Report: Apple should kiss and make up with NBC...fast

Forrester analyst James McQuivey says Apple needs to supply iPod owners with premium content and can't afford to let a top TV network get away.

Despite what Apple loyalists may think, iTunes needs NBC Universal more than the network needs iTunes, according to a report issued by Forrester Research.

As NBC shows such as The Office and Heroes began disappearing from iTunes over the weekend, James McQuivey, a Forrester analyst, warned Apple executives that it was in their best interest to "win NBC back."

In the report issued Monday, McQuivey asked what good it is equipping iPods with video monitors if there isn't any video to watch. The way McQuivey sees it, NBC Universal is the clear winner in the feud between the two companies.

"Don't let the Macgeeks posting angry blogs against NBC fool you," McQuivey wrote in a report issued Monday. "The loser here is Apple, which relies on NBC Universal to deliver 30 (percent) of video download sales. Any supposed backlash against NBC will not materialize because NBC has made its content available, for free, on NBC.com and six other major portals sites."

An Apple representative did not respond to interview requests.

Jeff Zucker, NBC Universal's CEO, has said that he hoped the two companies could figure a way to do business. But at this point, a mending of the fences appears unlikely.

"We're always open to dialogue, but right now there are no active discussions (between Apple and NBC Universal)," a spokeswoman from NBC Universal said Tuesday.

The relationship between NBC and Apple started going bad in August, when NBC decided not to renew its contract to sell downloads of TV shows on iTunes.

The reason for the split was money. NBC wanted more control over pricing of downloads but Apple has long held to a policy of selling TV shows for a flat fee of $1.99 and movies for $9.99.

McQuivey has long predicted that downloads of TV shows would be a tough sell when most networks offer the material for free on their own sites. Besides streaming shows on NBC.com, the network also offers them on Hulu.com and for download at Amazon Unbox .

A study by Forrester shows that only 19 percent of iTunes users buy videos from the site. Of that group, the average user spends only $30 on video, accounting for less than $100 million in sales for the first half of 2007.

 

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