Predictable Return of NBC to iTunes

Earlier today at its “Let’s Rock” event Apple has made a few announcements about the new iTunes version 8. The announcements include a new feature called Genius to automatically build playing lists for you and availability of HD content in iTunes priced at $2.99 apiece.

And this brings me to the most intriguing part for me: NBC content is back in iTunes store with a range of new HD shows, including The Office, Monk, Battlestar Galactica, 30 Rock. HD shows will be priced at $2.99 per episode while the regular SD versions - at $1.99. Mathew Ingram has an interesting point of view on the situation discussing how it happens that NBC is back after defiantly pulling its content from iTunes to sell it on Amazon and distribute on Hulu, the site NBC launched jointly with Fox.

Last year when NBC pulled its content off iTunes because it could not persuade Apple into a flexible pricing for its content, the majority of the bloggers (Profy included) predicted that this would not last forever and NBC would be back eventually simply because iTunes was a very significant distribution channel. Apparently neither Amazon, nor Hulu could not provide a comparable revenue for NBC - hence today’s reappearance of NBC shows on iTunes.

Negotiations tool almost a year and right now it looks like both companies decided yielding was possible. On the one hand, Apple agreed to some of the pricing changes that NBC demanded, like higher prices for HD content and variable prices for movie downloads (instead of traditional for Apple fixed prices). The variable prices mean that NBC can offer some older content at a price under the iTunes traditional $1.99 - as low as $.99 for some titles. At the same time NBC will be able to set prices for some special packages that could be cheaper than buying each episode at its regular price. On the other hand, NBC has not increased the price to $5 per episode (which was reported as one of the reasons for breakdown).

It is worth noting that NBC was once reported to account for as much as 35% of all movie and TV downloads from iTunes - and that must mean a significant revenue stream both for NBC and for Apple. This means that even if NBC lost a significant distribution channel when it pulled content off iTunes, Apple must have also lost a tangible revenue stream - so it is only logical that the two companies have finally come to an agreement.