Apple looking to halve cost of iTunes TV downloads - report

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In an aggressive bid to push more digital video sales, Apple Inc. is reportedly talking to television networks about cutting the price of TV show downloads through iTunes in half.

Citing three people familiar with the proposal, Variety claims that Apple has told networks and studios that it would like to slash the cost of most TV episodes sold via iTunes from the current $1.99 to just $0.99 — the same price it charges for most music singles.

Apple reportedly believes the move will spur a more than a twofold increase in sales of the digital television downloads, which would effectively offset the impact of the price reduction through higher volumes.

Not surprisingly, the networks have been hesitant to embrace to the concept, which may have also played a part in NBC's decision last week not to renew its current iTunes distribution deal, according to Variety.

Of particular concern for networks is the impact such a move would have of sales of high-margin DVD box sets, and subsequently the networks' partnerships with large DVD resellers such as Wal-Mart, Target and Best Buy.

For instance, NBC Universal's just released "Heroes" on DVD is expected to retail in most stores for about $40 for the set of 23 episodes. But under Apple's proposed plan, the same set of episodes would cost less than $23, potentially cannibalizing the DVD sales.

Still, there are some studios that may be willing to entertain Apple's proposal. Variety speculates, for example, that MTV or A&E may welcome the chance to sell their reality shows at a lower price, particularly since Apple would reward them with greater promotion on iTunes.

An Apple spokesman declined to comment on the report, pointing only to a previous statement that it wouldn't agree to NBC's request for a "dramatic price increase."