Now that the last NBC TV program has been pulled from iTunes, NBC-Universal CEO Jeff Zucker has revealed that iTunes was responsible for around $15 million in profit to the company last year. Speaking at the UBS Global Media Week and Communications Conference, he said "we had about 40% of the market share at iTunes on the video side. We were by far the most popular content company there...All of that was worth approximately $15 million in profit to us last year."
So why ditch a good thing? Because Apple was just inflexible in terms of what it would pay for the content and how NBC-U could sell it. "We did not feel it was the game-changer for us as it was prescribed to be, as it was for Apple. There's no place that I can think of that the retailer gets to set the wholesale price," he said. "All we asked was the opportunity to set a variable price structure, even for one program," and Apple vetoed any such experimentation.
Still, Zucker hopes to one day again offer its content on the popular media portal. "Given the tremendous market share that Apple has with its iPods, it's clearly the leader in that respect."
NBC-U has instead pursued an alternative multi-pronged online and mobile video strategy, offering pay-for-play content on Amazon's Unbox, ad-supported downloads on its own NBC Direct and a one-stop shop for ad-supported content via its Hulu joint venture with News Corp. These efforts haven't made up for the lost iTunes revenue, but "ultimately we'll get there," Zucker said.
Content providers should be experimenting with technology, but so far nobody has figured out a way to make money with new forms of video distribution, Zucker said. "I think everybody should be trying things...but at the same time nobody has really figured out the economic model that makes that a significant part of their bottom-line today."
Just when and how NBC-U should jump deeper into the digital distribution pool is still unclear. "This is something I struggle with on a daily basis, to make sure we don't replace dollars with pennies."
The still-fuzzy business models of Internet and mobile video are at the heart of the Writer's Guild strike. The studios and the union will meet again tomorrow and Zucker thinks the two sides are actually talking to each for the first time. "We made a proposal last Thursday and the writers said they needed these five days to work through that and come back to the table tomorrow. To this point, there has really been no substantial give and take between the two sides."
Although "technology provides us a great opportunity to make sure our content is available in many different ways," it has also fostered piracy, Zucker said, picking up on Hollywood's most persistently annoying drumbeat. A new bill will be introduced in the House of Representatives this week that gives content suppliers greater control over their intellectual property, Zucker said. (Anybody know what this is? Is this the colleges-lose-federal-aid-if-they-don't-police bill?)
And, as if we all didn't already know that it was Hollywood that pulled the puppet strings to get the French government to crack down on file-sharing and spy on its citizens in the process, Zucker also added "I don't think there's be anybody more in the forefront of this than the French government."
Cynthia Brumfield at 1:28 PM|Comments(0)
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