Free From iTunes Addiction, NBC Universal Seizes Control Of Digital Destiny
Nick Gonzalez
15 comments »
Following the announcement of Hulu early this morning, reports came pouring in about NBC Universal President & CEO Jeff Zucker’s vocal disdain for Apple turning media revenues “from dollars into pennies”.
Disputes over revenue shares caused the pair to split back in August, letting their contract lapse after this December. But positive reviews of Hulu seem to have made Zucker more at home criticizing iTunes. He detailed how NBC U felt slighted by iTune’s continual refusal to test higher $2.99 (Apple claimed $4.99) price points or share iPod sales, especially since 30-40% of all iTunes video downloads were from NBC content (Zucker claimed 40%, Apple 30%). All together, he said, NBC made just $15 million in revenue during the last year of its deal with Apple’s iTunes.
But squabbles over prices don’t seem to be all that’s in play. NBC recently struck a deal with Amazon to distribute their downloads for the same $1.99 iTunes price or a $1.89 per episode subscription, although the revenue share can vary. What NBC wants more than money, now, is control of their own digital destiny.
Zucker highlighted NBC’s own success online, specifically pointing to the large numbers of viewers already tuning in to NBC’s TV shows online. Zucker describes NBC.com as a “a small cable channel in our universe that is becoming very successful”, claiming 50 million TV show streams during October. That’s 8 million more than the 42 million streams served in the site’s first four months of operation to 6.9 million viewers. Although both numbers don’t state whether shorter and longer video clips are lumped together. For comparison, a hit TV show like “Heroes” can attract 16 million viewers in a week.
Yet, how profitable can NBC U’s venture into the ad-supported streaming model be? That all depends on costs and advertising revenue the service can command. On TV, an average hour-long primetime show can net $3.46 million in advertising revenue (41 cents per household). NBC has not disclosed it’s online earnings, earlier reports show online and offline aligning. A Hollywood Reporter article estimated $25 CPMs for a 15-second preroll Internet video spots, while general TV households in primetime might be an average $21. Video CPMs for the male 18-34 demographic, though, could reach as high as a $120 online and $198 on TV.
All things considered, going it alone may pay off for NBC.
I’m of the belief that even $1.99 is too high a price to pay for TV downloads. It should be closer to free (i.e. as in Chris Anderson “Free”)
So, for NBC to basically complain that Apple destroyed pricing model shows that they just don’t get the Internet.
$1.99 was an excellent deal for NBC. They didn’t even know how good they had it.
These guys should feel lucky to get any revenue from this. With prices like 1.99 / episode they’re just driving ppl to piracy and torrents.
iTunes is a dire evil! A plague, a pox upon the internet and all it’s users.
I try to save them but they just won’t come!
http://fakesteveballmer.blogspot.com
#3
Really, fake Steve Ballmer - cut it out.
Or at least post something with some sense.
or go get a job.
Or an education.
Something.
Anything.
I guess profitablilty for Hulu - and rates chargeable - depend on how available they make the content elsewhere (plus of course how good that content is).
Are you kidding me? Zucker is a moron! The whole world is moving towards superdistribution, and here’s Zucker plunging NBC in the opposite direction!
i think zucker is making a big mistake
CCTV-1 is so called NBC in China, since most chinese watch this every day. It is more and more popular after it is online. Users could download activex from http://www.tvkoo.com/en/download.htm and enjoy free CCTV from any corner ofthe wolrd.
Catup is best served burgers and fries….Steven Jobs did to Music, What Bill Gates did to software! Talk about a good Shot!
Gee, and here I was thinking that Apple helped NBC turn $0 of torrent income into a brand new $15M revenue stream. Unless NBC can prove that iTunes sales decreased their TV ad sales (bottom line), how can $15M from a nascent customer base be bad? In the end, I guess it will all come down to advertising. If NBC can control the context and delivery of content, infuse it with expensive ads, and still keep the end-user experience from being horrible, then perhaps they can make more than they would by staying w/ Apple. But all of this Apple slamming from media executives is really coming across as childish - like a bunch of whining teens biting the hand that fed them. Typical of Apple to innovate, be copied, and then berated.
At least the Hulu videos play smoothly - something I’ve *never* been able to say about movies or TV shows I’ve bought from iTunes.
Downloading videos is a tech head thing, not your average consumer unless you are using iTunes. Your average user wouldn’t know what to do with bittorrent even if comes pre-installed on their system. So for the minority of us that knows how to use bittorrent, the majority of the users would gladly stream the videos and that’s where Hulu comes in and they are legally able to improve and stream highly desirable content. All the bitching and moaning about quality and not being available outside US are issues that can be resolved later. For god sake, they are still in private beta now, I am still now seeing occasional issues with youtube, myspace, and facebook.
No I don’t work for the entertainment companies nor do I have any stake in Hulu, I am just sick of hearing about people bitching about NBC, Fox just because they are suppose to be evil. You know what, as much as Larry and Sergey claims their motto to “do no evil”, Google is one of the most evil companies ever.
Nick, don’t be fooled by the on-air/online CPM comparison. The audience multiples are so significantly different as to make it apples and oranges.
Folks, there is a world of difference between itunes and network (i.e. “free”) TV. For NBC, the TV viewer is a consumer. Their CUSTOMERS are the advertisers who pay them, thus pay their salaries, fund their new series, pay their actors, writers and support staff.
For itunes, the downloader is their CUSTOMER. Itunes has an interest in making their customer happy, NBC has the same interest. The difference, obviously, is their customers are totally different entities with totally different sets of interests.
This was bound to happen and I can only hope it gets worked out soon. I really want to watch Battlestar on my iPod!
And I agree. The bundling idea is wicked stupid.