TV download battle finally begins in Canada

Last Updated: Wednesday, December 12, 2007 | 5:26 PM ET

CBC News

The battle for downloadable television is finally coming to Canada, with Apple Inc. launching the sale of TV series episodes for sale on its iTunes store.

Apple on Wednesday announced it would sell individual episodes of several Canadian shows and a handful of U.S. series for $1.99 each, two years after it launched a similar service in the United States.

Apple has introduced several Canadian shows and a handful of U.S. shows for download on it iTunes store in Canada.

Canadian shows available for download include Little Mosque on the Prairie, The Rick Mercer Report and Corner Gas, as well as complete NHL hockey games. U.S. shows include South Park, The Sarah Silverman Program and The Hills.

Apple's move comes just days after its chief rival, Microsoft Corp., launched downloadable movie rentals over Xbox Live, the online component of its video game console. Both come in the same week that TiVo Inc. begins Canadian sales of television recording devices, which save shows on a hard drive rather than a traditional VCR tape. TiVo's product has been a big hit south of the border.

Industry analysts on Wednesday said both Apple and Microsoft have been forced into making television offerings available for the key holiday buying season. Apple can't afford to fall behind Microsoft in Canadian digital video sales and it can't let TiVo steal sales from its Apple TV set-top device, which makes downloaded episodes viewable on the television.

"This is the consumer quarter," said Eddie Chan, personal computer and technology analyst for research firm IDC Canada. "This is a critical time for everyone in the marketplace."

Peter Lowe, director of marketing for iTunes in Canada, said Apple has always intended to make the video service available to Canadians, but has been held up by licensing and technology issues.

"It's complicated because different networks and production companies have rights to content in different places around the world and you ultimately have to work with the person who owns the content to deliver it," he said. "Unfortunately, there is no one rule that you can apply."

In the United States, Apple and Microsoft typically negotiate download deals directly with a television show's producer. In Canada, however, television networks often hold the internet rights to shows, which adds a layer to negotiations.

The licensing issues have also shut Canadians out of watching television shows streamed on websites. U.S. residents can, for example, watch an episode of The Office on NBC's website if they miss it when it airs on television, but Canadians are barred from doing the same.

Analysts said despite the incursions into Canada by Microsoft and Apple, pay-per-downloads will not take off like they have in the United States because of inferior offerings, a result of the licensing complexities.

Microsoft, Apple offer few downloads

Microsoft made only a handful of movies available for rental download last week and did not include television episodes, which it sells on the U.S. version of Xbox Live. Meanwhile, Apple did not introduce movie downloads to iTunes in Canada, despite selling them in the United States.

"The content is slim pickings and doesn't give the consumer a great deal of motivation to adopt," said Kaan Yigit, president of Solutions Research Group. "Until you migrate that top-level content, it will remain a niche."

Apple plans to increase the amount of video content available over iTunes quickly, Lowe said.

"If you look at how we've built the library of music on iTunes in Canada and if you look at how we've expanded the catalogue of TV content on the iTunes store in the U.S., you absolutely see that we work at a fast pace," he said. "That's certainly our goal and expectation for Canada, as well. Being able to add content is something that's going to take weeks and months, not years."

Offering television downloads is key to spurring sales for the Apple TV, Lowe added. Analysts have said the device has not sold well in Canada or the United States because of its limited functionality and lack of high-definition video support.

Forrester Research has estimated Apple has sold fewer than 400,000 Apple TVs, while Apple chief executive officer Steve Jobs recently called the device a "hobby" for the company.