Interestingly, the reason that NBC decided not to renew their agreement with iTunes was allegedly that they wanted more control over individual show pricing, rather than the standardized pricing that Apple enforced. However, it’s now obvious that, at least in select cases, Apple could set different prices.
Although NBC Direct‘s free episodes (with embedded ads) expire after seven days, Fox’s free episodes will expire after 14 days. Financial terms of the deal were not disclosed.
The LA Times writes:
The deal underscores the television networks’ predicament: They are trying to protect their lucrative businesses at a time when more viewers are catching their favorite shows when they want, thanks to TiVo and digital video recorders. . . .
“What we are seeing is a rather messy and inelegant fumbling into the future of video distribution,” said Tim Hanlon, executive vice president of Denuo, a consulting arm of the advertising giant Publicis Groupe.
“It’s also an admission that the television networks’ time-honored, top-down manner of distribution is not the way that people are watching video anymore,” Hanlon said. “Programmers are having an interesting time trying to figure out how to adjust.”
The Times further delves into the difficulties that television companies are having in adjusting to the Internet age:
So far, TV companies have not raked in big money on their Internet offerings, at least not the enormous sums they have become accustomed to from their current customers: advertising sponsors, TV stations and cable channels.
However, TV executives are convinced that the Internet is an increasingly lucrative delivery system that will become a bigger part of their businesses, particularly as consumers who grew up using computers become the majority of the population.
“They are trying to figure out what consumers really want and how they can make money from that,” said David Sanderson, head of private equity firm Bain & Co.’s global media practice.
The article also acknowledges that free premiere episodes have been used in the past, including by NBC with “Heroes.” Some shows with free premiere episodes went on to become successful. While free content is always nice, I think it will be a while before TV companies find the best solution for both sides.