Apple TV plan may hinge on Murdoch executives

Posted by Gianluigi Cuccureddu SMP in Breaking News on August 31, 2010  |  0 Comments More from this author  |    |  Follow Gianluigi Cuccureddu SMP on: Facebook | LinkedIn | Twitter |

Several sources report on the internal struggle at Murdoch with regard to a partnership with Apple and its 99 cent digital rentals.

Executives opposing the partnership:

Single episodes of such popular shows as "Glee" or "Lie to Me" are available to purchase for as much as $3.99 at Apple's iTunes store. Some executives of News Corp., which owns the Fox network, worry that offering 99-cent episode rentals will cut into lucrative DVD sales and pull viewers away from watching network TV, thereby eroding a $20-billion advertising market, these people said.

Executives favoring the partnership:

But other top officials at News Corp. — especially Murdoch — are prepared to join Apple's six-month pricing trial because it could cement a relationship with Apple's powerful chief executive, Steve Jobs, and reap benefits for other divisions within the company, namely newspapers.

The latter is important in this, because Murdoch said the Apple iPad will rescue print media because it can lure readers who don't subscribe to newspapers.
The iPad is the device and keystone in Murdoch's ambition to launch a national digital product this year.

The following data shows how Apple is a powerful player in product development and altering consumer behavior:

"Unlike music, digital video-to-own never got much traction," said Russ Crupnick, a senior industry analyst for NPD Entertainment, which conducts periodic surveys of online consumer behavior. "Only about 2% of the U.S. population reports actually buying a movie — and about the same for a TV show."

Lowering the price to 99 cents for a two-day rental would more than double transactions, Apple executives have told Hollywood executives, according to people familiar with the negotiations.

"Apple has shown in the past that they can alter consumer behavior by dropping the consideration below a dollar," said Aram Sinnreich, an expert in digital media who teaches at Rutgers University. "They've done it twice, with music and applications."

Apple is capable, already proven. Do company execs like those at Murdoch see the inevitable digital transformation industries will undergo?