NBC has decided to part ways with Apple Itunes online store and begin to offer their TV episodes free of charge to viewers. Here's the catch, you can't skip the ads, and the file deletes itself a week after its been aired on TV.
NBC apparently wanted to jack the price of each episode to over double the cost currently. Apple said no deal, and NBC took their ball and went home. Now they're going back to the tried and tested way of selling episodes - to the advertisers. Unskippable ads, however, probably have about as much effect as ads on TV to those that really don't want to watch them, except instead of channel clicking, people will just open up a new window.
Apparently NBC's main argument is with the revenues it garners from online sales. It wasn't enough (mind you, somethings still more than nothing, considering torrents etc). So NBC decided to sell advertising shares and forgo the download cost. This brings up a secondary argument, one that hasn't been higlighted in the news so much.
Many of the programs that NBC plans to offer are aimed at the younger audience. These shows also have high viewer rates, but aren't always counted in the same way. Heroes was one of the most watched series last season, but it's viewer numbers were not as high as they actually were. This is because the Nielson ratings don't account for TiVo'ed views that are watched later on than the showings. Advertisers don't benefit from recorded shows, as viewers tend to skip the ads as they feel. But the behaviour shown by viewers matches the age group. Younger people are the On Demand generation of viewers. They watch shows when they have the time and want to, not when Cable TV tells them to. This explains why box sets of series DVDs sell, and why TiVo and ITunes downloads of episodes are popular.
But again, ads are gone from these sources. So what does NBC do? They create a way to capture at least a part of this On Demand market that was getting away ad-revenue free. They'll keep all the ITunes consumers, that's almost guaranteed. Changing the delivery method usually doesn't turn away previous consumers, especially when the cost drops. This means, as long as they get at least an equal amount of advertising revenue from the free download, they break even. Given the fact that its very likely much of the On Demand TiVo market will take this route as well (I know I will) means their viewer numbers will go up from ITunes. If NBC sold ads based on only ITunes subscriptions, they can expect to be able to charge more for revenues as the viewer base grows.
There is one downfall for the moment though. NBC is only offering it to windows users. No Mac, No Ipod. It reeks of spitefulness on the part of NBC, which is probably a poor choice. Yes, Macs arent a big market, but the Ipod video probably is. This is only a temporary issue, of course, but it's just a mean-spirited way of doing business.
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