After a pricing spat with Apple led NBC
to pull its video content from iTunes,
the broadcaster has struck a deal with Microsoft's Zune
online store.

On Tuesday, as part of an announcement about new Zune features, Microsoft planned
to say that it will start selling television programs at the Zune store for
viewing on its portable music player. NBC is among the broadcasters supplying
videos for the service.

The videos, which also come from Comedy
Central, MTV, Nickelodeon,
Turner Broadcasting and VH1,
will cost US$1.99 each. Users will be able to choose from 800 episodes.

The price is significant because it is the same that Apple charges for most
TV programs in iTunes. However, at the time of the dispute between Apple and
NBC last year, Apple said NBC wanted to increase its wholesale price of each
episode by so much that Apple would have to charge $4.99 per episode. Apple
said it wouldn't agree to that price change.

At the time, NBC disputed Apple's version of events and said that NBC wanted
to offer customers a variety of pricing options, including bundles of programs
for set fees. When NBC's contract with Apple expired in December last year,
it was not renewed.

Microsoft's flexibility over price was one reason NBC wanted to sell its content
through the Zune store, according to Microsoft. "We have worked closely
with them around flexibility and protection of IP," said Julio Estrada,
general manager for Zune Social. "Zune will control the price of the episodes,
but we're open to understanding which episodes can be priced lower and how we
may introduce premium content which may be priced higher than $1.99," he
said.

Estrada also hinted at potential future services to be offered through the
Xbox. For now, he would only say that when customers buy any of the TV programs,
they'll be able to watch them on their TVs through their Xbox, connected to
the Zune.

NBC did not respond to a request for comment late Monday. Microsoft's announcement
includes a quote from JB Perrette, president of NBC Universal Digital Distribution,
saying the deal with Zune offers NBC flexible packaging and pricing options.

ITunes currently offers packages that include a whole season of a TV show for
a discounted rate.

In addition to the new video offerings, Microsoft is updating the Zune software
on the device, the software for the PC and the online store. The updates revolve
around an effort to make it easier for people to discover new music and an attempt
to offer new social-networking opportunities, Estrada said.

Users of the Zune Card will be able to share and update cards on their Zune
devices. A Zune Card is an electronic snapshot that lists favorite tracks and
recently played songs. While users could previously view and share Zune Cards
on the Web, they'll now be able to drag and drop friends' cards onto their Zune
and receive updates of songs that their friends are listening to each time they
sync their Zune.

The software update includes many other minor changes, such as one that lets
users browse their video collections by genre and an editing change that lets
users edit track and album information more easily.

Zune users will be notified that there is a new version of the software available
for download.

Microsoft launched the Zune in late 2006, joining a market that had been picking
up steam since Apple launched the iPod in 2001. Microsoft has sold more than
2 million Zunes. That compares to more than 10 million iPods sold in the first
three months of this year.

IDG News Service

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