Microsoft Zune and NBC Challenge Apple iTunes

Microsoft Corp will start selling downloadable television shows for its Zune portable media device with addition of new features in a clear challenge to Apple iTunes. Even now, Zune offers some capabilities the iPod doesn’t such as access to every song in the catalog for $14.99 per month.

The Zune digital online store offers more than 3.5 million tracks, two-thirds of which are available in pure MP3 format, 800 TV shows, 4,800 music videos and 3,500 audio and video podcasts, and more. However, Microsoft still has a lot of work to do to catch up with Apple iTunes.

Since the first Zune went on sale in November 2006, the software maker has sold about 2 million portable devices, while Apple sold 10.6 million iPods in the first three months of 2008 alone. In April, Apple’s iTunes music store surpassed Wal-Mart to become the biggest music retailer in the US, according to the market research group NPD. But the Zune offers some capabilities the iPod doesn’t such as Microsoft’s Zune Pass subscription service, which gives users access to every song in the catalog for $14.99 per month. Plus, Microsoft is also introducing additional features to the Zune, including the ability to subscribe to a friend’s music playlist.

NBC had been a significant provider of content to Apple’s iTunes store, which works in conjunction with the iPod, but the companies split last year after a disagreement over pricing. The split led NBC to pull its video content from iTunes and to struck a deal with Microsoft’s Zune online store.

“Partnering with Zune will allow us to develop innovative content offerings for their customers, including flexible pricing and packaging options beginning this fall,” said JB Perrette, president of NBC Universal Digital Distribution. “NBC Universal is excited to offer our hit television shows to Zune customers.”

Zune is expanding its video store to include downloads of popular television shows from Comedy Central, FUNimation Entertainment, MTV, NBC Universal, Nickelodeon, Starz Media (including Manga Entertainment), Turner Broadcasting, Ultimate Fighting Championship (UFC) and VH1 that consumers can sync to their device and enjoy on the go. Each television show will be approximately $1.99 at launch.