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Disney offers next-day iTune downloads

October 13, 2005

By Steve Gorman

LOS ANGELES (Reuters) – ABC’s unprecedented plan to offer
next-day downloads of its biggest prime-time hits for $1.99 per
episode via Apple’s online iTunes store opens a new revenue
stream for the TV industry and a new era of digital portability
for viewers, experts said on Wednesday.

The move, unveiled in conjunction with a new partnership
between the Walt Disney Co. and Apple Computer Inc marks the
latest bid by a major broadcast network and its parent company
to shake up “old media” models and expand their avenues of
distribution.

“This is the first giant step in terms of making content
available to more people in more places,” Disney CEO Robert
Iger said in announcing the deal.

Commercial-free episodes of two of U.S. television’s
highest-rated shows — ABC’s “Lost” and “Desperate Housewives”
– will be available for download from Apple’s iTunes a day
after their network broadcast. Last season’s episodes will be
available for download immediately.

Viewers will then be able to watch those shows at their
leisure on the new video-playing iPods and newly upgraded iMac
computers unveiled by Apple on Wednesday.

Apple’s iTunes will also offer downloads of ABC’s new drama
“Night Stalker” and Disney Channel’s two most popular cable TV
shows, “That’s So Raven” and “The Suite Life of Zack & Cody.”

The downloads will be priced at $1.99 per episode, the same
as iTunes will charge for music videos.

Iger said he sees the portability of the TV-viewing
experience offered by iPod and similar devices “as the future
as far as we are concerned.”

But the move raised questions about whether instant access
to current prime-time shows might diminish their future value
in the burgeoning DVD market and in broadcast syndication.

David Miller, a media analyst for brokerage Sanders Morris
Harris, said the added distribution outlet “increases the value
of the content” and complements Disney’s overall strategy.

“Disney has always taken the attitude that they want to be
able to distribute their content to anyone, any time … no
matter how they want to consume it,” he told Reuters.

Mike McGuire, research director for the Gartner Group, said
the downloads present “another way to extract revenue” from
Disney properties without cannibalizing commercial potential
for DVD sales and reruns.

The availability of cheap downloads of single episodes
could help drive demand for DVD boxed sets, giving more
consumers a chance to sample a show before deciding whether
they want to pay for an entire season. And he said audiences
that seek out their entertainment on the Internet differ from
the more “passive” viewers who settle for traditional reruns.

“This is about a very active, growing consumer base, active
in the sense that they will do a little extra work to … get
content outside of a programing schedule, and oh, by the way,
they want that content to be portable.”

Offering downloads of shows stripped of ads, however, might
give advertisers the jitters, he added.

The Disney-Apple venture comes as numerous networks are
exploring new outlets for on-demand viewing of their shows.

Last month, the Viacom Inc.-owned UPN network began
offering video streaming of its new hit comedy “Everybody Hates
Chris” through Google Inc.

And the WB network, controlled by Time Warner Inc., has
debuted two of its shows, “Jack & Bobby” last season and
“Supernatural” this fall, through sister online service AOL
before they premiered on television.




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