May 13, 2008

HBO Selling Shows Through iTunes

In a deal that could be announced as early as Tuesday, cable network HBO is expected to begin selling its shows through Apple Inc.'s iTunes digital entertainment service, according to a Reuters report this week and initially reported by Portfolio.com.

Sources familiar with the discussions say a flexible pricing model will be used, with shows selling at a price of $1.99 per episode or higher. It would be the first time Apple has agreed to sell television episodes at different prices in the United States.

Until now, the company has kept consistent pricing for its content in the spirit of providing pricing simplicity, although some global iTunes stores have sold songs at different prices. But studio and music company executives had advocated a variable pricing model that would offer new releases at higher prices and other content at lower prices, believing the move would increase revenue from its older catalogs.

Apple's fixed pricing structure was part of the reason General Electric's NBC Universal decided last year to remove its shows from iTunes. Since that time, NBC has allowed some content to be available for streaming on Apple's iPhone and for sale on iTunes United Kingdom store.

For HBO, the deal would mark the first time the network has made its shows available for sale in electronic form. The network, home to hit series such as "Sex and the City" and "The Sopranos", is also testing a broadband service for its Wisconsin subscribers that would provide streamed episodes of shows shortly after their first airing.

According to the Reuters report, HBO plans to sell some of its shows on iTunes at the same time they become available on DVD, after the entire season of the show is initially aired. This would protect the network's relationship with subscribers and cable operators who pay a premium for every new subscriber. 

Other cable and broadcast networks take a different approach, making their content available as early as the following day after an initial broadcast.  Initially, HBO will likely offer shows from its archives, according to Reuters.

A representative for Apple could not be reached, and HBO declined comment on the matter.     


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