HBO Raises the iTunes Cost Bar

Three of the six shows—"Deadwood," "Rome" and "Soparanos"—cost $2.99 an episode. That's a buck more than other TV shows, even those from premium networks Showtime and Starz.

There's no volume discount, either. "Sopranos" complete season one—13 episodes—is $38.87, or $2.99 each. That pricing is consistent with the other premium networks but not others. For example, season three of "Lost" cost $1.52 per episode when purchased together; otherwise episodes are $1.99 each.

HBO's pricing hints at what NBC most wants from Apple: variable pricing—the idea that some shows are more valuable than others. Apple has resisted price variations on TV shows, even while increasingly embracing them for music. Long past is the day when all iTunes albums were $9.99. Movies started out with somewhat tiered pricing.

Michael Gartenberg, a JupiterResearch research director, blogged today:

"In the end, it's more important for Apple to make sure there's first class content available for consumers who purchase devices as part of the iTunes ecosystem, including buyers of Apple TV, iPod and iPhone. While uniform pricing made good sense in the early days of the iTunes store to simplify the experience, the reality is some content is worth more than other content, both to the content holders and the consumers."

I disagree with NBC's fundamental assertion that some shows are more valuable than others; that goes for Michael, too. Some shows are less valuable than others. Apple just added "I Dream of Jeannie," which I don't think is as valuable as "Lost." But the shows cost the same. I don't want to pay more for "Lost" but less for Jeannie. Besides, why should someone pay more when the show is available elsewhere for free, such as network Web sites or services like Hulu?

Networks could make a "more valuable" case for TV shows not available anywhere else. Some older, popular shows could command a premium price, if iTunes is the major retailer. Geographic market availability would justify higher pricing. I would absolutely pay more for overseas programming, such as from BBC (not BBC America) sold here. The United States doesn't have a lock on good TV. There is plenty of good non-U.S. programming worth paying extra for.

But charging more for some U.S. shows than others: On what basis? Nielsen Ratings? Or iTunes Music Store popularity? Arbitrary pricing isn't good marketing, for either Apple or the networks.

HBO's premium network premium pricing is an open door for NBC to come back to iTunes. "We'll likely see more of these types of deals in the future, and Apple's flexibility with HBO bodes well for a return of NBC Universal content in the not too distant future," Michael blogged.

Can there be pricing common ground between Apple and NBC? I'm skeptical, but HBO variable pricing is an olive branch. Will there be peace and peacock in our times?

Posted by Joe Wilcox on May 13, 2008 1:10 PM