TV episodes through iTunes

TV episode sales through iTunes

I would not be comfortable if I was a TV affiliate or cable provider. This is the future. The Network’s, the content providers, have a larger economic incentive to sell through iTunes rather than traditional methods and it is way easier on them. Assuming Apple is only keeping 30% of the sales, each episode in the States sells for $1.99 which works out to roughly $1.39 per viewer per episode to the content provider. Selling advertising on a top rated show only generates $0.40 per viewer per episode and your viewers (notice the viewers are not the customers in the old model) hate the commercials. For the HD content Apple sells for a dollar more $2.99, so $2.09 per viewer per episode to the content provider. I am not aware of any additional advertising revenues for HD channels on cable, but I am not very well informed on that side.

My numbers breakdown for the 199 million episodes and 1 million HD episodes:

Network’s Revenue
Regular $277,207,000
HD $ 2,093,000
Total $279,300,000

Apple’s Revenue
Regular $118,803,000
HD $ 897,000
Total $119,700,000


The old model
Total $80,000,000 to the Network’s for the first run.

The other great thing for the Network’s is the fact that all viewers pay the “first run” rates. Conventionally advertisers pay more when an episode is run for the first time and receive a discount when the episode is rebroadcast later in the year. In the iTunes model, if you watch the episode the night it is released or a year later you are still paying the same amount.

The ease for the Network’s is the infrastructure they no longer need to maintain. Once they have finished producing the episode it is electronically shipped to Apple who distributes it to the customers. The Network’s don’t need to build server farms for distribution, this is what Apple is charging for, and the Network’s can phase out the infrastructure they have built to provide content to the affiliates. Even shows like Letterman are tape earlier in the day and played in their time slot. I believe even the news is tape delayed to a certain extent.