Apple Computer is is going to have a harder time dominating digital video than it did conquering the digital audio market, according to a Wall Street analyst. David C. Bailey of Goldman, Sachs & Co. said that the news of CBS and NBC offering TV shows for US$0.99 per episode through video-on-demand services is an indication that competition in this market will be tougher than in the digital audio market. In comparison, Apple is selling episodes of five TV shows from ABC and Disney for US$1.99.
"The more aggressive price of $0.99 per episode compared to Apple’s $1.99 and ability to watch the shows on a TV (instead of a computer or iPod under Apple’s agreement) are strong indications that Apple will not be able to easily replicate its digital audio dominance in the nascent market for digital video," wrote Mr. Bailey in a research note obtained by The Mac Observer.
The research note did not get into details such as whether or not the rental model of NBC and CBS will be more attractive to consumers than Apple’s purchase model, or other such esoteric aspects that differentiate the two.
The firm reiterated an "Inline" rating, which means Goldman Sachs expects the stock to trade inline with other stocks being covered by Mr. Bailey. A secondary view of "Attractive" was also reiterated, meaning that, "The investment outlook over the following 12 months is favorable relative to the coverage group’s historical fundamentals and/or valuation." A price target was not offered.
Apple’s stock traded lower today to close at 59.835, down 0.40 (-0.66%) on moderate volume.
*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.