Warner Bros. skeptical of Apple’s TV rental plan | iLounge News


Warner Bros. skeptical of Apple’s TV rental plan

Speaking at the Bank of America/Merrill Lynch 2010 Media, Communications & Entertainment Conference, Warner Bros. Entertainment Chairman Barry Meyer expressed doubts about Apple’s plan to rent HD TV shows through the iTunes Store for $0.99 per episode, according to a Los Angeles Times report. “We just don’t think the value proposition is a good one for us,” Meyer told analyst Jessica Reif in an interview. He added that the company would rather license whole seasons of shows than “open up a rental business in television at a low price.” Meyer is reportedly worried that rentals at such a low price could undermine the long-term value of Warner Bros. shows, despite the fact that DVD sales of shows have not yet harmed the market value of rerun licenses. Both CBS and NBC Universal are also for now staying clear of Apple’s rental service, although neither has yet to comment publicly on their reasoning.

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Here’s the part I don’t understand: Are these suits seriously trying to suggest to intelligent humans that they are netting more than $0.70 gross in traditional advertising for every viewer they can demonstrate via viewership rating systems? If yes, I understand their reluctance to make these deals with Apple. If not, though, then why the heck are they balking so heavily at a price point viewers might actually pay?

I find it very hard to swallow the notion that $0.99/ep is actually some sort of loss for them. I suspect it is in reality a HUGE increase in revenue over traditional channels. For example, we have the basic DirectTV package and a basic Netflix sub with streaming to the TV and i-Devices. That comes to about $650 annually. Considering just first runs, with the amount of TV me and my wife watch, that’s, maybe, $1.20 an episode, not a lot more gross revenue than Apple’s suggested price point. Throw in watching re-runs and the amount of children’s programming my kids watch, and Apple’s $0.99/episode rental looks like home invasion with sodomy compared to what I am paying now.

And those actual prices per episode watched are not 1:1 compensation for the content owners (well, maybe the Netflix is, not sure how their deals work, but that’s a small amount of the TV watched compared to satellite). Instead, that money is being shared among media companies we never so much as surf through.

I will never understand the patent insanity of the greed underlying media corporations. They always act as though every distribution channel exists in its own bubble universe independent of all the other distribution channels. Yet, their customers live in the “other” universe where there is satellite, cable, DVR & TiVo, bittorrent, Hulu, station websites, borrowing friends DVD sets, Netflix, Amazon marketplace, yardsales, etc., etc..

Posted by Code Monkey on September 17, 2010 at 10:01 AM (CDT)


The media companies’ colossal greed is indefensible. However, the statement, “We just don’t think the value proposition is a good one for us,” is more true than WB can know. As I’ve pointed out elsewhere here, it’s the same or less price for the consumer to *purchase* the Blu-Ray box set of one season of a series, than it is to rent every episode in the season for $0.99 from iTunes. Add in the fact that Blu-Ray provides lasting ownership of 1080p content with no waiting (vs. fleeting access to 720p content after a long download), and as WB said, the value proposition just isn’t there.

Apple certainly knows how to reinvent the wheel: iTunes Store, iPod, iPhone, iPad. Their repeated inability to successfully do so when it comes to television (1 failed aTV and probably another, now this episode rental nonsense) must mean that the on-line TV market is indeed a difficult one. A point even Steve Jobs conceded.

Posted by Farnsworth on September 17, 2010 at 10:19 AM (CDT)


I think @Farnsworth nailed it. It’s not a good “value proposition” for consumers, but if consumers will bite, then it /has/ to be a good “value proposition” for the networks.  Right now I rarely watch anything live. At the very least I time-shift by 15 minutes to avoid commercials. Advertisers are going to figure this out eventually.  If I miss an episode, I can usually get it on-line with limited commercials from Hulu or the network site, or I can download it ad-free via torrent.  The ability to /watch/ content on-line is already there. The ability to /own/ digital files is already there.  If Apple can convince people to pay for an ability that they’re already getting for free, then how can Networks fail to profit from that?  The question doesn’t seem to me to be whether it’s a good “value proposition” for networks, but rather you will ever convince consumers that it’s a reasonable expense for them.

Posted by Rob E. on September 17, 2010 at 11:17 AM (CDT)

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