Jeff Zucker says iTunes deal only netted NBC Universal $15 million

Not that it comes as much of surprise given recent developments, but NBC Universal's Jeff Zucker is clearly still none too pleased about the company's deal with Apple, as evidenced by his recent comments at a benefit for Syracuse University. According to Variety, Zucker lamented the lack of flexibility on pricing, and the fact that NBC U wasn't able to get a cut of Apple's hardware sales, saying that "Apple sold millions of dollars worth of hardware off the back of our content." He also dropped the bomb that the iTunes deal netted NBC U "just" $15 million in revenue, despite the fact that NBC's programming accounted for 40% of video sales on iTunes. Not coincidentally, all of this comes on the same day that NBC Universal (and its partners) launched the beta version of Hulu.com, which it hopes will provide some competition to iTunes, not to mention be better for its bottom line.

[Eric @ Oct 29th 2007 4:03PM]

The guy's a dope. He wouldn't know the truth if it bit him on the butt. Compare the revenues for movies to the revenues of competitors, or from other services? How's the downloads onto XBoxes going, eh?

I thought so.

[Ruben @ Oct 29th 2007 4:11PM]

"How's the downloads onto XBoxes going, eh?"
Care to enlighten us?

When did the Xbox get involved in this?

Maybe Apple was asking for a greater cut than NBC wanted to give. In a business move, they felt it would net them more by making their own service. We can only make that judgment once their service has matured.

[W00ter @ Oct 29th 2007 4:14PM]

Uh, yea. Why don't you go take a basic econ class at the local community college.

Zucker has a point. They have the right to ask/demand more $ if their content is downloaded more than other studios.

NBC U's in the lucky position that they have big demand for their shows, they should be able to charge whatever they want for their content. It's a free market and consumers will go where they want to go. If NBC U prices the content too high, more people will be driven towards piracy - this is NBC U's problem.

Let's turn around the equation. If you created a product, would you let another company set the price for you? No, you would price it for whatever the market will allow. You don't allow another company to set the price of your product/content.

This is why no other studios will align with iTunes on DVD downloads.

[Eric @ Oct 29th 2007 4:14PM]

Isn't there an XBOX Movie download service. Oh, wait, that's movies. Never mind. :-P

It was NBC asking for more money, not Apple. Up to $4.99, which NBC now denies. Considering their lack of candor, I'm betting Apple is telling the truth here. NBC has always been worse than their two main competitors when it came to DRM and fair use. So it's not that I'm an Apple fanboy (which I am) in this case. It's the track record of both companies making me trust one over the other in this particular spat.

[Ruben @ Oct 29th 2007 4:22PM]

I really don't get why this is an issue. If NBC doesn't want to use iTunes to sell their shows and movies, then it doesn't. The content belongs to one entity. And that entity has complete rights (depending on contractual issues) to put its content on any format it chooses.

Why are iTunes users pissed (i already have an idea of the true answer ;), but im curious of what comes out of the horses mouth)?

[Eric @ Oct 29th 2007 4:24PM]

@WOOter,

Uh yeah, Economics. That's a throwaway course I took before grad school.

Apple is the leader. Their formula for success is unprecedented. NBC is the one begging to get online. If they think they can make it on their own, good for them. But to pretend Apple is being greedy by providing them a platform to selll their produtcs in a new avenue - and saving one of thei biggest money-makers (Office) just shows how out of touch they are with economics. They used to be an 800 pound gorilla 30 years ago, and still can't get over the fact that's no longer true. And desperate to maintain their arrogant dominance of all they deal with.

Reality will set in some day. Either for them, or for Apple. It's too early to tell at this point. But I suspect the dinosaur will fall.

[Eric @ Oct 29th 2007 4:26PM]

I guess I am pissed at NBC for their arrogance, and lying about it later. But why should I care. You have a point. I just hope consumers win in the end.

[Eric @ Oct 29th 2007 5:03PM]

The Xbox Live marketplace is number 2 and quickly gaining steam, and I believe that content providers prefer its safer platform to iTunes.

[Eric @ Oct 29th 2007 5:06PM]

http://www.gamasutra.com/php-bin/news_index.php?story=14180 Check that out, looks like Lions Gate has made more from XBLM than NBC with iTunes.

[Dave @ Oct 29th 2007 6:38PM]

@ Eric

There's a difference between revenue and profit.
Hollywood accounting in full force here.


Tossing $15million away because they think they're going to make $15million in ad profit streaming video over some under hyped website. I thought the whole purpose of buying shows off itunes was to watch them on the subway, plane, train.. places that don't have wifi or streaming... this will bite NBC in the end.

[sr @ Oct 30th 2007 3:54AM]

Yeah right. If even one person actually bought an iPod because NBC is selling shows on iTunes I'll shut up. It's more like your software sold because Apple sold so many iPods. These stupid shows are on TV, there are many ways to gets access to them, nobody bought an iPod just to watch them.

[Bart Lee @ Oct 29th 2007 4:08PM]

Seriously, somebody remind this guy that he's in charge of a network that is running dead last. Is it a good idea to greatly reduce exposure of all the new shows you're trying to gain traction with?

[Nogami @ Oct 29th 2007 8:20PM]

I was thinking that $15 million profit is better than the loss they'll have with the new service they're creating (that nobody will use).

[Rishard Chapoteau @ Oct 29th 2007 4:10PM]

How much do they expect to make for free content????

[Jason Smith @ Oct 29th 2007 4:13PM]

Well, with the sorts of advertisers that they get on their own site and on their channels, it's quite possible that they could do better with embedded advertising (even if the online ads are only thrown in for free to seal the deal on major ad buys).

[rokerovakero @ Oct 29th 2007 4:14PM]

$100 per season since the mac guys seem to like paying for expensive stuff. not even $50 dvds are worth paying for some of the most boring tv of the decade. Specially when you get them free on tv, and not worthy of repeated watching. Grow up Zucker and blame you sucking writers, even SNL is nothing compared to previous seasons.

[Andrew Jones @ Oct 29th 2007 6:03PM]

I heart NBC for Heroes and The Office. That's the extent. Now that I can no longer purchase them legally, I'll resort to either downloading them or recording on my PC using my ATSC tuner. I fail to see how NBC makes more money on that.

[bob @ Oct 29th 2007 4:10PM]

Unless the previous Apple/NBC deal was greatly skewed in favor of Apple, it sounds to me like online video downloads aren't ready for mass consumption. Music companies get something like 70% of the gross sales on iTtunes. If that percentage was the same for video publishers like NBC, then iTunes has only done ~$35m in gross video sales. That seems really low to me when you put things in perspective.

[jollyllama @ Oct 29th 2007 4:11PM]

"Apple sold millions of dollars worth of hardware off the back of our content."

The only reason I bought an iPod was so I could buy restricted-use compressed quality episodes of NBC tv shows for $2 each.

Not.

[abbot @ Oct 29th 2007 5:18PM]

Amazing what greed can make you believe. If I bought my iPod on the back of his content, how come two years later (after videos) I still have no content for my iPod? (I live in Germany)
Hopefully the EU will soon blow the separated iTunes stores apart and allow free access to paid content

[Fox McCloud @ Oct 29th 2007 4:12PM]

As many have said before, who the hell is going to go to individual sites for each networks shows? It's a mess and will not do well.

I'm still amazed people will pay anything for a tv show to be honest.

[NG @ Oct 29th 2007 4:12PM]

sounds like everyone is starting to get pi**ed off from Apple..
Apple fever soon over?

[Jason @ Oct 29th 2007 4:18PM]

Well... the fever has been going for about 30 years now... since around 1984...

[Nathan @ Oct 29th 2007 4:38PM]

2007 - 1984 = 23
23 != 30

[SteveMB @ Oct 29th 2007 4:53PM]

"Nathan @ Oct 29th 2007 4:38PM

2007 - 1984 = 23
23 != 30 "

Obviously, you forgot the value of the exclamation point, which is 1.30434.

[Billy K @ Oct 29th 2007 4:59PM]

2007 - 1976 = 31. Learn to History.

[NG @ Oct 29th 2007 10:01PM]

it wasn't that crazy before the birth of iPod

[V3LOCIP3D3 @ Oct 30th 2007 12:03AM]

23 years? Bring up Apple computers to anyone before ipod 3G came out and watch everyone wonder what the hell you're talking about. Apple has never been a popular computer distributor. The birth of Apple Inc began when they manufactured ipods . . specifically the 3G ipods. So Apple "fever" 2003-2007, 4 years. Apple is an MP3 manufacturer first and a computer manufacturer last. Fanboys always get this confused, but we can expect that of them.

[Ruben @ Oct 29th 2007 4:12PM]

Advertisements.

Google survives (handsomely) solely based on this principle (plus a few deals to use their system and some side deals).

[t-bone @ Oct 29th 2007 4:13PM]

Complaining that they didn't get a cut of Apple's hardware sales? If that isn't greedy, I don't know what is.

[Rich @ Oct 29th 2007 4:37PM]

Yup. Next they'll be complaining that they don't get a cut of Sony's revenue from TVs for watching their dross on...

[xkevin @ Oct 29th 2007 4:59PM]

In a world where Apple gets a hefty share of wireless revenue a la the iPhone when its just the hardware provider, do you really think its unreasonable for a content provider to want to cash in too? The arguments are circular. It boils down to whether content drives hardware or hardware drives content.

Sometimes you have to look at the whole picture...

[Argot @ Oct 29th 2007 4:58PM]

Yeah, that's crazy. Just imagine if Apple came and wanted a cut from the telecom providers just for letting them sell their iPhone. Crazy I tell you!

[Zed @ Oct 29th 2007 6:42PM]

Getting a piece of the hardware revenue is pretty ridiculous. They totally missed the boat on the digital revolution, and yet they expect a piece of the hardware? Get real. Which came first, the mp3 or the iTunes music store...

Zucker may know a bit about traditional TV, but seems a bit lost on how to help universal survive in the digital age.

[Jim @ Oct 29th 2007 4:14PM]

I'm calling shenanigans on this one.

[MacVicta @ Oct 29th 2007 4:15PM]

http://www.coolest-gadgets.com/20061102/how-itunes-saved-the-office/

How iTunes Saved The Office

The Office is one of the best shows on network TV. It’s clever, witty and very funny. But according to the Nielson ratings, The Office was a dud. The ratings were so bad that NBC almost canceled it before the end of its first season. But since NBC owns and produces The Office, they had nothing to lose by posting it in the iTunes Store. At the very least, NBC thought they might make a little money on iTunes before canceling the show. But once episodes of The Office were available online, they became an iTunes overnight best seller. The Office had a huge fan base and the low Neilson ratings were basically just a lie.

Angela Bromstead, president of NBC Universal Television Studios, had this to say in Newsday:

“I’m not sure that we’d still have the show on the air” without the iTunes boost… The network had only ordered so many episodes, but when it went on iTunes and really started taking off, that gave us another way to see the true potential other than just Nielsen. It just kind of happened at a great time.”

-------

In other words, the worth of your programming on iTunes was bigger than that $15 million in revenue, Mr. Suc... uhh Zucker.

[nntpgrip @ Oct 29th 2007 4:38PM]

This is what this idiot does not grasp. iTunes gave execs something to look at besides Nielsen ratings. Also, they were hard numbers instead of some formula, and everyone watching paid something, so they individually invested more than just stopping on a channel.

It may not have earned NBC more than 15 million DIRECTLY, but it made a dent in improving the programming on their network, and INDIRECTLY make them millions in the traditional distribution method through advertising revenue, as the better content is noticed by viewers and the trusted Nielsen "shares" then reflect this shift.

The next "Firefly" might actually survive...

[Andrew Fong @ Oct 29th 2007 6:47PM]

The key question is how the iTunes saved the Office. Did people discover the brilliance of the show just because it popped up on iTunes? Or did they discover the show via word of mouth and iTunes simply provided a convenient place to view/download it online? If it's the latter, then iTunes is replaceable. Youtube, Amazon Unbox, NBC's own video streams, and even Google searches provide more accurate alternatives than Nielsen ratings. Admittedly, those other sources of information don't provide $15 million of ITMS sales, but the information is still there, and the information is what saved The Office, not iTunes.

[Jesse @ Oct 29th 2007 7:47PM]

Speaking of the Devil, isn't the office known for heavily using product placement from Staples in their comedy. Did NBC U count that with their sales of the office?

[The Pepto Pimp @ Oct 29th 2007 4:16PM]

A year from now we'll all be saying "Huloo?" "Hu-what" "Hunan.com?"

Zucker sunk NBC U into the ground anyway. He's from the old school and doesn't think that loss-leader economics applies to media distribution. He's wrong. Apple proved it. What a dolt.

[Trevor @ Oct 29th 2007 4:25PM]

I wonder what the difference will be between their iTunes profit and their Hulu loss.

[Jared @ Oct 29th 2007 4:27PM]

I guess saving The Office wasn't enough for NBC...

[Micah Neumark @ Oct 29th 2007 4:27PM]

I don't get how they think they deserve any cut of hardware sales. Television has been around for decades, and they don't get a cut from Sony, Toshiba, or Pioneer when they sell televisions despite the fact that they used to solely be available on Television. Why would iTunes be any different? Especially since you don't even need an iPod or iPhone to watch the shows, just any normal computer and an internet connection.

[BandB @ Oct 29th 2007 4:27PM]

Does NBC want a piece of TV and computer sales too?

[MTC73 @ Oct 29th 2007 4:27PM]

"Apple sold millions of dollars worth of hardware off the back of our content."

Yeah...I'm sure the reason people were clamoring for iPods was to watch reruns of The Apprentice. Are you kidding me?

[The Raven @ Oct 29th 2007 7:15PM]

My thoughts exactly.

[adam @ Oct 29th 2007 4:27PM]

Last time I checked, iTunes wasn't specific to Apple. I'm pretty sure that any Windows PC can run it. Does NBC want a cut of Dell's profits too?

[ChillyWilly @ Oct 29th 2007 4:28PM]

And Zucker expects to make immediate bank off Hulu.com?

Instead of chasing dollars, why don't they work on building a strong digital following and then worry about making money.

SUre, $15 mil is nothing to sneeze at for one of the Big 4, but it's not bad for a start.

[James Rainey @ Oct 29th 2007 4:31PM]

This is illogical. They make nothing off the sale of T.V.'s or the couches we use to watch their poorly written programming.

Get a grip, Apple has an excellent client base with an effective and profitable delivery method. They should get their greedy heads busy doing things like writing compelling shows. Increase viewership is a novel way of increasing revenue.

Or does my logic not make sense here?

[Ruben @ Oct 29th 2007 4:40PM]

Heres the issue. Sony, Toshiba, HP, etc. didnt piss off NBC. Otherwise they would say the same thing.

Even if you didn't get your iPod to watch NBC programming, there is bound to be a person that did. Also, take into account that the prospect of buying TV shows to watch your iPod makes up a certain percentage of what you want an iPod for, otherwise, your decision would go towards another player. Take into account that 40% of videos purchased were NBC Uni. Logically its sound that iPods were sold due to NBC.


What some of you don't seem to get is that NBC is venting. They don't want the hardware sales money. They are just pissed that Apple wouldn't budge on their pricing scheme and forced themselves to come up with their own model of distribution.