Apple sells 200 million TV shows, but is that a big deal?

October 16, 2008

Apple said Thursday that it has sold 200 million TV episodes on iTunes. This might sound like a lot, but the money that TV networks see from the deal may still be relatively small.

The company also announced that the download store would offer high-definition TV shows from all four of the major broadcast networks--CBS, Fox, ABC, and NBC--and that it had sold 1 million HDTV episodes since last month.

To put the 200 million number into context, Peter Kafka at Silicon Alley Insider figured it this way: Apple sold the 200 million episodes over three years. If each show sold for the standard $1.99 iTunes price and the networks took a 70 percent slice then they would have seen about $280 million. That means the group is getting just over $93 million a year.

NBC has said that it accounts for 40 percent of the videos sold on iTunes, which would mean it takes in $36 million. Here's where things get hinky. That figure is more than twice the $15 million that NBC Universal CEO Jeff Zucker said the company nets from iTunes. Of course, he said that a year ago, just after pulling NBC content from iTunes following a spat over pricing.

This could mean that the sales rate at iTunes jumped in the past year while NBC's content was gone. Sales may have skyrocketed with the debut of the iPhone. We don't know. Regardless, the truth is that even in a best-case scenario the numbers are a drop in the bucket. The Television Bureau of Advertising reported in August that total broadcast ad revenue was just over $11 billion for the second quarter.

That's worth repeating: $11 billion for the second quarter.

But does this mean iTunes won't be a significant video distributor in coming years? No way. The numbers show that a significant amount of people are willing to pay cash for mobile content, the same content they can watch for free via broadcast or at Web sites like Hulu.

"Consumption of (mobile video) is not replacing broadcast but it is supplementing it," said Josh Martin, an analyst with the Yankee Group. "This is an indication consumers are willing to consume media in multiple forms. Providing freedom of choice is important for content owners. Linear broadcast is still the golden goose but there are other opportunities for the networks to make money and please consumers."

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