Despite Apple’s vast reach into online music distribution, its dominance in that market is not helping it with video downloads. Among other recommendations, Forrester research analyst James L. McQuivey says Apple needs to win back NBC to make video sales on the iTunes Store successful moving forward.
Apple and NBC began a very public battle over pricing strategies for video downloads earlier this year with the end result being no NBC videos for sale on iTunes. While Apple may have won a moral victory by refusing to sell NBC shows, McQuivey says the move will hurt Apple more than NBC.
“Don’t let the Macgeeks posting angry blogs against NBC fool you,” said McQuivey. “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, via NBC Direct download, as well as over cable VOD.”
Forrester also recommends Apple adopt a movie rental service. Using Apple’s current video purchase model, McQuivey said it “Sounds like a weak value proposition because it is.”
Apple should be looking at an advertising model on the iTunes Store to bolster revenues, according to McQuivey. Forrester predicts will be a $7.2 billion online video ad market by 2012.
“We recommend that the goal of maintaining a death grip on price control be put below the goal of staying in business,” said McQuivey.