NBC Universal - Fails Basic Math

There has been a recent spat between Apple and NBC Universal over pricing TV shows on the iTunes Music Store (iTMS). The net result is Apple is no longer offering NBC Universal programming on the iTunes Music Store.

Centered around the argument was the desire for NBC Universal to charge consumers 4.99 per episode of popular content. After reading that, I began to do some investigating of popular NBC Universal DVD box sets. Here’s what I came up with.

Heros Season 1 39.99 / 23 episodes = 1.73 per episode

The Office Season 3 31.99 / 24 episodes = 1.33 per episode

30 Rock Season 1 32.49 / 21 episodes = 1.54 per episode

and the most expensive example I found

Battlestar Galactica Season 2 51.99 / 20 episodes = 2.59 per episode

Based on their pricing model, the Battlestar Galactica box set would cost $100. Why would they care to raise prices to the point that no one would buy their content? I can think of only two reasons.

They are starting their own online service. While this is certainly not necessarily a bad idea, spending the money to create a competing service is ultimately going to fail. Like it or not, the iPod and the iTMS is the premier content delivery platform. For any competing platform to be successful they will need to have a smooth process for allowing downloads to an iPod. The only way they could possibly compete in this space is if they offered DRM free shows (which they won’t).

They want to minimize individual unit sales and drive DVD box set sales. I’m less inclines to believe this but this is only based on my experience. With the advent of DVD rental services and now digital delivery, I’m less inclined to want to take up valuable real estate in my house to contain walls of DVDs. The physical disk really has limited value.

Content providers have to get over the fact that with the competition for eyeballs from multiple sources, their content is not worth very much. I predict that while NBC Universal will be back on iTMS either by the end of this season or the beginning of next.