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Warner Bros. holds out on iTunes show rentals

updated 11:05 am EDT, Fri September 17, 2010

CEO worries about sales of full seasons

Warner Bros. is not participating in 99-cent iTunes TV rentals for several reasons, the Associated Press reports. Speaking at a Thursday investor conference hosted by Merrill Lynch, studio CEO Barry Meyer explained that Warner considers the 99-cent price too low. Rentals would also hurt sales of full seasons, the executive claims.

"We just don't think the value proposition is a good one for us," Meyer elaborated in an interview at the conference. Warner continues to sell individual TV shows at iTunes as well as season sets. Also sticking to that strategy are several other networks, including NBC and CBS. Only ABC, Fox, Disney and BBC America are so far on board for the new rental scheme.

The TV industry reaps significant income from DVD season collections, to the extent that previously canceled shows such as Family Guy and Futurama have been brought back. Video traffic at the iTunes Store has always been marginal, however, which 99-cent rentals may be intended to address. Apple generates most iTunes revenue through music and apps.

by MacNN Staff

(24)

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industry, iTunes, Apple TV, TV, Warner Bros.

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doctor9
Fresh-Faced Recruit

Joined: Aug 2001

+7

09/17, 11:19am | report spam | close Reply |
huh?

I'm not aware of the price details to argue, but didn't these same networks including Warner agree to provide such content for the new Samsung Galaxy Tab yesterday?

http://www.electronista.com/articles/10/09/16/samsung.media.hub.debuts.for.us.android.devices/

prl99
Fresh-Faced Recruit

Joined: Mar 2009

+7

09/17, 11:24am | report spam | close Reply |
greed and shortsightedness

How many $2.99 shows are they selling? How many more 99-cent shows would they sell? Production costs aren't more for either amount so why not try the lower cost and see if you can sell more than 3x as many shows, thereby making more money? I'd think all the production costs have already been taken care of by advertising during the actual TV showing so re-runs on the 'net generate bonus money (less royalties to the actors--if they get any). I'm more willing to try shows at 99-cents than at $2.99 so getting any money from me means selling it at an amount I'd be willing to pay.

hayesk
Professional Poster

Joined: Sep 1999

+8

09/17, 11:25am | report spam | close Reply |
Huh?

Do movie rentals harm sales of movie sales or box office prices?

I think the real reason to hold out is "if we refuse the new business model, we believe the old business model will continue to work for us."

iphonerulez
Fresh-Faced Recruit

Joined: Nov 2008

+8

09/17, 11:27am | report spam | close Reply |
The real concern of the networks is

Apple taking control. They just flat-out don't like Apple putting leverage on them. Yet, I think as long as other networks give in and start making money, TW will likely have to give in or lose out on a viable revenue stream.

I believe some networks see iTunes as middleman that doesn't seem to be doing anything. Like a doorman that's always holding his hand out for tip just for opening a door. It's really funny. Only time will tell but I think it will end up the same way as the music industry. Apple's iTMS will become too big to ignore.

hayesk
Professional Poster

Joined: Sep 1999

0

09/17, 11:28am | report spam | close Reply |
Huh?

Do movie rentals harm sales of movie sales or box office prices?

I think the real reason to hold out is "if we refuse the new business model, we believe the old business model will continue to work for us."

cmoney
Mac Enthusiast

Joined: Sep 2000

+4

09/17, 11:32am | report spam | close Reply |
Full season prices are too high!

I'm gonna be "homeless" for a few months so I'm looking at TV show download options only to find out they want $50 for a season of most shows in HD format!

Studios: it's 99 cents a show or nothing. (And by nothing I mean I'll be downloading via alternative methods.)

vasic
Fresh-Faced Recruit

Joined: May 2005

+4

09/17, 11:41am | report spam | close Reply |
Control

Yes, it is entirely about Apple's dominance, and WB is petrified.

The argument that the price is to low is easy to make, since it is difficult to back it up by actual numbers. You would have to figure out:

1. How many average viewers are there for an average WB show (Nielsen does this fairly reliably)
2. How much money are they consequently getting per average show from advertising
3. Calculate how much ad money does a single viewer generate.
4. Figure out if the difference between $0.99 rental revenue minus ad revenue per single user is positive or negative.

I don't doubt for a moment that it would be positive, so this is entirely about WB losing level of control to Apple, the biggest company in tech, and soon to become the biggest company in the US.

vintagegeek
Fresh-Faced Recruit

Joined: May 2007

+1

09/17, 12:07pm | report spam | close Reply |
The Matrix

Hey, does anyone have a matrix of Studios, Networks, etc and where they stand with TV rentals, buy on iTunes. Old versus current season shows. I'm soooooooooo confused.

B9bot
Fresh-Faced Recruit

Joined: Dec 2008

+2

09/17, 12:12pm | report spam | close Reply |
All of the above

Greed, shortsightedness, control, fear because that's not the way we do business are all the reasons Warner, the king of GREED won't agree to rentals. Once they see how ABC racks up the money, they will eventually change there mind. Especially when they see there sales go DOWN because no one will download from them.
Warner needs a change in higher management to get with the present times, not live in the past.
Right now Warner thinks they can do business as they did in the past. They will find out soon that what they did in the past doesn't work anymore especially at the price point they want.

B9bot
Fresh-Faced Recruit

Joined: Dec 2008

+3

09/17, 12:14pm | report spam | close Reply |
You would have thought they would have learned

You would have thought they would have learned from there music business how things work today. But the old fogies apparently are stuck in there ways and I guess you can't teach old dogs new tricks.

vintagegeek
Fresh-Faced Recruit

Joined: May 2007

+2

09/17, 12:20pm | report spam | close Reply |
99 cents Tooo Low?

How can anyone say 99 cents is too low for a 20 minute comedy/sitcom show. Remember they are 10 minutes of commercials in a 30 minute comedy.

testudo
Fresh-Faced Recruit

Joined: Aug 2001

-2

09/17, 12:48pm | report spam | close Reply |
Re: greed and shortsightedness

How many $2.99 shows are they selling? How many more 99-cent shows would they sell?

That's a stupid argument. It takes nothing else into account except 'online sales'.

Production costs aren't more for either amount so why not try the lower cost and see if you can sell more than 3x as many shows, thereby making more money?

Again, it isn't just about itunes sales.

I'd think all the production costs have already been taken care of by advertising during the actual TV showing so re-runs on the 'net generate bonus money (less royalties to the actors--if they get any).

This is where your logic falls through the floor. You make the assumption that advertising revenue will not change, that, somehow, everyone watching on TV will still watch on TV.

And yet, when the original AppleTV was released, and more so with the new one, there are people saying "Great! Now I can dump my cable package and just rent the shows on-line!". The cheaper the shows are available on-line, the more likely people will start renting them from on-line instead of watching them on TV. At that point ratings go down, which then means ad revenue goes down.

And, as mentioned in the article, you aren't even taking into account DVD sets of the shows. There are people who don't watch shows when they're on but get the DVD set. If you can rent the show, you can get it for far cheaper than the DVD set, thus killing another revenue stream.

testudo
Fresh-Faced Recruit

Joined: Aug 2001

-1

09/17, 12:53pm | report spam | close Reply |
Re: Huh?

Do movie rentals harm sales of movie sales or box office prices?

Completely wrong comparison, since movie rentals are not available at the same time as it is in the theaters.

And box office prices should indicate to you that something is doing harm to the industry. The prices keep going up, yet revenues are not taking off accordingly, because attendance is down.

And why anyone would waste their time going to a theater, with over priced tickets and food, let alone the idiots talking through the whole thing, making calls, texting, no ability to pause to hit the head. Yeah, going to the movies is a wonderful experience.

testudo
Fresh-Faced Recruit

Joined: Aug 2001

-1

09/17, 01:11pm | report spam | close Reply |
Re: Control

Yes, it is entirely about Apple's dominance, and WB is petrified.

Yeah, how dare some company not willingly hand over the control of their product to a third party.

h***, Apple does it all the time. They aren't afraid that someone might be able to wield control of the iPhone, say, to be able to dictate to apple terms and conditions.

Oh, wait...

The argument that the price is to low is easy to make, since it is difficult to back it up by actual numbers. You would have to figure out:

And so you go out of your way not to back up your argument, though, with real numbers either.

I don't doubt for a moment that it would be positive, so this is entirely about WB losing level of control to Apple, the biggest company in tech, and soon to become the biggest company in the US.

Of course you don't doubt it. And WB doesn't doubt they'd lose money. But we know you must be right.

testudo
Fresh-Faced Recruit

Joined: Aug 2001

-3

09/17, 01:13pm | report spam | close Reply |
Greed

I find it funny people are saying WB is being greedy, and yet then state that they'd make a lot more money from rentals. Exactly how is that being greedy then? Isn't greedy when you go after more money?

jwdsail
Fresh-Faced Recruit

Joined: Jun 2000

+1

09/17, 01:41pm | report spam | close Reply |
Too Low?

Strange I look at $0.99 to RENT 1 episode and think it's too damn high.

I'd consider renting a SEASON, for $2.99-$3.99, a reasonable price.

I'm really not interested in renting anyway. I want to download it once and not worry about Cox's crappy service.

testudo
Fresh-Faced Recruit

Joined: Aug 2001

0

09/17, 01:43pm | report spam | close Reply |
cost

Oh, and can someone explain why a 30-minute show and an hour show should rent for the same price? Esp. since the hour show tends to have far higher production costs than your average 30 minute sitcom.

testudo
Fresh-Faced Recruit

Joined: Aug 2001

-1

09/17, 01:44pm | report spam | (1 reply) close Reply |
Re: Too Low?

Strange I look at $0.99 to RENT 1 episode and think it's too damn high.

I'd consider renting a SEASON, for $2.99-$3.99, a reasonable price.

Yes, the logic of the cheap-skate. "Who cares how much it costs to produce! I want it for this price!"

tdellos
Fresh-Faced Recruit

Joined: Sep 2003

0

09/17, 02:08pm | report spam | close Reply |
AppleTV

The key line in this article is "Apple generates most iTunes revenue through music and apps." I don't think this is a result of the price of video content, instead I think it's because of the price/performance of the original AppleTV.

If the new AppleTV takes off (which I think it will because it's cheap, small, and integrates well with iOS devices), then Apple will start selling a lot more video content.

These increased sales, especially if they trend higher for people doing the 99Â¢ pricing, are what will motivate studios like Warner Bros. to "drink the 99Â¢ rental Kool-Aid".

leamanc
Fresh-Faced Recruit

Joined: Oct 2003

0

09/17, 03:49pm | report spam | close Reply |
Just doesn't make much sense

They forget that they give these shows away free, over the air. This means they have to profitable before they even air, just to stay in business. Rentals, DVDs, and reruns are extra money down the road, if a show is successful and/or gains a cult following.

Hardly anybody was biting at $2.99 per episode. I know I wasn't. I will do it at $0.99 per episode, though. I don't watch much on ABC or Disney, however, and would prefer NBC and CBS programming.

And to folks who question whether actors get royalties from re-runs, yes, they do. This may not be the case in some older shows (like from the '50s and '60s) before actors realized the profit potential of eternal syndication. But if an actor has a halfway-decent agent, they will make sure to get syndication royalties in the contract. The cast of Seinfeld makes millions per years, just off the re-runs, and will continue to do so until either the show finally stops being a popular re-run, or they die. (Granted, not all shows are big cash cows, but it's not a bad chunk of change in any case.)

testudo
Fresh-Faced Recruit

Joined: Aug 2001

-1

09/17, 04:59pm | report spam | close Reply |
Re: Just doesn't make much sense

They forget that they give these shows away free, over the air. This means they have to profitable before they even air, just to stay in business. Rentals, DVDs, and reruns are extra money down the road, if a show is successful and/or gains a cult following.

They aren't 'free' over the air. People pay them money to air commercials during the broadcast. They also receive cash from cable providers for the rights to broadcast their channels.

testudo
Fresh-Faced Recruit

Joined: Aug 2001

-2

09/17, 05:02pm | report spam | close Reply |
In-show ads

BTW, the more shows go to iTunes and the like, the more in-program advertising you will be seeing (like you thought it was too much now).

facebook_Justin
Via Facebook

Joined: Sep 2010

0

09/18, 11:13pm | report spam | close Reply |
comment title

Do what you want WB, and all you other film companies but it's only going to lead to more piracy. You keep denying us customers what we want well guess what, were gonna go the piracy route then. The other day I was looking all over the net for a movie to LEGALLY rent or buy online (WB movie, too) and could not find it anywhere. Not on iTunes, Netflix, Amazon, BB Online, Hulu, and many more that I looked at. I ended up spending $6.48 on a RapidShare membership and pirating the movie to watch. I hate piracy but guess what, you don't wanna give me any legal ways to get a movie, I'm gonna get it the other way then. Not like I didn't try doing it the proper way.

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Warner Bros. holds out on iTunes show rentals

updated 11:05 am EDT, Fri September 17, 2010

CEO worries about sales of full seasons

huh?

greed and shortsightedness

Huh?

The real concern of the networks is

Huh?

Full season prices are too high!

Control

The Matrix

All of the above

You would have thought they would have learned

99 cents Tooo Low?

Re: greed and shortsightedness

Re: Huh?

Re: Control

Greed

Too Low?

cost

Re: Too Low?

AppleTV

Just doesn't make much sense

Re: Just doesn't make much sense

In-show ads

comment title

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Warner Bros. holds out on iTunes show rentals

updated 11:05 am EDT, Fri September 17, 2010

CEO worries about sales of full seasons

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huh?

greed and shortsightedness

Huh?

The real concern of the networks is

Huh?

Full season prices are too high!

Control

The Matrix

All of the above

You would have thought they would have learned

99 cents Tooo Low?

Re: greed and shortsightedness

Re: Huh?

Re: Control

Greed

Too Low?

cost

Re: Too Low?

AppleTV

Just doesn't make much sense

Re: Just doesn't make much sense

In-show ads

comment title

Login Here

10 Most Read

10 Most Discussed

MacNN Marketplace