Report shows Apple needs NBC back, like yesterday
A report issued by Forrester Research suggests that contrary to conventional wisdom (or at least the comments here at TUAW), Apple is the loser in their feud with NBC-Universal. The on-going fight, which reached fruition last week, as all all NBC-Universal content was removed from iTunes, hurts Apple more than it hurts NBC. James McQuivey, an analyst for Forrest Research, urges Apple to make-up with NBC, otherwise they risk losing their spot as a major source in the distribution of online broadcast content. Why? Because although iTunes dominates the world of digital music sales, the same cannot be said for iTunes video downloads.
According to the report, which was quoted by CNET, Apple relies on NBC to deliver 30% of their video download sales. This is in line with the 40% figure claimed by NBC in October (I say we split the difference at 35 or call it a third). Furthermore, a Forrester study revealed that only 19% of users buy video content (either TV shows or full length movies) from iTunes and of that 19%, the average amount spent on videos is $30. Meanwhile, competing pay services like Amazon Unbox and the free offerings provided by the networks own websites and through services like the Fox and NBC collaboration Hulu.com make paying for an iTunes download, just so you can watch it on an iPod or Apple TV, less inviting or appealing to users.
To me, as an avid television watcher/fan and an avid gadget junkie, this makes complete sense. I have a truly frightening collection of TV shows on DVD (just the TV show sets take up almost an entire IKEA Billy Bookcase), I'm also a full-fledge iTunes addict for music -- but I can't recall ever buying a TV show or TV episode from iTunes, even though I've had a 60 GB video iPod for two years. Instead, I have two TiVos, but in the event that I do miss an episode of a show, I am more than fine with streaming that episode on my computer (where I would be watching the iTunes video 99% of the time anyway). If I want to buy the content, I'll buy the DVD, not a lesser quality DRM-ed digital version that doesn't have any extra features and that can't be easily moved place to place. I think the big argument of, "oh, you can watch TV shows and DVDs on your iPod" is better in theory than in practice. In theory, I'd have tons of videos on my iPod. In practice, I have the Guy Love video promo from NBC/Scrubs last year (oh, the irony), an episode of the Squadcast and a video clip of Blake Lewis from American Idol that I put on my iPod, just because they (meaning Fox) said it couldn't be done.
Furthermore, while some of the streaming or direct download programs are un-Mac friendly, Hulu, though still in beta, works great on my Mac, features new episodes and tons of older TV shows - many of which are currently (or were previously) available on iTunes, with minimal advertisements and streaming quality that is, I've got to be honest, absolutely as good as what you get from an iTunes download. And it's free. As I said, if I'm going to be watching the content on my laptop anyway. Certainly, this isn't the case for every user out there, but this report indicates that as it stands, not that many customers are buying video content off of iTunes anyway.
I would love to see NBC and Apple make-up -- if only so the NBC-branded podcasts would return to the iTunes directory or so that we could get free episodes every now and then -- but I tend to agree with the outcome of this report, even if Apple isn't the "bad" guy in this war, it's still the company that has more to lose from this break-up. Maybe Steve Jobs and Jeff Zucker should take negotiation advice from 30 Rock's Jack Donaghy (Alec Baldwin). Then again, maybe not.
