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Tue, 06 May 2008 After abandoning iTunes, NBC shows up on Zune

NBC runs to Zune

Nancy Gohring

After a pricing dispute with Apple led NBC to pull its video content from iTunes, the broadcaster has struck a deal with Microsoft's Zune online store.

On Tuesday, as part of an announcement about new Zune features, Microsoft planned to say that it will start selling television programs at the Zune store for viewing on its portable music player. NBC is among the broadcasters supplying videos for the service.

The videos, which also come from Comedy Central, MTV, Nickelodeon, Turner Broadcasting and VH1, will cost $1.99 each. Users will be able to choose from 800 episodes.

The price is significant because it is the same that Apple charges for most TV programs in iTunes. However, at the time of the dispute between Apple and NBC last year, Apple said NBC wanted to increase its wholesale price of each episode by so much that Apple would have to charge $4.99 per episode. Apple said it wouldn't agree to that price change.

At the time, NBC disputed Apple's version of events and said that NBC wanted to offer customers a variety of pricing options, including bundles of shows for set fees. When NBC's contract with Apple expired in December last year, it was not renewed.

Microsoft's flexibility over price was one reason NBC wanted to sell its content through the Zune store, according to Microsoft. "We have worked closely with them around flexibility and protection of IP," said Julio Estrada, general manager for Zune Social. "Zune will control the price of the episodes, but we're open to understanding which episodes can be priced lower and how we may introduce premium content which may be priced higher than $1.99," he said.

Estrada also hinted at potential future services to be offered through the Xbox. For now, he would only say that when customers buy any of the TV programs, they'll be able to watch them on their TVs through their Xbox, connected to the Zune.

NBC did not respond to a request for comment late Monday. Microsoft's announcement includes a quote from JB Perrette, president of NBC Universal Digital Distribution, saying the deal with Zune offers NBC flexible packaging and pricing options.

iTunes currently offers packages that include a whole season of a TV show for a discounted rate.

In addition to the new video offerings, Microsoft is updating the Zune software on the device, the software for the PC and the online store. The updates revolve around an effort to make it easier for people to discover new music and an attempt to offer new social-networking opportunities, Estrada said.

Microsoft launched Zune in late 2006 and has sold over million units so far. That compares to more than 10 million iPods sold in the first three months of this year.

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