Variety.com – Apple seeks TV price cut
This could be one of the reasons why NBC left, but I think the media companies are crazy. They will make a lot more money in increased volume in downloads from the iTunes store, selling TV shows for $.99, than they would selling them for $1.99.
The story tries to say how much money the studios would lose in the DVD market if Apple gets their way. For example, the recently released Heroes DVD is selling for $40, but if it were to be sold in the iTunes music store, it would be $23.
But this does not add up for me. In this example, NBC would lose $17. But they don’t have to market it as much, they have no production costs like packaging and burning the discs, and they have no shipping costs of the product to stores. They can make a lot more money in the increased volume and lower development costs.
This is what Variety thinks will happen:
If cooler heads prevail, it seems possible Apple and the nets will come to a settlement in which shows are sold via tiered pricing, perhaps 99¢ for library titles, $1.99 for current hits and $2.99 for megahits or shows on premium cablers such as HBO or Showtime.
While big networks and studios seem to be scoffing at Apple’s proposal, some nets could welcome the idea. Cablers such as MTV or A&E may welcome the chance to sell their reality shows at a lower price, particularly since Apple would likely reward them with greater promotion on iTunes.
It will be interesting to see what happens. I would certainly welcome lower costs to shows and will miss NBC not selling their shows in the iTunes music store.