NBC shows up on Zune after abandoning iTunes

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 $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.