September 2008
NBC Universal ended its battle with Apple Inc. restoring some of the most downloaded TV shows to the iTunes store.
The companies ended a feud that erupted last September over Apple's insistence on a $1.99 price for all shows. Analysts said the two appeared to be meeting in the middle, with Apple agreeing to allow a little flexibility but not giving NBC carte blanche to change the prices of shows.
"NBC is coming back to iTunes," Apple Chief Executive Steve Jobs said during a news conference.
The rift with NBC had been seen as a sign of Hollywood's fear that Apple was amassing too much power in digital media distribution. At the time, NBC's cable networks supplied iTunes with three of its 10 bestselling shows, accounting for 30% of TV show sales.
The technology company said NBC had wanted to charge as much as $4.99 a show. NBC disputed Apple's claim and said it wanted to package shows together with variable pricing.
In September 2007, NBC said it wouldn't renew its contract to sell shows through iTunes. Apple responded by saying it wouldn't sell the network's fall shows.
A week later, NBC struck a deal with Amazon.com Inc. to sell show downloads. The following month, NBC joined with News Corp. to launch a competitor of sorts to iTunes: Hulu, an ad-supported service for watching free video online.
As part of the agreement, some of which appears to apply to other TV networks, Apple will begin selling TV shows in high-definition for $2.99, a dollar more than for standard-definition shows. Selected older catalog shows will cost 99 cents an episode.
In addition, NBC will sell an iTunes season pass that will give customers a show's entire season at a discounted price. "That's what we were looking for," J.B. Perrette, president of NBC Universal's digital distribution division, said in an interview.
Over the last year, Apple has shown some increased willingness to experiment with different prices, such as by agreeing to sell shows from HBO and other premium channels for $2.99 an episode.
Although NBC doesn't gain significant revenue from iTunes, it's an important storefront that helps sell more iPods, analysts said.
"It's really hard to challenge the dominance that iTunes and iPods have in the market," Gartner Inc. analyst Van Baker said.
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