John Paczkowski

Recent Posts by John Paczkowski

TV Studios Aren’t Buying Apple’s 99-Cent Rentals

Better run a diagnostic on the reality distortion field….

“We think the rest of the studios will see the light and get on board pretty fast,” Steve Jobs said earlier this month of the TV studios wary of its new 99-cent iTunes TV rentals initiative. And while it’s never wise to bet against the Apple CEO, it’s beginning to look like “pretty fast” was an optimistic choice of words. Because in a flurry of public comments recently, a growing number of TV execs have decried the 99-cent rental model, which they say undervalues their content.

At the Goldman Sachs Communacopia conference last week, Viacom (VIA.B) CEO Philippe Dauman said of it, “The 99-cent rental is not a good price point. It doesn’t work for us. We value our content a lot. We don’t think Apple has it quite right yet.”

And during his appearance at the conference, NBC Universal CEO Jeff Zucker said pretty much the same thing. “We do not think 99 cents is the right price point for our content,” he argued. “We thought it would devalue our content.”

Then there was Warner Bros. Entertainment Chairman Barry Meyer, who trashed Apple’s (AAPL) effort at the
Bank of America/Merrill Lynch 2010 Media, Communications & Entertainment Conference. “We just don’t think the value proposition is a good one for us,” Meyer said, adding that he’d rather sell season passes to the studio’s TV series and $1.99 and $2.99 per-episode downloads than “open up a rental business in television at a low price.”

And now Time Warner (TWX) CEO Jeff Bewkes has come out against 99-cent iTunes TV rentals. Speaking at the Royal Television Conference in London, Bewkes echoed the comments of his colleagues, warning that the new model Apple’s pushing will threaten sales of TV shows to network television. “How can you justify renting your first-run TV shows individually for 99 cents an episode and thereby jeopardize the sale of the same shows as a series to branded networks that pay hundreds of millions of dollars and make those shows available to loyal viewers for free?” he asked. “These new entrants must meet a few criteria: They must provide consumers with a superior TV experience, and they must either support or improve the overall economics that funds and creates the programming in the first place.”

Early reviews suggest that Apple has met Bewkes’s first criteria, but given the statements above it’s looking like it may take a bit longer than expected to meet the second, or convince the studios that it has.


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