Friday, February 26, 2010

The iTunes TV Network?

One of the bigger topics of discussion in the media world this week (fueled by a feature story in The New York Times) is Apple's push to lower the price of TV shows on iTunes to 99 cents, roughly half the current price. Apple's position is that 99 cents is the ideal number, proven by the massive success of music downloads at this price; and they are aggressively trying to get their TV network suppliers to agree.

I started buying TV shows and movies on iTunes just about a year ago and now watch almost as much TV on my iPod and lap top as I do on the 40" plasma screen in my living room. I am basically paying for this content twice, once to Apple on my credit card and a second time to TW Cable in my monthly cable bill.

For me, the iTunes option is purely a business travel survival tactic.  I am OK paying 34.95 for an entire season of my favorite show, "30 Rock", to have on my iPod/laptop and ease the pain of a long business trips. But I was reluctant to pay $9.99 per episode (or $54.95 for all six segments) of the Ken burns documentary "The National Parks - America's Best Idea", as I was some other shows.

I would certainly sample at a lower price, which probably would lead to a purchase of more episodes. I buy dozens of songs every month on iTunes without ever thinking twice.

As reported in the NY Times article only 375 million TV episodes have been downloaded from iTunes compared to 10 billion songs. iTunes clearly remains a music store and will need to do something dramatic to grow the TV side of their business.

The latest news is that CBS, the highest rated network, may be willing to test a few shows under a dollar in the near future.

If the networks cooperate and Apple has even a quarter of the success with TV that they are having with music, the implications for the TV industry will be enormous.

Two billion dollar questions:

1. Will the new revenue from iTunes (and the other services like Netflix and Amazon who would be likely invited to participate) offset the lost revenue from broadcast advertising as more viewers migrate to this new platform?

2. What will be the impact be to the existing television subscription providers (cable, telco and satellite) as consumers bypass them and create their own a-la-carte programming packages?