TV new terrain for Zune-iPod rivalry

Times Staff Writer

Microsoft Corp. will compete more directly with Apple Inc.’s dominant iTunes store by selling TV shows at its own online store for use on its Zune music and video player, the company said Monday.

Microsoft’s initial offering of more than 800 TV episodes for sale at Zune Marketplace will include popular shows currently unavailable at iTunes, such as NBC Universal’s “The Office,” “Heroes” and “30 Rock.”

NBC Universal’s shows can’t be purchased at iTunes because of a rift with Apple over pricing.


The iTunes store, which sells music, movies and TV shows in the form of digital downloads, is the dominant retailer in digital entertainment, surpassing Wal-Mart Stores Inc. as the top music retailer in the U.S.

Last week, Apple increased the number of new movies for sale at iTunes, which rents movies as well.

Zune Marketplace joins other online stores selling TV episodes, such as Inc.’s Unbox and SanDisk Corp.’s Fanfare. The TV shows bought at Zune Marketplace can be watched either on a Zune device, a computer or through Microsoft’s Xbox 360 game console, which connects to the television. Microsoft wants Zune to be more than a retailer, but a service where consumers can sample and share entertainment.

NBC Universal is not ruling out working with iTunes one day, said J.B. Perrette, president of NBC Universal’s digital distribution division. “We want our content available on any storefront,” he said. “We think iTunes is ultimately handicapped by not having access to our shows.”

NBC is the only major broadcast network with shows for sale at Zune Marketplace. Other offerings include shows from Comedy Central, MTV, Nickelodeon and VH1. Each episode will cost $1.99, the same price iTunes charges. The Zune store has 2.5 million songs and 4,000 music videos for sale. The store also makes available 3,500 free audio and video podcasts.

Microsoft, based in Redmond, Wash., has sold more than 2 million Zunes since November 2006, said Jason Reindorp, Zune’s director of product marketing. Cupertino, Calif.-based Apple said it sold more than 10 million iPods in the first quarter alone.


The Zune is the No. 3 portable player in the U.S., with 4% of the market, according to the NPD Group. Apple’s iPods dominated with 71%, followed by SanDisk’s lineup, which had 11% market share.

Microsoft also plans to announce it will expand services for Zune customers to make it easier to share music wirelessly. Unlike iTunes, Zune offers a music subscription service that enables customers to listen to unlimited music for $14.99 a month.

By selling TV episodes, the Zune “is now at parity with Apple,” Reindorp said. “This gives us a chance to stop chasing Apple and show how our strategy is different.”