating since there is no viewer overlap).
Broadcast TV to 7M viewers grosses $1.75M
Rental to 4M viewers grosses $2.8M
Total $4.55M
The numbers show realistic scenarios where successfully renting at $.99 could result in a significant drop in total revenue due to devaluing the broadcast advertising rates. I can understand their hesitance.
Top performing shows on the big four networks can net as much as $.50 per household in advertizing revenue. At 11M viewers, a 1 hour episode could gross $5.5M
Lets assume TV renting becomes very popular and 4M of viewers stop watching this show via broadcast TV and start following the rental model. Since the show lost viewers, they can no longer charge the same rates that allowed $.50 per household. Now they can only charge $.25 per viewer (a single show with a large number of viewers is more valuable then two shows with ½ the rating since there is no viewer overlap).
Broadcast TV to 7M viewers grosses $1.75M
Rental to 4M viewers grosses $2.8M
Total $4.55M
The numbers show realistic scenarios where successfully renting at $.99 could result in a significant drop in total revenue due to devaluing the broadcast advertising rates. I can understand their hesitance.
You're correct, sort of. You're numbers are at only one point on the slope. If you continue the slope to where all 11M viewers rent at $.99, it would equal $7.6M, over $2M more than what the make now. There's a break even point in there somewhere, but I'm too lazy to do all the math...
The other scenario that's a real possibility in the not too distant future, is that Networks stop broadcasting all together and move completely to an online distribution platform. Here they could charge for shows and embed limited advertising. I guarantee that accountants are running these numbers at the biggest networks, right now.
You're correct, sort of. You're numbers are at only one point on the slope. If you continue the slope to where all 11M viewers rent at $.99, it would equal $7.6M, over $2M more than what the make now. There's a break even point in there somewhere, but I'm too lazy to do all the math...
Agreed, but I think that this the real sticking point. I don't think that the Networks have enough information to know if, when, and for how long they could lose money as viewer transition towards renting. The Network exec's aren't known as big risk takers.
Just the possibility of losing money makes them hesitant.
Hopefully it doesn't take them too long to jump on-board. Heck I wouldn't mind (that much) if they threw a couple of national ads into the rentals in order to hedge their bets. I just want a complete rental catalog.
Maybe Apple should allow the Networks to set the pricing per show, like they do with iBooks. The most effective pricing will bubble to the top over time.
No commercials, no stupid network logo or advertisements on the screen (ok there is still product placement). I'm not 100% for this rental thing just yet, I see potential. I was just answering the question.
Agreed.
People aren't giving NBC nearly enough credit for knowing their own business. The "devaluing" of their content isn't really about rentals vs buying. As above, it's more about advertising rates, physical disk sales, and, most importantly, franchise fees.
Adding to the above analysis, the networks get money from the broadcast stations and from the cable companies to carry their shows. The loss of those 4 million viewers lowers the value of the show for the broadcaster and for the cable company. They may, and ought to, go back to NBC and demand lower payments. Those payments are far more important to the networks than any rental income.
The fight here isn't between rent vs buy or ad supported vs ad free. It's between ala carte episode consumption over the internet and subscription services (including on demand) through cable companies. At the moment, the cable companies are worth far more to NBC than any on-line distributor not just Apple, so they are quite reasonably going to be very cautious with anything that threatens that revenue stream.
When I look at the App Store (iPhone only) top 25 list I see:
16 Apps priced at $0.99
2 Apps priced at $1.99
6 apps priced at $2.99
1 App priced at $4.99
Of course, the Top 25 on the iPad list is significantly different.
Look at the top GROSSING apps -- the #1 grossing App is $4.99. In fact, of the Top 25 GROSSING app store apps, there are only SEVEN (7) priced $0.99 or less.
The fact that apps priced above the baseline ($0.99) are currently among the most popular, and certainly among the top grossing, lends a lot of credibility to NBC's position, imo.
People will pay more for a quality product. Whether the content NBC broadcasts is quality (or not) is certainly debatable.
I'd love to see ANY analysis that supports that networks are making anything close to $.99 (or even .50, allowing for Apple's cut) off either OTA or Hulu per epsisode view.
OTA Revenues==Ad revenue / Number of viewers + Cable/Satellite Carriage Fees. Assuming a 30-second spot cost of 100-200K (which is what a HIT TV show charges), with viewership in the tens of millions, and 14 spots per 30 min show, at best the networks may make between $.06 and $.30 per showing per viewer.
Hulu is chump change due to low ad rates AND low viewership (compared to OTA)
So, tell me again how $.99 for one viewing is undervaluing the content?
The real fear here is not that it's undervalued, but that the network is in essence losing control of distribution. If everyone rents through iTunes (or Google, or Netflix), then there is no syndication, no carryover effect to launch new shows or boost news ratings. That's what the networks really fear--but that's the future.
People want content of their choice, on their schedule. They may (or may not) accept advertising, based on the cost savings to them. Once the premium providers of content (HBO is the best example) start selling direct, the days of the networks are numbered...
I'm curious to know how much the network actually gets from one viewer watching ad supported content... Because if it's 99 cents those advertisers are wasting a lot of money on me...