NBC Universal shows up at CES 2008 and online, but not on my iPod

So, the trip out to Vegas was a long one. Sherwin and I had a stop in Little Rock, Arkansas along the way. The total time was of the trip was about seven hours. Knowing this, I had planned to catch up on the second season of Heroes and was going to download it all to my iPhone the night before the trip. That’s when it sunk-in that NBC Universal pulled out of the iTunes Store. NBC offers their content via Hulu and NBC’s own site but both are just a stream - you can’t download or time shift shows to your Mac or PC, let alone your iPod or iPhone. So, I instead of watching new shows (well, at least new to me), I watched older shows I had already downloaded.

One of the first “booths” I discovered on the CES map was NBC Universal. I wondered what their content-oriented booth would be like at a tech fair. It was pretty cool. It had a number of touch screen columns and there were folks handing out USB drives—nice ones, 2GB SanDisks. You could walk up to the column, touch on your favorite show, connect the USB drive, and the show downloads. Pretty slick.

Unfortunately when I get back to try the files on my Mac, I find that they’re DRM’d and unsupported in Mac OS X, for now. What I can open on the USB drive is a text file with a URL in it that takes me here. After some further investigating at CES, I find out that Fanfare is a site and service that SanDisk has created that is a video download service, made to be used with the its TakeTV device. It’s a USB drive and remote that connects to your TV, and lets you play back video. The Fanfare service lets you download content to playback on your TV or PC (yes, again, DRM’d and Windows only). According to the SanDisk representative, at least some, if not all of the downloadable content will be free and will be ad supported.

I really want to give NBC credit here. I really want to praise it for getting over the fear of digital files and portable media. This USB drive thing is proof, right? But the thing is, NBC has been doing this for some time now via the iTunes Store, and more recently via Amazon Unbox. Can we say this USB thing is anything new? All NBC has done here is licensed downloads to another company (which is great) while taking the content away from the leading provider—you remember, the one with the 70-some percent marketshare?

This is where things don’t add up, at least to me. Diversifying your distribution is logical, eliminating what has to be your number one avenue of distribution is crazy-making. To me, NBC risks forcing consumers back into stealing content, because it’s not providing a legal way to purchase content on the dominant player. Instead, NBC seems to want to cut off its nose to spite its face—you know, the one that saved The Office. Do NBC’s management and share holders really think that this equation holds true:

Revenue from: Revenue from:

Hulu +
NBC.com +
Fanfare +
Unbox

?

Hulu +
NBC.com +
Fanfare +
Unbox +
iTunes Store

Maybe NBC isn’t realizing the hit at the moment because of the ongoing writers strike. But when the strike ends, can shunning what consumers have made into their dominant legal provider of downloadable video make financial sense?

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