NBC Universal decided not to renew its agreement to sell its films and television shows on Apple’s iTunes after the network and Apple were unable to successfully negotiate pricing terms, the New York Times reported earlier today.

NBC is currently the No. 1 supplier of digital video content to iTunes and accounts for roughly 40 percent of downloads, which include hit shows like “The Office,” “Battlestar Galactica,” and “Heroes”. The network was reportedly seeking better piracy controls, the ability to bundle its content, and different pricing options, which Apple was unwilling to offer.

NBC’s content WAS slated to come off of iTunes in 90 days. However, in a statement issued only hours after the initial announcement hit the newsstands, Apple says it won’t offer any new NBC TV starting NOW.

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Since NBC would withdraw their shows in the middle of the television season, Apple has decided to not offer NBC TV shows for the upcoming television season beginning in September,” said Apple in its statement. “Apple declined to pay more than double the wholesale price for each NBC TV episode, which would have resulted in the retail price to consumers increasing to $4.99 per episode from the current $1.99.”

 

It’s an interesting move from both parties.

Apple should be commended for offering its users the greatest a-la-carte-flexibility and sticking to its price point despite heat from both record labels and TV networks. But iTunes is only as good as the shows it’s selling, and its appeal lies in its seamless integration with other Apple products. The online store is dependent on media conglomerates like NBC to provide content for video iPods and Apple TV. Like Forrester Research analyst James McQuivey told Cnet, “If you don’t have access to top-rated content, what’s the point?”

In removing its content from the top online digital download retailer, NBC is obviously banking on it’s ad-supported online, streaming episodes and much-anticipated, almost-launched destination video site Hulu to draw enough potential traffic and customers to make iTunes an insignificant bystander.  It could also partner with competing sites, like Amazon’s Unbox, which would most likely be willing to offer the the network a favorable deal in exchange for its top shows.  But what about the shows I wanted to watch on my iPod?

Will iTunes change its pricing model? Will NBC find acceptable alternatives? Stay tuned.

Update: NBC claims it never asked iTunes to double the price of downloads and its shows will still be available on Apple’s service through the end of the contract in December. (via paidContent)

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