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Apple vs. NBC: Who¿s the biggest loser?

I was hoping it wouldn't come to this.

Over the weekend Apple removed most of the remaining NBC Universal video content from the iTunes Store. No longer can fans download episodes of The Office, Heroes or Battlestar Galactica.

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The falling out between the two companies has been public since August when NBC Universal announced it would not renew its contract to sell content on the iTunes Store. Apple retaliated the very next day with a biting press release announcing that iTunes would not carry new episodes of NBC programs premiering in the fall season.

Many observers (yours truly included) thought the bluster was mostly public posturing and that the two companies would resolve their differences before the December deadline.

But when NBC CEO Jeff Zucker launched another verbal tirade against Apple and iTunes a month ago, any prospects for a deal evaporated. "Apple sold millions of dollars worth of hardware off the back of our content, and made a lot of money," Zucker said. "They did not want to share in what they were making off the hardware or allow us to adjust pricing."

That statement made it clear Zucker had declared Apple the enemy and had no interest in further negotiations. Apple has claimed NBC wanted to raise prices too high and objected to variable pricing, which contradicts the general iTunes Store policy of uniform pricing.

Now that this game of corporate chicken has ended in a head-on collision, pundits have tried to sort out who has suffered the most damage.

According to Forrester analyst James McQuivey, it's Apple. In a report released Monday, he wrote: "Don't let the Macgeeks posting angry blogs against NBC fool you [DZ: should I be insulted?]. The loser here is Apple, which relies on NBC Universal to deliver 30 (percent) of video download sales. Any supposed backlash against NBC will not materialize because NBC has made its content available, for free, on NBC.com and six other major portal sites."

Maybe so. But without iTunes, viewers have no option for downloading shows to watch them on an iPod or other video device. I won't go so far as to predict a "backlash," but if you don't give the customer what they want, they'll seek it elsewhere. And when I say elsewhere, I'm talking pirate sites. And it's unlikely the pirate sites will be sending NBC Universal millions of dollars – as did Apple -- when its users download NBC shows.

I'm not saying losing NBC's content won't hurt the video arm of the iTunes Store. It obviously will. But it won't have that much impact on Apple's bottom line, either. Video is Apple's least successful venture so far (see: Apple TV). As long as the Mac, iPod/iTunes music combo and iPhone businesses are thriving, video is not critical.

The situation as it stands leaves both companies worse off. NBC Universal, for all its trash talk, will lose money while angering viewers. Apple will lose money in addition to some of its stature as a provider of video content.

But by far the biggest losers are the fans of the TV shows who would rather legally download their favorite programs from iTunes as opposed to the inferior options NBC is giving us.

That's you and me, dear reader. And sadly, there's not much we can do about it.

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