TV networks continue to resist iTunes price cuts
Apple has been courting US TV networks recently in a bid to get them to drop episode pricing from its current level of $1.99 down to $0.99. The New York Times reports that, predictably, many TV networks are resisting Apple's push for lower episode prices, even though iTunes's initial $0.99 per song price point is arguably what made purchasing digital music palatable to consumers.
Music sales through the iTunes store have fallen off recently, at least partially because of record labels' demands for a price hike to $1.29 per song for popular tracks. Meanwhile, though TV shows have been available for download in the iTunes Store since 2005, only 375 million shows have been downloaded in that time -- compared to nearly 9.5 billion songs downloaded over the same period. With a reported 125 million iTunes Store accounts, that equates to an average of 76 song downloads per customer compared to a paltry 3 TV episodes downloaded.
Click the "Read More" link to find out more about the current state of TV on iTunes.
The Times states that "television production is expensive, and the networks are wary of selling shows for less." However, analysts have stated that TV downloads through iTunes represent a "marginal" or "niche" portion of the market, and this is borne out by the relatively low download numbers. TV episodes are already available from a number of other (legal) sources, and all of them are less expensive than iTunes: free over the air, free over Hulu (in the US anyway), for-pay via a cable subscription, and for-pay via purchases of TV seasons on DVD.
As one example of iTunes's extremely uncompetitive pricing for TV shows, Season 5 of House, M.D. costs $39.99 on iTunes in Standard Definition, and that's for the TV shows alone; the same season currently costs $24.49 on Amazon for a DVD box set complete with many special features not available on the iTunes Store. Even if the studios still think charging an extra $15 for digital versions of the same season of the same show is worth it to consumers because of the convenience of one-click downloading, based on the relatively low number of downloads thus far, it's pretty clear consumers don't feel the same way.
Although TV networks are reportedly resistant to price reductions, unless they can find a more compelling way to sell digital versions of their shows based on content, the only way they're going to get more people to download more shows is by budging on the price. Apple has reportedly pitched a $30 per month "subscription" model for popular shows, which could be a compelling alternative to cable TV for many consumers. TV networks haven't dismissed this proposal outright, but they are experiencing "trepidation" over it according to the Times. However, considering that spread over five years the amount of money that all studios combined are making per year off iTunes Store downloads equates to less than the three-week gross of a popular summer theatrical release, it seems like they have very little to lose.
[Via MacRumors]
