09.24.2007 08:32 AM
Networks shift Internet distribution strategy for fall season

NBC Universal announced last week that it would soon permit consumers to download many of NBC’s most popular programs free to personal computers and other devices for one week immediately after their broadcasts.

Soon after, Disney’s ABC said it will begin offering ABC’s primetime programming to AOL Video. AOL will get the shows one day after they premiere on broadcast television. A special “ABC.com on AOL” video player will ID ABC’s local affiliate station. The move expands ABC’s distribution beyond Apple iTunes.

CBS and Fox are both planning to offer season premiers of their key new shows for free on iTunes. Fox’s “K-Ville” and “Prison Break” drama series premieres will accompany CBS’ “The Big BangTheory” as free offerings from iTunes this fall. Both CBS and Fox expressed happiness with their current iTunes arrangement.

In NBC’s case, the announcement came less than three weeks after NBC Universal ended its contract with iTunes. Reports said the Apple-NBC partnership fell apart due to a pricing dispute and NBC’s concerns over piracy protection.

The moves by the networks come as TV programmers seek to use the Internet to boost audience share and retain advertisers. “The shift from programmer to consumer controlling program choices is the biggest change in the media business in the past 25 or 30 years,” Jeff Gaspin, president of the NBC Universal Television Group, told the “New York Times.”

NBC’s downloaded files will contain commercials that viewers cannot skip through, and the files are designed not to be copied. They play only on Windows computers, not Macs. And, after a seven-day period, the file degrades and becomes unwatchable.

In mid-2008, NBC said it planned to offer files for a fee that downloaders could own and transfer for viewing to other devices, such as iPods. That capability is already available on Apple’s iTunes.

Chris Crotty, an analyst for iSuppli, an independent firm that specializes in analysis of new electronic media, told the “Times” that NBC’s do-it-yourself distribution move is “a stretch.” He argued that consumers have already demonstrated they are extremely happy with the iTunes service.

“It’s not just a shift from a supermarket to a mom-and-pop story, it’s a shift to one store that only sells bread, another store that only sells dairy products. The consumers have decided they want to get their content from iTunes,” he said.

NBC has come across to consumers as “highly greedy” in its dispute with Apple, Crotty told the “Times”. Apple reported that NBC was insisting it raise the price of some downloads on NBC shows to $4.99 from the $1.99 iTunes charges for all programs. NBC denied that assertion.

In the meantime, “Variety” reported that Apple is considering a plan to cut the price of TV show downloads on iTunes in half. The entertainment industry trade said that Apple has told networks and studios that it would like to slash the cost of most TV episodes sold via iTunes from the current $1.99 to just 99 cents — the same as what Apple charges for most music singles.

Apple’s argument to the networks and studios, “Variety” reported, has been that it will end up making more money from digital downloads under the new proposal. Apple believes the volume of sales for TV shows will rise dramatically, offsetting the impact of the price cut.



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