Apple 2.0

Covering the business that Steve Jobs built

Apple, the iPad and the 99¢ TV show

March 19, 2010: 8:11 AM ET

Scrambling to cut content deals as the April 3 launch-day deadline looms

Photo: Apple Inc.

Steve Jobs knows a thing or two about Hollywood. He ran Pixar for 20 years. He's Disney's (DIS) largest stockholder. He's got a hobby called Apple TV. And he's packed the iTunes Store with more than 55,000 TV episodes and 8,500 movies. But in terms of delivering video content to American consumers, Apple (AAPL) is still in the bush leagues -- and he knows it.

Enter the iPad. With a 9.7-inch high-res screen, broadband Internet and enough flash memory and battery life to show a trans-Atlantic flight's worth of entertainment, the tablet computer could be Apple's first serious entree into the world of the couch potato -- if only Hollywood would play along.

That's the dramatic tension underlying today's piece in the Wall Street Journal, which reports that Apple has put its magazine, newspaper and textbook projects "on backburner" as it concentrates on cutting media content deals in the weeks before the iPad's April 3 launch.

Citing "people familiar with the matter" 12 times in 14 paragraphs (are you there, Rupert?), the Journal reports that Apple is scrambling to strike deals but running into fierce resistance. Specifically:

  • Apple has put on hold its plan to offer "best of TV" packages as $30 per month subscription services "because few media companies were interested."
  • Instead, it is discussing dropping the price of individual TV shows to 99 cents, down from the $1.99 and $2.99 currently charged for most shows on iTunes.
  • Many major TV studios are balking at the price cut, worried that it would "jeopardize the tens of billions of dollars in subscription fees" cable and satellite companies pay now for their content.
  • Apple counters with the familiar argument that lowering the price could create new markets -- as if there weren't enough television being consumed in America today.

The Journal's people say that it looks like Apple has cut some deals and may be offering a limited number of 99-cent shows by the time the iPad ships. In December, the paper reported that CBS (CBS) and -- big surprise -- Disney were the content producers most likely to buy into Steve Jobs' Hollywood dreams.

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[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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