It’s big news in the world of online entertainment today: HBO is reportedly in final negotiations with Apple, about bringing its current and former original programming to iTunes and thus, Apple TV. This, by itself, is big news. Potentially larger news for the industry, is the rumor that HBO may have figured out a way to make Apple flexible on the pricing of content to consumers. This is precisely why NBC claimed to take its content off of iTunes: they wanted a better deal, and Apple wouldn’t budge. Supposedly, HBO was more effective, though perhaps that’s because HBO programming is premium cable. In other words, consumers are used to spending a little more time and money to get HBO shows, compared to network shows like The Office on NBC. According to the original report from Portfolio:
Details of the agreement are not yet known, but it is clear that HBO was able to secure better terms from Apple than other content providers, they said. One possibility is that HBO programming will have a higher retail price than the flat $1.99 fee Apple currently charges for video content; another is that HBO will receive a larger cut of the same flat rate than other iTunes content providers receive. Apple and HBO spokespeople did not return calls for comment on the deal.
NBC pulled its programming from iTunes last summer after Apple refused to charge more than $1.99 for that network’s shows. In May, NBC struck a deal with Microsoft to sell its shows on the Zune website.
The HBO-Apple agreement is a strategic coup for both companies. Apple is trying to increase sales and awareness of its new Apple TV, a device that allows viewers to rent movies and buy content from your television. HBO wants to profit from its archive by letting fans buy old episodes of shows like Deadwood and The Larry Sanders Show.
The terms of this new deal could open a Pandora’s box for iTunes. With the advent of pricing variation, movie studios and musicians will want to charge more for their big hits. Apple could be pressured to accept variable pricing for other content, a change it has resisted in the past.