Apple lowers the price on (some) TV shows to 99 cents

Reintroducing Apple TV, the company tries to ignite a pricing revolution for downloading TV shows on the Internet.
Reintroducing Apple TV, the company tries to ignite a pricing revolution for downloading TV shows on the Internet.

The wait is over. Steve Jobs, the oracle of Apple (as well as its CEO), addressed the faithful Wednesday morning (Sept. 1), and now the whole world knows what has been (correctly) rumored for the last few weeks.

Apple is bringing to market a revised version of its Apple TV set top box, the add-on accessory for TV sets, and cutting the price of some TV shows to 99 cents.

The message was unmistakable: Apple, the 1,000-pound gorilla in selling music, movies, and TV shows to the public, and streaming them via the Internet for viewing and listening, believes that rentals, not sales, are the best route to dominance in the streaming movie and TV market. Its newly revised Apple TV, somewhat of an orphan to date in Apple's media hardware arsenal, will only stream content and have no hard drive — in other words, no storage. And no storage means no ownership. iTunes shoppers will still be able to buy their movies and TV, but the Apple TV streaming-only box, priced at $99, appears to encapsulate Apple's emerging philosophy of the direction of the media market.

First the so-so news: Jobs announced today in San Francisco at an invitation-only event that Apple will stream new movies for $4.99 — basically bringing them in line with other streaming competitors. But then Apple ratcheted up its streaming-movie cred by adding Netflix to its streaming movie services. Of course you pay for a monthly Netflix subscription ($8.99 and up); however, it's a complementary addition to Apple TV's movie services.

But the big news was that Apple will make available hot current TV shows from ABC, Fox, Disney Channel, and BBC America networks for 99 cents — the first major crack in the wall from Apple's usual buy-only price of $2 to $4 per episode. That 99-cent figure is Apple's 'ꀜsweet spot'ꀝ for purchasing most songs and iPhone apps. That will be the price of those shows when the Apple TV box becomes available in four weeks; that pricing is already available in Apple's iTunes store.

Volume in the Apple universe has more than made up for low prices, and volume is clearly what Apple is counting on to make the TV pricing a success — and to persuade other studios to make their shows available to Apple at that price. It worked before, you know. Look what that cost structure did to the music industry. One recent report put Apple's market share of downloaded music at 70 percent.

Jobs' announcement was muted somewhat because only two of the major networks, ABC and Fox, have signed up thus far for the 99-cent rental level. So while Apple has taken the big step in setting up the same economic model that has changed the music industry and virtually created the smartphone app market, it'ꀙs far less certain that the company will have the same impact on TV programs.

Here'ꀙs the heart of the issue: Most dedicated TV fans want all episodes available of a given show in case they missed a few episodes along the way, or have recently developed an intense interest in watching it. Apple offers most of the shows, but has offered top shows in a timely manner only at a steep price.

So if not Apple, where should a TV fan turn?

Cable channel AMC'ꀙs 'ꀜBreaking Bad'ꀝ is a good example of what it takes to hunt down a TV show. A double Emmy award winner last Sunday, the award show reminded me how much I had enjoyed the "Breaking Bad" pilot in 2008, and I had never gotten around to watching the series. Three seasons have been completed. Now seemed as good a time as any to catch up.

Logic dictated that free episodes would be on AMC's website; that's the policy of a number of networks. At AMC, I scoured the website. I was sure I had missed it. AMC is a smallish channel. How could they not have free episodes to strut their stuff? Alas, no such luck. "Want to see it? Go buy it" was AMC's message.

I explored my other options:

  • Blockbuster (the only brick and mortar video store left standing in my area): Seasons 1 and 2 are available on DVD; three DVD sets are available for each season, $15 total per season.
  • iTunes store: All 48 episodes must be bought, not rented. Individual episodes: $2.99; season passes for HD (my preference): $32.99 for seasons 2 and 3 (season 1 is cheaper at $15). If I wanted to watch it in standard definition (poorer quality), I could save about $9 on the season.
  • roughly the same deal as iTunes.
  • Netflix: probably my best bargain. Seasons 1 and 2 are available as part of my monthly $8.99 subscription, but only as delivered DVDs; instant streaming isn't available. Watching a few episodes, then waiting two or three days for the DVDs to turn around? Sigh.

Now imagine going through this process for every off-air TV show you want to watch, and you'ꀙll better understand how much richer Apple might get if it can become the one-stop shop that corners the most networks at its proven pricing policy.

That'ꀙs why all the major streaming players — Apple, Amazon, Netflix and Hulu — are scrambling to court the studios. And there are persistent rumors about Google, Microsoft, and Sony wanting into the fray.

The studios are working their own deals. For example, Paramount, Lions Gate, and MGM recently formed Epix TV, which is at once a new cable TV channel, video on demand through your set-top box, or a website. And who just paid Epix roughly $1 billion to stream their library through their service? Netflix did — and Netflix subscribers still have to wait 90 days before they can see Epix'ꀙs newest films because Epix gets first cut showing the films to their own potential audience.

As for more on the AppleTV unit itself, it will sell for $99 and is roughly one-fourth the size of the original AppleTV unit. It has no storage — remember, this set top box is now all about streaming and renting. It offers audio/video plugs or an HDMI cable to attach to your TV. Your Internet connection can be via an Ethernet cable or via built-in WiFi.

So did today mark the launch of a game changer? Only time, and all those back room deals, will tell.

Apple made a number of other announcements about new iPods, long-awaited improvements to the iPod Touch (finally, an on-board camera), a software update that will bring the iPad the same features as the current iPhone software, a Facebook-like online community for music lovers ("Ping"), and more. A complete wrap-up of all the announcements is available at USA Today.

And one final note: The Apple event, held at the Yerba Buena Center, was televised live specifically for the Apple faithful whose iPhones, iMacs, and iPads have up-to-date Apple operating software and browsers. While I have seen several events blogged live on my computer, it was the first time I saw the event live on TV. It was interesting and informative but did remind me of a whip-up-the-troops Amway sales meeting. I do hope the press attending were not among the acolytes.


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