How Apple TV is going disrupt the industry

DavidS2013 · Feb 21, 2013

I'm a cable company. Subscribers pay me a certain fee each month to access content that I provide. I also get a percentage of advertising revenues sold during the shows on networks that I exhibit.

I'm the History Channel. I get paid 40 cents per subscriber of cable. I also sell advertising space during my shows and make a percentage of that.

The problem is that I have the word "Channel" after my name. Why? Because someone can only access content that they want to see at any given time. if they don't like what's playing on my channel right now, they don't access my content and my advertisers don't access them.

How Apple TV will fix that. The History Channel will have its own Apple TV App much like the Apple Newsstand. So it'll be an app container. Inside of that app, will be every single show the History Channel currently provides. So say Pawn Stars has their own App. The only way you can access its app is inside of the History Channel App. Ok, so I've downloaded the Pawn Stars App. I can now purchase for $1.99 per episode every single episode of every single season.

There are Six Seasons and 136 different episodes. So the most someone will spend on that History Channel app is $270.64. Apple takes 30% of that. So now we're at $189.45.

$189.45 X 7,000,000 = $1,326,136,000.

That's one TV show on one channel.

A: Think of the money other networks can earn that have even better ratings than the History Channel

B: Think of the money Apple can make

C: Think of all of the money that other people can make who aren't part of a network - as long as they get their content into the hands of a few people and it can become viral..

Two words: Cha ching

So many more people will switch over to Apple TV to save money vs. cable networks.

jav6454 · Feb 21, 2013

Do you have a tl;dr version?

DavidS2013 · Feb 21, 2013

jav6454 said:
Do you have a tl;dr version?

What's that?

jav6454 · Feb 21, 2013

DavidS2013 said:
What's that?

To long ; Didn't read

spacepower7 · Feb 21, 2013

Disruption .... A different take and my own rant. Sorry to thread jack.

Why does my 2013 cable box GUI look the same as it did in 1999?

Why can't I put my favorite channels as 1-10 instead of 1201, 1203, 1249, etc.... Better yet have apps/icons for my favorite channels.

Why are local channels 3,5,9,12 allocated to 1103,1105,1109, and 1112 for their HD versions yet USA is 33 sd and 1201 HD, TNT is 51 sd and 1203 HD?

Why? BC the cable companies' oligopolies on infrastructure, and even worse their ownership of the media companies.

These companies don't care about making things better for their customers, they haven't invested much in it since 1999.

Time Warner owns HBO, so they don't want to sell HBO alone without a cable subscription.

Tonight I tried to watch a "PrimetimeOnDemand" show "Southland". It took almost 5 minutes and equivalent to 120 remote/mouse clicks to get to the episode.

The mega-multinational companies have the power. I'm not sure who will disrupt the industry, if any, but it probably won't be what the consumers really want.

Hmmm.... Lots of thoughts

HobeSoundDarryl · Feb 21, 2013

OP, Apple already offers it that way. We can already buy it for about $2 an episode. Nobody is making a billion dollars from one show.

Where's that 7 million people number coming from? You are expecting every person that might own an :apple:

TV to all spend $2/episode times 189 episodes for a single show like Pawn Stars? Wouldn't that be about 100% adoption? No TV shows are so popular that everyone who gets them watches them now.

And then you have the problem of many whining that $2/episode is much too expensive. We want everything we want to watch for a fraction of what we pay now. How does the Studio or Apple make much money off that?

And then you have the problem that even if there was a way to work that out, the same cable company that likes things "as is" is also the lone broadband providers for most of us. What do they do if something starts seriously eating into their cable revenue? Raise their broadband rates to compensate.

Lovely vision to make Apple richer, the Studios richer and the cable company richer (as broadband provider). Of course, if all of those are going to get richer, where's all that extra money coming from? Oh yeah, us consumers.

There is no big savings for us by replacing one "middleman" (the cable company) with another (Apple) when the latter's replacement solution is entirely dependent on flowing through broadband pipes owned by the former. Let Apple in in a big way and we just pay more to help Apple make even more money. Sure, the experience of television could improve but not as measured by us consumers getting to spend a lot less.

Michael CM1 · Feb 21, 2013

I definitely think some of these companies could make money off the model you suggested. The problem is probably the fear of the big providers kicking them off if they do something good and all the rights contracts that would have to be dealt with in terms of shows.

I personally use about 10-15 channels most of the time. I cannot tell you how much I would love to pick only those 10-15 so I didn't owe about $80/month (including HBO). The companies that own the channels always yap about the lower-tier channels that nobody would want in this model. That's kind of a dumb statement if the channel is good. Had anybody heard of the developers of Angry Birds before the game became a hit? What about the author of the Fifty Shades, Hunger Games, Twilight and Harry Potter books?

If you make good content, people will come. If you develop an app system that would allow people to subscribe to something like History on Apple TV and then also watch on iPhone and iPad at any time after the initial availability, then you have just killed DVRs and will have a good base of subscribers.

marc11 · Feb 21, 2013

DavidS2013 said:
I'm a cable company. Subscribers pay me a certain fee each month to access content that I provide. I also get a percentage of advertising revenues sold during the shows on networks that I exhibit.

I'm the History Channel. I get paid 40 cents per subscriber of cable. I also sell advertising space during my shows and make a percentage of that.

The problem is that I have the word "Channel" after my name. Why? Because someone can only access content that they want to see at any given time. if they don't like what's playing on my channel right now, they don't access my content and my advertisers don't access them.

How Apple TV will fix that. The History Channel will have its own Apple TV App much like the Apple Newsstand. So it'll be an app container. Inside of that app, will be every single show the History Channel currently provides. So say Pawn Stars has their own App. The only way you can access its app is inside of the History Channel App. Ok, so I've downloaded the Pawn Stars App. I can now purchase for $1.99 per episode every single episode of every single season.

There are Six Seasons and 136 different episodes. So the most someone will spend on that History Channel app is $270.64. Apple takes 30% of that. So now we're at $189.45.

$189.45 X 7,000,000 = $1,326,136,000.

That's one TV show on one channel.

A: Think of the money other networks can earn that have even better ratings than the History Channel

B: Think of the money Apple can make

C: Think of all of the money that other people can make who aren't part of a network - as long as they get their content into the hands of a few people and it can become viral..

Two words: Cha ching

So many more people will switch over to Apple TV to save money vs. cable networks.

Now you need to deduct all the revenue from Cable those 7 million people will stop paying for and also deduct the revenue from advertising. Currently you do not have commercials from shows purchased online; if you intend to include commercials then people are going to expect or demand a discount on the shows they purchase. Also you need to consider the fact that the History Channel gets advertising dollars 24 hours a day, 7 days a week, with your model an advertiser may be only willing to pay a prorate of that because they know that not all the people will be seeing the commercials all the time.

People would only see the commercials when watching the show, the target audience is smaller, the amount of TV time is smaller, and of that, not as many people will watch at the same time and you also get the channel flippers, people who watched one show and leave the station on to be dragged into another show, etc.

It is not so simple as people x cost = more money then the current model IMHO.

If it was so easy, it would have been done before; Apple is not the first on the block with a TV set top box, it has been around for a while and if anything Apple so far behind other boxes with content; it just isn't easy to preserve the CURRENT revenue and add onto it. There are also contracts and obligations involved the extend far beyond Apples reach....nope, it is much bigger then a simple math problem.

jmcgeejr · Feb 21, 2013

Michael CM1 said:
I definitely think some of these companies could make money off the model you suggested. The problem is probably the fear of the big providers kicking them off if they do something good and all the rights contracts that would have to be dealt with in terms of shows.

I personally use about 10-15 channels most of the time. I cannot tell you how much I would love to pick only those 10-15 so I didn't owe about $80/month (including HBO). The companies that own the channels always yap about the lower-tier channels that nobody would want in this model. That's kind of a dumb statement if the channel is good. Had anybody heard of the developers of Angry Birds before the game became a hit? What about the author of the Fifty Shades, Hunger Games, Twilight and Harry Potter books?

If you make good content, people will come. If you develop an app system that would allow people to subscribe to something like History on Apple TV and then also watch on iPhone and iPad at any time after the initial availability, then you have just killed DVRs and will have a good base of subscribers.

If you didnt pay a cable monopoly for those crappy channels how would kim kardasian and snookie get paid?

725032 · Feb 21, 2013

Do you mean disrupt just like Ping did?

jlc1978 · Feb 22, 2013

marc11 said:
People would only see the commercials when watching the show, the target audience is smaller, the amount of TV time is smaller, and of that, not as many people will watch at the same time and you also get the channel flippers, people who watched one show and leave the station on to be dragged into another show, etc.

It is not so simple as people x cost = more money then the current model IMHO.

While the total views may be smaller, you will have much more information on the demographics of the views. Apple knows a whole lot about who purchases from iTunes just from CC data - information of value to advertisers. Ads can be targeted at specific demographics and purchase patterns, an advertisers charged accordingly. Apple could even insert different ads in the same show based on who buys it; where they are, etc. The key is building up a large enough user base to be more than a tiny player. For that, it must be:

1) Easy to use
2) Either significantly cheaper than cable or offer a much better value for the price

The real power lies with controlling the bandwidth to the home - if cable companies start losing significant numbers to set top boxes you can expect strict bandwidth caps and price increases to follow as they extract money from their pipe.

DP812 · Feb 24, 2013

I'm real curious to see how (or if) the Apple TV and other devices like it will change the industry. Will we start seeing more companies try to offer channels as apps for direct subscriptions? So if you want to subscribe to FX, you pay a monthly or yearly subscription fee. Will there be tier subscription packages like "subscribe to x number of shows for x dollars per month"?

If it's just a matter of buying each individual show, I'm not sure that will work as well. There are shows I really enjoy, but I'm fine not owning and waiting for them to turn up on Netflix, so if I had to pay to watch them every week, I might opt out of that.

hafr · Feb 24, 2013

DavidS2013 said:
I'm a cable company. Subscribers pay me a certain fee each month to access content that I provide. I also get a percentage of advertising revenues sold during the shows on networks that I exhibit.

I'm the History Channel. I get paid 40 cents per subscriber of cable. I also sell advertising space during my shows and make a percentage of that.

The problem is that I have the word "Channel" after my name. Why? Because someone can only access content that they want to see at any given time. if they don't like what's playing on my channel right now, they don't access my content and my advertisers don't access them.

How Apple TV will fix that. The History Channel will have its own Apple TV App much like the Apple Newsstand. So it'll be an app container. Inside of that app, will be every single show the History Channel currently provides. So say Pawn Stars has their own App. The only way you can access its app is inside of the History Channel App. Ok, so I've downloaded the Pawn Stars App. I can now purchase for $1.99 per episode every single episode of every single season.

There are Six Seasons and 136 different episodes. So the most someone will spend on that History Channel app is $270.64. Apple takes 30% of that. So now we're at $189.45.

$189.45 X 7,000,000 = $1,326,136,000.

That's one TV show on one channel.

A: Think of the money other networks can earn that have even better ratings than the History Channel

B: Think of the money Apple can make

C: Think of all of the money that other people can make who aren't part of a network - as long as they get their content into the hands of a few people and it can become viral..

Two words: Cha ching

So many more people will switch over to Apple TV to save money vs. cable networks.

I watch about ten shows any given season, let's say a show is on average 15 episodes. Three seasons per year, ten shows, 15 episodes per show, two bucks per episode, that's 900 dollars per year (75 dollars per month). Just for my shows, not including the news, movies, documentaries, children's TV and so on.

So I would pay more and get less, in order to own episodes and have them on my computer so I can watch them whenever I want instead of recording them when they air and then watch them whenever I want. Episodes that I never ever watch twice by the way.

Great deal, where can I sign up?

blanka · Feb 25, 2013

Channels are dead, and I hope also the Apple way does not last long.
In the end I just want direct creator-to-watcher downloads with 1 click easy payment and no-drm MKV downloads with all relevant subs (if Danish producer from Borgen wants the show to be viewed in the Netherlands, they should include Dutch subs).
Apple is too dumb/simple to handle the diversity in Europe, so an Apple solution will not work here. And the actual producer is the only one that can sell without all strange region restrictions. They only have to ditch their contribution to the MPAA and the like.

tekno · Feb 25, 2013

The majority of tv viewers still prefer scheduled programming. It's too much effort to find the shows you want to watch, plus scheduled programmes mean you're likely to stumble onto something new.

bozzykid · Feb 25, 2013

The problem is these networks make money from cable/sat companies for each subscriber. So whether or not people watch a channel, they still get revenue. This is why bundles will never go away anytime soon. If they went to a ala carte concept, most of the smaller networks would instantly go out of business.

marc11 · Feb 25, 2013

tekno said:
The majority of tv viewers still prefer scheduled programming. It's too much effort to find the shows you want to watch, plus scheduled programmes mean you're likely to stumble onto something new.

This is so very true and something people overlook. I am on internet TV only here in Japan, meaning Netflix, Hulu, my library and what I can find over the internet. Every single time I want to watch TV, even if it is just for background noise while I am doing something else I have stop and think about what I want to have on, then go find it. It sort of blows.

With scheduled TV, if I want background noise, I just turn on the TV, whatever is on, is on and is usually good enough.

There is also a lot to be said about channel surfing, sometimes you find a gem just flipping channels, you cannot do that with on demand TV.

IMHO a hybrid approach is the best thing.

StinDaWg · Feb 25, 2013

bozzykid said:
The problem is these networks make money from cable/sat companies for each subscriber. So whether or not people watch a channel, they still get revenue. This is why bundles will never go away anytime soon. If they went to a ala carte concept, most of the smaller networks would instantly go out of business.

Exactly true. Cable doesn't want to go ala carte because everything is bundled together. You want ESPN? OK, Disney requires you take ABC Family and countless others in their portfolio as well. I don't see this changing anytime soon as they are making record profits.

Ala carte is a pipe dream until they start losing money like what happened when Napster was around for music and itunes was created.

marc11 · Feb 25, 2013

StinDaWg said:
Exactly true. Cable doesn't want to go ala carte because everything is bundled together. You want ESPN? OK, Disney requires you take ABC Family and countless others in their portfolio as well. I don't see this changing anytime soon as they are making record profits.

Ala carte is a pipe dream until they start losing money like what happened when Napster was around for music and itunes was created.

But there is a flip side, often cable companies are forced into taking and paying for channels they do not want because the big networks also bundle them in. Oh you want Fox, well you need to take these six channels with it.

So I think there may be room for improvement, but someone has to give first and really I think its the networks. The networks aren't going to give unless they see a chance to earn more money. The networks and the cable companies do not care about the consumers; we have no choice really, it is one company or the other; there is zero incentive for any of them to change; which is why Apple has such a low chance of disrupting an industry that has no reason to change at the moment...what Apple can do is disrupt the consumer by getting us to pay more for what is already available just in a different format, like HBO Go, offer it on the Apple TV but only if you subscribe via cable and at some point I can see having to pay a fee for multiple device access for these services too.

In the end, we would be foolish to think we will pay less and not more...just look at how we get bent over by the cell phone companies.

hafr · Feb 26, 2013

marc11 said:
But there is a flip side, often cable companies are forced into taking and paying for channels they do not want because the big networks also bundle them in. Oh you want Fox, well you need to take these six channels with it.

So I think there may be room for improvement, but someone has to give first and really I think its the networks. The networks aren't going to give unless they see a chance to earn more money. The networks and the cable companies do not care about the consumers; we have no choice really, it is one company or the other; there is zero incentive for any of them to change; which is why Apple has such a low chance of disrupting an industry that has no reason to change at the moment...what Apple can do is disrupt the consumer by getting us to pay more for what is already available just in a different format, like HBO Go, offer it on the Apple TV but only if you subscribe via cable and at some point I can see having to pay a fee for multiple device access for these services too.

In the end, we would be foolish to think we will pay less and not more...just look at how we get bent over by the cell phone companies.

In other countries, the cable providers have already started offering their subscribers premium on-demand services, such as all movies for free for 30 days after they've aired, TV-shows and so on. They have iOS/Android apps so that you can bring it with you. There is no need for their subscribers to have an ATV-specific app where they can purchase or rent content, and they're still cable subscribers. Best of both worlds.

blanka · Feb 26, 2013

tekno said:
The majority of tv viewers still prefer scheduled programming.

But that group is declining fast. I stopped counting people who ditched cable etc.

hafr · Feb 26, 2013

blanka said:
But that group is declining fast. I stopped counting people who ditched cable etc.

I know a few people who have ditched cable. Only one has given another reason than "it's too expensive", and most of them have expressed that they miss being able to just switch on the TV and flip through channels, turning on the news or whatever it might be.

So ditching cable is not the same as not preferring traditional TV.

rikscha · Feb 26, 2013

It is very simple, if people's life in the US would not be around TV 90% of their time, these channel networks would automatically become more flexible in making deals etc.

It is just amazes me how much time and money is spend on watching hours of television every day and week. This life style is very questionable and contributes greatly to the dull image that people have of that society.

When I read that people have a TV in every single room in their house, I am just feeling really sad for them.

Except for the UK, where people developed similar viewing habits as in the US (and people are very dull here), Pay TV has not really kicked off in Europe. People are just not willing to pay that much money for something that they a) do not value high enough to pay for b) eventually getting all available channels public + private channels for free (public channels cost effectively EUR 150/£140 p.a. - quality very high, culturally stimulating programmes s. BBC i.e.)

Ideally, Apple should take over and offer private content through ATV and give the option to watch what you want, when you want it.

marc11 · Feb 26, 2013

rikscha said:
It is very simple, if people's life in the US would not be around TV 90% of their time, these channel networks would automatically become more flexible in making deals etc.

It is just amazes me how much time and money is spend on watching hours of television every day and week. This life style is very questionable and contributes greatly to the dull image that people have of that society.

When I read that people have a TV in every single room in their house, I am just feeling really sad for them.

Except for the UK, where people developed similar viewing habits as in the US (and people are very dull here), Pay TV has not really kicked off in Europe. People are just not willing to pay that much money for something that they a) do not value high enough to pay for b) eventually getting all available channels public + private channels for free (public channels cost effectively EUR 150/£140 p.a. - quality very high, culturally stimulating programmes s. BBC i.e.)

Ideally, Apple should take over and offer private content through ATV and give the option to watch what you want, when you want it.

Are you from the USA? If not, do not beleive what you read and hear; I love it when people tell me things about the US, as an American living outside of the country; it makes me laugh. I do not know of any family that has a TV in every single room and I do not know of any person that watches TV 90 percent of the time.

Beleive it or not, most families have one or two televisions, most people do not watch TV from the moment they get into the house, a lot of us work, go to school, play sports, shop, go out to eat...oh wait, all Americans are fat, so we should stay home and eat...oh wait, all Americans are lazy we should go out more....oh wait alll Americans do not spend enough time at home with family...

There are 350 million Americans, do not lump the majority in with the minority. But even if someone DID want to watch a lot of TV SO WHAT??? If it bring them happiness, enjoment and it is WHAT THEY WANT TO DO, who cares what someone from some other country says? I love it when people tell other people what they should and should not do for enjoyment of thier lives.

Rant over!

----------

hafr said:
In other countries, the cable providers have already started offering their subscribers premium on-demand services, such as all movies for free for 30 days after they've aired, TV-shows and so on. They have iOS/Android apps so that you can bring it with you. There is no need for their subscribers to have an ATV-specific app where they can purchase or rent content, and they're still cable subscribers. Best of both worlds.

Yes I know; but in many countries it is not like that and the money that is currently being generated is not easily dismissed.

sdilley14 · Feb 26, 2013

I just skimmed over the replies here, so I'm sorry if someone already touched on this.

Why haven't "they" figured out a fair way to offer channels "piecemeal"? Something where you can assemble your own cable "packages", "x" dollars per channel. "Pick any 10 channels for $5/channel/mo...any 20 channels for $4/channel/mo"...something like that.

In my TV utopia I would have a 55" Apple branded TV set with an integrated "receiver", or at the very least an Apple branded receiver/set top box with an elegant and updated UI, integration into my existing device ecosystem, and a cable package consisting of channels that I define. They can leave the channels themselves how they are, same programming, same scheduling, same commercials...just let me pick which channels I pay for and give me an updated UI and an advanced device to run everything on.

How Apple TV is going disrupt the industry

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