Apple Enlists Networks to Negotiate With Local Affiliates in Streaming TV Talks

[SeaFox]

Rumors around this Apple service have consistently been mini-cable package, not an al-a-carte channel-selection service. ESPN is considered the jewel channel in the ABC/Disney portfolio. While some of us can see it as "too expensive", THEY see it as "biggest, most important money maker"- push it into a package and make more money, allow it to be excluded or reserved for some separate package and make less money. Thus, I expect ESPN to be included whether some of us will want it or not... not because we desire lower monthly costs but because key partners contributing content want to maximize profits.

Thank you, Captain Obvious.
Having worked in the cable industry for over a decade, I had no idea what the business cases were for bundling.

This ignores that lots of "cord-cutters" left their old pay TV providers because of having to pay for channels they didn't watch. And since live sports is one of the biggest dealbreakers for cord-cutting for some people, a larger percentage of cord-cutters are people who do not care about having live sports in their replacement entertainment packages.

If you haven't been paying attention to the response to Dish's Sling service, there are people turning the service down because of the ESPN inclusion (and the portion of the bill folks know is making it up). If Apple wants to attract people to their service, having an option that does not include ESPN would certainly help.


Edit: But who am I kidding? They don't need to attract people to their service. There are folks who will sign up in droves even if the service is crappy, just because it has Apple's name on it. (moo)

 

[HobeSoundDarryl]

So, we still have to subscribe and get a bundle of channels. Why not just stick with Cable if Apple is gonna offer the same thing? I always thought the point was you can pick and choose as few or as many channels you want. I don't wanna pay for a bundle of channels if I'm only gonna watch 2 or 3 of them...

Well, the key difference here is that Apple's bundle of channels will be the channels that Apple has selected for us... one might say hand or human curated especially for us. So those channels- whatever they are- should quickly become the ONLY good channels available and anyone not happy with just those channels shall be called a "troll" and "if you don't like it, don't buy it" and so on. We've seen this movie 1,000 times before.

Apple has already offered al-a-carte, pick & choose TV shows AND movies for many years now. They are even commercial-free!!! For a while the TV options even had a discounted rental price as an experiment to see if a lower- but content-creator acceptable price- was the obstacle to motivating us consumers to switch to commercial-free, al-a-carte model instead of clinging to our cable or Satt TV options. What is/was wrong with that? Apparently, the key piece of this idea of "pick & choose" is the dream of "huge discount". Apple already gave us "pick & choose" but couldn't hit the "huge discount" that would motivate the masses to "cut the cable" and go with the commercial-free, new model solution already (long since) in place.

So, having given that a GREAT try- especially with the TV rental discount experiment- the fall back appears to be to go with what works (which is defined by what works for the content owners and us consumers). And that appears to be what we're going to get.

Note the commercial-free, al-a-carte option is still available in the iTunes store too for anyone that actually wants commercial-free, al-a-carte at pricing that actually works for the parties in the rest of the chain (beyond us consumers).

 

[Benjamins]

So basically TV has been delayed because of local channels? Is live streaming of local channels that important these days?

I doubt that's the one thing that's holding up the launch, but having local channels would be nice.

 

[jdag]

The TV/streaming concept is super-interesting to me. The “cracking of the code" to this is coming up with a solution that people actually understand.

Cutting the cord, at least to me, does not “necessarily” mean making your cable/satellite bill $0. To me it means spending a comfortable amount yet still receiving the programming you desire in a simple manner. It may mean cutting cable/satellite service, but having to make an investment in hardware (new router, streaming boxes, etc.). It may also mean having to increase your internet bill by $20/mo because you need/want more speed.

Right now, things are so fragmented that most people cannot understand how to get such programming. Do I need Netflix? Can I get stations using an antenna? And if so, how do I get those stations on all of my TVs? Oh, what about ESPN? Etc.

Then, to top it all off, most people can’t come to grips with managing the different devices to watch various programming. Which input do I need to switch over to to get my DirecTV? How about my AppleTV? Wait, where is Netflix again…on AppleTV or the Roku…or both? Why is there both HBO NOW and HBO GO? It is just overwhelming to many.

Could Apple break this problem? Maybe. (Side comment: Although with what they’ve done with Apple Music, it makes me wonder about simplicity. Apple Music is really causing people headaches. mainly with the integration of the online content and the local content people already own.)

Anyhow, I have about as streamlined a system now as can be imagined.

1) No cable/satellite at all. I do pay extra for the higher speed internet connectivity (I have the 2nd highest tier from my provider).

2) An over-the-air antenna that is hooked to a Tablo receiver…Tablo is a receiver that plugs right into the router, allowing me to view/record live TV and watch it via the AppleTV. Basically, think of it as a networked DVR as opposed to a DVR box on each TV. It is far from perfect, but works for the limited live TV we watch. Side note: You have to use AirPlay to watch Tablo via AppleTV (and it works very well), or you can also use Tablo from any computer, Roku, FireTV, etc.

3) Only 1 “box” hooked to each TV…an AppleTV…so I watch everything now through AppleTV only, videos from my computer, Netflix, and regular TV using AirPlay/Tablo. Never ever have to change any inputs at all, only use 1 remote, and only have to "compromise" and use AirPlay for Tablo, which is honestly very rarely used.

My monthly TV cost…$13. I pay $5/mo for Tablo and $8/mo for Netflix. I also pay $60/mo for Internet. But that pales in comparison to those $150-$200/mo bills most people have for TV/internet. Even if I added HBO and Showtime, it would still keep my TV programming bill to about $40/mo.

Net, I get all the TV/internet I could want and more for about $73/mo, save over $100/mo or over $1,200/year. Investment in necessary hardware was about $500 for the antenna, Tablo, and 3 AppleTVs.

Would I be interested in an AppleTV method of viewing live TV (and getting rid of Tablo)...sure.

 

[d21mike]

But who are we kidding? "Talent" is use to making 10s of thousands of dollars per episode as are the networks, production companies, and cable/satellite providers. Why would they want that to decrease?

Ask yourself how Netflix is able to pay $10million to create house of cards and more for the other commercial free content and still be able to only charge about $9 per month. How is HBO able to create Game of Thrones Commercial Free Content for $15 per month (with everything else). It seems that most people feel that it is just impossible to create commercial free content at a reasonable price. It can be done and if you follow the news at all Netflix is growing faster then anybody and the stock price is showing the confidence. I do like Netflix (I do not own the stock) and I know it seems I am promoting them. But I really think Hulu could have a much much large subscriber base if they would follow the Netflix Model. I.E. Add Profiles, add commercial free tier and make a deal with CBS. They could be bigger then Netflix but would require thinking differently.

 

[nazaar]

so basically there hasn't been any progress in the talks.

 

[Rogifan]

Would like to know about the option to not take ESPN with this package. A "skinny" package that allowed access to local channels would be welcome -- but I don't want to pay $5-$10 of that fee for having ESPN included when I don't watch it.

It's common knowledge that ESPN is one of the most expensive non-premium cable channels, and that they are on basic cable so they get revenue from every subscriber.

That's the question I have. Will customers be able to choose from a list of channels or maybe different packages/price tiers or will it be one package take it or leave it?

 

[d21mike]

For those that want a DVR option. As yourself why.
1) Watch a TV Show on your schedule
2) SKIP Commercials
3) ????

A well done "on demand commercial free" streaming service much like Netflix, HBO and Showtime eliminate's the need for a DVR. Hulu is close but they need a commercial free tier. For all of you "save the planet" types, think of the savings of replacing all of the equipment with small hockey puck type devices (or built into the smart tv) and everything was on demand.

 

[Rogifan]

It looks to me that there is going to be a skinny channel, PLUS some a la carte. E.G. HBO. Now Showtime. This has been the maddening thing about cable. You can't get HBO without getting 200 other channels you never wanted. If they have the top 20 channels plus local news for cheap I think they are onto something. This could upend the TV industry the way Apple did with music, phones etc.

I would love it if I could get, say, ABC and ESPN but not have to pay for ABC Family and Disney which I'll never watch. Of course that is a pipe dream that will never happen. If Disney signs on to TV you pay for all their channels whether you want all of them or not.

 

[HobeSoundDarryl]

Thank you, Captain Obvious.
Having worked in the cable industry for over a decade, I had no idea what the business cases were for bundling.

This ignores that lots of "cord-cutters" left their old pay TV providers because of having to pay for channels they didn't watch. And since live sports is one of the biggest dealbreakers for cord-cutting for some people, a larger percentage of cord-cutters are people who do not care about having live sports in their replacement entertainment packages.

How could I know that you have worked within the industry? However, as such, you should well know what many here seem to miss: that commercials running on upwards of hundreds of channels "I" never watch help pay for it all, including the stuff "I" do watch. Your comment reads like you lack an understanding of your industry... as if cutting a typical cableTV bundle of channels from 200 to an al-a-carte 20 should perhaps result in a cut of the cable bill by up to about 90% too. But if you know your industry, you should recognize that any embracing of some hypothetical al-a-carte model would revolve around all players making MORE money, not less... so I would expect price modeling something like this:

• 200 channels for about $75/month
• 20 al-a-carte channels for about $100/month (but probably more than that).

Again, perhaps that's more "Captain Obvious" (though every one of these threads seem to fill with "name your own price" posts where many expect everything they want for a huge discount) but no one beyond us consumers wants a massive revenue haircut so that we consumers can get exactly and only what we want for such huge discount. And nobody else in the chain wants to kill off all that commercial-driven, other-people-money generated by commercials running on 180 channels that "I" never watch just because "I" am not interested in watching those channels.

For those happy with the channel-based model but desiring a pick-and-choose mix of channels, the best way to approximate it without killing the golden goose is to use the FAV option in on-screen channel guides. Hide the 180 channels you never want to watch so that your guide shows you only the 20 channels you actually want to watch. The 180 channels can still run commercials that you'll never see, generating revenue for the content creators so that they can keep making other content that you do like.

One more from "Captain Obvious":

• Dramatic cut to monthly subscription revenue +
• dramatic extinction of dozens or hundreds of channels running commercials we never see that help fund it all =
• dramatic cut in the quality of programming we do like +
• dramatic cuts to the breadth & depth of what we do like as well.

We already have a source of free or near free video programming created without paying for the talents of the Studio professionals. It's called YouTube. Something toward YouTube is what we get if we kill most of the subscription and commercial revenues in pursuit of some new model.

 

[cmChimera]

Ask yourself how Netflix is able to pay $10million to create house of cards and more for the other commercial free content and still be able to only charge about $9 per month. How is HBO able to create Game of Thrones Commercial Free Content for $15 per month (with everything else). It seems that most people feel that it is just impossible to create commercial free content at a reasonable price. It can be done and if you follow the news at all Netflix is growing faster then anybody and the stock price is showing the confidence. I do like Netflix (I do not own the stock) and I know it seems I am promoting them. But I really think Hulu could have a much much large subscriber base if they would follow the Netflix Model. I.E. Add Profiles, add commercial free tier and make a deal with CBS. They could be bigger then Netflix but would require thinking differently.

This is truth. I won't subscribe to Hulu because of ads. It would also help if they same-day streaming of new content.

 

[Juicy Box]

That's the question I have. Will customers be able to choose from a list of channels or maybe different packages/price tiers or will it be one package take it or leave it?

That seems to be the big question. I would like to have the big networks, FX, USA, FOX, NBC, CBS, ABC, SYFI, maybe a few others, but I would rather not have any sports channels.

ESPN seem so important to most people, but I couldn't care less about having it, and I rather not pay for it.

 

[d21mike]

That's the question I have. Will customers be able to choose from a list of channels or maybe different packages/price tiers or will it be one package take it or leave it?

I am guessing you will have a base package with a number of channels and be able to add more on top. Verizon FIOS is doing that with their Custom Package where they put ESPN in an Add On Sports Package for $10 per month. And they are getting push back because of it. But I really this is the trend. I do not care for ESPN so I save not only on that part but also the "Video Sports Network Tax" that is added to the Video Tax Section of my bill. That is at least $3.50 per month tax. I think one advantage most do not consider is the Video TAX they we are changed that is not changed by the streaming service. Before dropping the sports I was paying $15 per month. For some reason I think it was closer to $20 before switching to the Custom Package. Now it is about $11.50. And it will be 0 after I drop the TV bundle. This is similar to the Phone TAX that you pay on top of the Phone Service that they do not quote you until you see the bill. For those that simply do not know, check the bottom of your bill where they add in all of the TAXES.

 

[elgrecomac]

So basically TV has been delayed because of local channels? Is live streaming of local channels that important these days?

Yes it is. Most people dont want to hang an antenna in their home to get local HD stations.

 

[oneMadRssn]

That's true, but the Apple TV device has an HDMI output (and optical audio, if you have a home theater system). You don't have to connect a television to it -- any monitor with an HDMI input will work.



Apple is trying to grow their market share by making Apple TV the entertainment source for a household. As long as a consumer has to go elsewhere to view local channels, Apple will be a niche provider like Roku.

A number of people have posted that they would drop their subscription with their local provider and switch to Apple TV if this kind of option was provided. They don't want the hassle of setting up an antenna, or are in a location where OTA signals are unavailable or marginal.

They are the customers that Apple wants to acquire.

You can't say on the one hand that an antenna is too much of a hassle to set up, and on the other than hand imply that the hassle of hooking up an AppleTV through a receiver to a tuner-less monitor via HDMI / optical is a common enough occurrence that the lack of a OTA tuner would be a problem.

I see your point though - if Apple can lock-in local channels, that would sway a lot of people. In theory (and admittedly unlikely and somewhat unrealistic), if Apple were to buy a company like Tablo and develop their app, that would get local channels on AppleTV for a lot of people. Though, a pipedream.

 

[Juicy Box]

Yes it is. Most people dont want to hang an antenna in their home to get local HD stations.

I know I don't. But I also couldn't care less about local stations. I guess the appeal is the watching local news?

 

[gadgetguy03]

Well, I currently spend close to $0 on iTunes content.

A hybrid scheme might persuade me to spend some money, and regularly. I’ll never purely rent, as it's throwing money away, but if I can buy and then be rewarded with some some time-limited streaming, it would be an incentive to explore iTunes content, to the benefit of everyone.

This is how I see it:

TV previews at 30 seconds are much too short to judge whether I want to buy it. Therefore, I generally don't buy any TV shows. But if I had a month of streaming after buying something, I can then explore TV shows in depth. That way, there's more chance that I’ll find a gem that I want to own.

I agree that's a nice setup, however I don't see the content providers bending to any of those. Apple couldn't even get the Apple Music subscription to $5 a month.

 

[ChazSch]

If I can pick the channels I love, I am in.100%

 

[ChazSch]

If you hold the menu button down on AppleTV, it takes you to the home page, no matter where you are.

user error...

 

[Kaibelf]

Seems like it, and it's super frustrating to have the Apple TV hardware release delayed just because of some streaming agreements, none of which will be available in Finland anyway.

Finland's not a key market, the US is, so you'll have to wait for Apple to work where the money is.

 

[ladycsr]

Give me a way to pay $0.99 to $2.99 (per channel) for the channels I want and I will be a happy lady.

 

[Kaibelf]

I don't get the whole skinny cable-like package thing. Two channels I watch frequently are Food Network and Cooking Channel. If they're not part of Apple's service it's useless to me. Why not then just get the cheaper cable or satellite tier that will most likely have more channels than TV will be offering. And once you subscribe to TV, Netfilx, HBO, Showtime, etc. it's not much cheaper than cable bundles are now. Will this TV offering allow us to watch live TV anywhere we want on our iOS or Macs? With DirecTV you can watch some channels live on your device (without needing to be on the same wifi network as your receiver) but not many. And certainly not any local affiliates or ESPN.

I think it will, because when you use the Apple TV to sign up for HBO Now and Showtime, you get access on ALL devices as part of the deal, and it's very smooth to tie it all together. It's not a huge ordeal like it has been in the past. I can imagine streaming of all content would be part of the contract.

 

[gadgetguy03]

And if they continue on this path companies like Netflix, HBO and Showtime will replace them for creating Original Content. ABC, CBS, FOX, CW makes some of the best original content now and maybe will continue. However the commercial free content from Netflix, HBO and Showtime are really good and with Netflix bringing in huge numbers in subscriber grow they will continue to have the money to "buy" original content. Netflix to me is the only one that truly gets it. They will continue to grow and add more and more commercial free content until the others start to understand what the consumers want. And that is commercial free content at a "reasonable" price.

Netflix can only continue to grow as much as they are able to afford. Content deals are getting more and more expensive. When they can't afford to license various shows anymore due to rising content costs they'll have to raise prices and lose subscribers. Lower revenues will mean a drop in amount/quality of original content.

I love my Netflix account and Netflix themselves but I don't see their model as self sustaining very long without raising prices soon. Content providers are getting more and more money-hungry and there will be a tipping point where the one service Netflix provides will be broken out into individual $8 a month subscriptions from the various networks so the costs are self-contained.

 

[HobeSoundDarryl]

Net, I get all the TV/internet I could want and more for about $73/mo, save over $100/mo or over $1,200/year. Investment in necessary hardware was about $500 for the antenna, Tablo, and 3 AppleTVs. Would I be interested in an AppleTV method of viewing live TV (and getting rid of Tablo)...sure.

I liked your post but the average American pays about $65/month in a cable/satt bill: http://www.ibtimes.com/cable-bills-...-fcc-media-bureau-report-shows-pay-tv-1587304. Yes there are some that pay more-to-much-more than that but then again, there are also some that use an OTA to get their entire TV channel "package" for free. I myself have a pretty big package of channels and pay <$80. Replicating favorites al-a-carte at prices already revealed from some of them implies that it would likely cost me much more to have the 25 or so channels I would want al-a-carte rather than just keep the 200 channels and optionally hide 175 of them with the FAVS option in an on-screen guide.

As we keep seeing real pricing reveals of various channels al-a-carte, I think we are all beginning to realize that dreams of $1-$2 per channel in al-a-carte world is not going to happen. As we look at CBS rolling out at $6/month, I don't know how we can keep clinging to the idea that the other big 3 or 4 will remain in Hulu "as is" once they see that CBS can actually get $6/month. CBS + ABC + NBC + FOX and maybe CW at $6/month = $24-$30 month for 4-5 channels often viewed as "free*". If free channels can get $6/month, what's a TNT, USA, TBS, TCM, FX, COM, ESPN, NBA, Local sports network, etc going to cost? My cost of < $80/$6 = about 13 channels before some al-a-carte model would cost more IF all channels adopted $6/month like CBS. We already see Showtime at $10 and HBO at $15. There's nothing magical about $6.

The point is that I wonder how many more channel pricing reveals we all need to see before we start doing what some are already doing: realizing the value of 200 channels for about $65 on average vs. 10 or 20 for >$65. I suspect our collective view of cableTV "as is" will shift from ripoff to bargain once a fair number of additional channels for sale al-a-carte are publicly priced.

I think many of your ideas are good ones though. Instead of Tablo, it seems like Apple would use an Apple Match-like option for a virtual DVR in "iCloud" and/or offer their own Tablo-like hardware option for a local network whole-home DVR that interacts with iCloud if they would incorporate any kind of OTA tuner. Doing their own would be more profitable and break the dependency on Airplay which would simplify usage (or they could open things up so that Tablo wouldn't have to work through Airplay).

I'd add that one great desire from seemingly many is cross-services search, meaning you search for show or film and the search will be able to show options from all of your subscribed services (thus a show available for sale in iTunes or part of a subscription in Hulu or Netflix, etc).

 

[2010mini]

Ask yourself how Netflix is able to pay $10million to create house of cards and more for the other commercial free content and still be able to only charge about $9 per month. How is HBO able to create Game of Thrones Commercial Free Content for $15 per month (with everything else). It seems that most people feel that it is just impossible to create commercial free content at a reasonable price. It can be done and if you follow the news at all Netflix is growing faster then anybody and the stock price is showing the confidence. I do like Netflix (I do not own the stock) and I know it seems I am promoting them. But I really think Hulu could have a much much large subscriber base if they would follow the Netflix Model. I.E. Add Profiles, add commercial free tier and make a deal with CBS. They could be bigger then Netflix but would require thinking differently.

Simple. Check out how much their stocks are worth.

Plus unlike cable companies netflix on pays for what they want. The networks/studios can't force bundles on them like they do cable companies.