After a week of claims and counteraccusations with Apple over its iTunes video contract, NBC Universal announced last week that it will now sell its television programs online with Amazon’s Unbox video download service.
The move is especially risky for NBC because Amazon’s technology is incompatible with Apple’s iTunes or iPod — the world’s overwhelmingly dominant media player.
Over the past week, NBC Universal engaged in a public argument with Apple over pricing, piracy controls and packaging of its programs in the iTunes online media store. NBC refused to renew its two-year iTunes contract, which runs through December, and Apple retaliated by immediately refusing to add new episodes of NBC’s shows to its iTunes offerings.
The largest supplier of digital video to iTunes, NBC’s nearly 1500 hours of entertainment, news and sports content accounted for about 40 percent of downloads. However, sales of online video are relatively low when compared with music. During 2007, iTunes should generate about $300 million, according to estimates from Forrester Research.
NBC Universal claimed that Amazon, through its Unbox service, agreed to give it greater flexibility in the pricing and packaging of video downloads. Episodes of popular NBC shows will be available on Unbox the day after they are first broadcast.
While Amazon’s pricing has not yet been revealed, the “New York Times” reported that Unbox typically charges more for newer releases than for older ones. It also gives consumers more options, including whether to rent a movie for $3.99, buy a download for $14.99, or acquire a whole season for a 30 percent discount.
Apple sells episodes of television shows for a flat $1.99, with movies priced at $9.99.
Since it started in September 2006, Amazon’s service has been a distant competitor to iTunes. The “Times” reported that it has suffered from scattered service problems, including lengthy waits for downloads.
NBC is taking a major risk. The”Times” noted that abandoning Apple could anger consumers by preventing them from easily watching shows and movies through iTunes and the iPod. According to the “Times,” television networks and movie studios have vigorously tried to avoid being branded with the same anticonsumer sentiment that has worked against the record labels.
And because iTunes is so popular, with 76 percent of the online music market, NBC could lose an increasingly important way of marketing its new programming.