NBC + Amazon: No Market Share Worries?

The deal, as I’m sure you’re aware, is that NBC has left Apple for supposedly greener pastures, Amazon’s Unbox video download service. But forgetting about more restrictive DRM, weirder pricing schemes, and the rest, I’m stuck thinking about a few obvious market share sacrifices that NBC must not be aware they’re making.

Here’s one problem: According to Apple’s most recent quarterly report, iTunes Store sales of $608 million represents 33% growth over last year. On the other hand, Amazon’s 10-Q doesn’t mention Unbox, since the service hadn’t even launched as of the report’s late-July release. Even allowing that NBC makes up 40% of video downloads from the iTunes Store, they’re giving up a sizeable existing market in order to try to create their own with Amazon. It’s Slotkin’s old myth of “regeneration through violence” biting them in the ass.

It’s also worth noting that Unbox works only in the US, while iTunes also makes sales around the world. According to the W3Counter, about 30% of Internet traffic comes from the US; depending on one’s calculations, the same portion or greater comes from non-US nations where the iTunes Store makes sales. One has to acknowledge the greater popularity of NBC’s programming in the US than elsewhere, but all the same, here, too, NBC’s move represents a significant sacrifice of the potential market for digital content.

Finally, Unbox currently doesn’t work with any non-Windows OS. Again according to the W3Counter, Apple, Linux, and other systems make up roughly a 6% market share, which is a decent chunk of income to abandon, when you add it to the rest.

Can NBC really hope to make sufficiently greater income, with the switch to Unbox, to outweigh these factors?

[Post prompted by Daring Fireball‘s excellent coverage of the story]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s