This is the first time a big UK broadcaster has done a deal with Apple. Retailers that are only just getting to grips with the idea of selling music as digital files over the internet could find that Apple has caused a step-change in the way people buy TV entertainment.
With supermarkets battling for entertainment market share, both online and in their stores, the question of how customers want to buy and consume entertainment products is one of interest to many more retailers than it would have been a few years ago.
However, looking forward, the long-term threat to retailers’ businesses might not come from iTunes, but broadcasters themselves.
At the start of the year, the BBC launched its online, on-demand TV service, which allows you to watch and download a selection of programmes aired in the previous week. 17 million programmes have been downloaded or streamed from iPlayer’s site in the seven weeks since it launched. 11 million of these programmes were downloaded by 2.2 million people in the first month.
These programmes will now become available on iTunes after they have aired for free on iPlayer. You can only store and watch programmes through iPlayer for 30 days after downloading them, but the usage figures suggest that many consumers think that not owning the programme permanently in any format is a worthwhile trade-off for getting to watch it at a time convenient to them for free.
And the competition for consumers doesn’t end there. Channel 4 has also launched an on-demand service similar to iPlayer and Sky allows its customers to record and view programmes at their leisure. Cable operator Virgin Media also has an on-demand service, which allows Virgin subscribers to watch the whole series of many popular programmes when they like.
Again, the viewer doesn’t retain a digital copy of the programme, but anecdotal evidence suggests this isn’t a problem. My boyfriend had been buying episodes of one of his favourite American TV shows through iTunes, until he discovered he could watch it at no extra cost, whenever he likes, as part of his Virgin subscription. iTunes, for once, is losing out to a newer business model.
Born in the 1980s, he is one example of the “digital natives”, or “generation Y”, that retailers are told they must start to cater for. For this demographic, buying a whole series on DVD isn’t even a consideration.
Retailers will have to investigate the technology platforms that they might need to keep up not only with iTunes, but also with broadcasters that provide content for free as a value-adding feature to their core propositions.
Next Christmas is likely to provide the first strong indicator of whether consumers still prefer physical copies of their favourite programmes over digital ones. Don’t be surprised if box sets of this year’s most popular TV shows fail to fly off the shelves.
And, as an early warning to UK booksellers, consider that HarperCollins has just announced it has poached Sky’s head of commercial partnerships to be its director of digital development. His remit will be to implement a “company-wide strategy to enhance existing digital income and fully exploit potential digital revenues”. The digital revolution has some way to run. You have been warned.