It didn't take long for NBC Universal to get over its breakup with Apple
This is a great move from Amazon CEO Jeff Bezos. NBC accounts for 30% of the television shows sold through Apple's iTunes, including hits The Office, Heroes, and 30 Rock. Apple's loss will clearly be Amazon's gain.
Breaking up isn't so hard to do
This was a quick resolution to a nasty breakup on NBC's part. Things had gotten ugly in a hurry. It all started on Thursday, when NBC announced that it will pull out of Apple's digital video storefront once its contract expires in December.
NBC is uncomfortable with the rigid $1.99-per-episode pricing throughout iTunes. Because Apple's own margins are higher on its iPod players than on its iTunes downloads, content providers such as NBC and Universal Music were getting tired of making the razors that fuel the sales of iPod blades.
NBC also announced that it wanted tighter piracy safeguards and the flexibility to bundle offerings. In short, it wanted Apple to change. And we know how well that usually goes in real-world relationships.
Apple made a swift decision. Scribbling its Dear John letter in its finest legalese the next morning, Apple decided to break up first. It was regrettable, but Apple decided to not carry any of the new seasons that begin later this month. There was no point in keeping the charade going. It would just shortchange iTunes subscribers who would lose their episodic installments in the midseason.
Apple didn't go down quietly, though. It accused NBC Universal -- a company that's majority-owned by General Electric
NBC denied the claim, but we'll see what Amazon starts charging when the new seasons start in a few weeks.
Out of the Unbox
As of last night, Amazon began selling episodes from many of last season's NBC shows at $1.99. For instance, Amazon is offering 22 of the 23 episodes from the most recent season of The Office at $1.99 apiece. As a nod to NBC's desire for bundling flexibility, fans can buy all 22 episodes for $34.99, a 20% discount to buying them piecemeal. Similar savings can be had on other complete-season purchases.
Sure, it may be a limited market of fans who want to use up hard-drive space to download an entire season. It doesn't help that Amazon shoppers can buy the actual four-DVD set of The Office's third season for less than downloading it. However, that's still a sign of Amazon's flexibility.
Another big winner here is TiVo
Again, if $35 for an entire season of the zany antics at Dunder-Mifflin is prohibitive, shelling out $300 for a new TiVo HDTV system is even less of an impulse purchase. However, it makes TiVo that much more attractive to someone who is actually on the market for a digital video recorder.
Can we still be friends, even if you no longer have Friends?
Amazon is a winner, at least until NBC begins distributing its shows in a free ad-supported model through Hulu. TiVo has everything to gain. However, what about our original couple?
It's clear that Apple will miss out, now that three of iTunes' 10 most popular TV-show downloads will be gone during the upcoming fall season. NBC will also feel the pain, since Amazon's Unbox is still a smaller platform than iTunes. So it's more than likely that NBC will sell fewer episodes in the future.
Add it all up, and you shouldn't be so quick to assume that these old flames have moved on. Both Apple and NBC Universal are playing a lot of "he said, she said" games right now, but I wouldn't be surprised if they were back together -- like Ross and Rachel -- before the 2008 fall season comes around.
Don't have $1.99 on you? Check out these classic Fool.com episodes for free: