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

[AppleMad98004]

That's what I don't get about these skinny packages. It's still a bundle of channels just fewer channels. I'd rather get more channels and know I'm getting the ones I want than fewer and am missing ones I frequently watch.

That is a great point. Most models for al carte TV or skinny bundles show that after adding about 15 channels (broadcast/ESPN/HBO/Discovery/A&E etc...) you actually pay MORE than a bundle with all 120 channels.

What a lot of people do is get internet and cable TV from the same provider, so Cable TV is actually around $65 and internet adds the difference to get to the $110 a month. If you add al carte channels and keep cable internet you would pay more.

None of these companies are going to make less. They are looking to take more money from the consumer using clever marketing and packaging techniques.

 

[d21mike]

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.

Not true with FIOS Custom TV Channel Lineup. ESPN is part of Sports and Disney is part of Kids. There has been push back in regards to ESPN but not sure about Disney. Not suggesting you get FIOS. Just suggesting that it is at least an option with FIOS and could be an option with Apple TV. FIOS has a main bundle. Then they have Lifestyle, Entertainment, News & Info, Pop Culture, Kids (has Disney), Sports (has ESPN), Sports Plus (other sports but requires base sports). You have to pick 2 groups with the main group (this should not be required) and then you can optionally add other groups at $10 each.

 

[attila]

That's what I don't get about these skinny packages. It's still a bundle of channels just fewer channels. I'd rather get more channels and know I'm getting the ones I want than fewer and am missing ones I frequently watch.

I wonder why we in 2015 are discussing channels at all! Only news and sports require live streaming, the rest are just programs

 

[BuffaloTF]

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 can't imagine it wouldn't allow streaming anywhere. All new content agreements include those rights for all major providers, it seems. I can't think of any channel on DirecTV that I can't watch anywhere these days save for locals/RSNs. ESPN, to use your example, just requires that I use the Watch ESPN app rather than the DirecTV app -- which I prefer, since there's more content available than what's on their family of channels, and it's a cleaner app. Some, like NBC Sports, is available both within the DirecTV app and within its own NBC Sports Live Extra app.

I think honestly what excites me most is that [I assume] it would eliminate the charges for extra boxes, since I could own those. On DirecTV I pay 5 dollars for each additional box and 25 dollars just for the joy of having an "Advanced DVR" for whole-home service... eliminating that alone would substantially lower my bill. When I had Time Warner, it was ~10 dollars per box.

 

[HobeSoundDarryl]

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

Ads are a subsidy paid for by other people's money, much like the subsidy for iPhones paid by AT&T, Verizon, etc. I've done the math before: to kill the commercials but keep all that commercial-driven subsidy flowing would cost $53 per U.S. household PER MONTH. In other words, if all of us could agree to start the bill at $53/month for 0 channels, THAT would wash the subsidy that helps make what we do watch cost what it does now. On top of that, we would then add the cost of the channels al-a-carte... not at the often-dreamed number like $1/channel and similar but more like the real-world numbers illustrated by channel launches like CBS (at $6/month), Showtime (at $10/month) and HBO (at $15/month). Pick your favorite 10 for about $8/each: $80 + $53 might equal a real commercial-free al-a-carte scenario.

Is that crazy? Apple already has a commercial-free, al-a-carte TV show + movie library available in iTunes. How much does it cost to watch everything we want to watch on a monthly basis if we just fully embraced that option? Substitute what used to be the 99 cent per episode rental for TV shows if you like.

Hulu and Netflix won't last at those rates forever. As contracts come up for renewal, Netflix loses more desirable content (like the big Starz package). This will only expand as each group of content owners decides to make more profit by going direct than offering content through Netflix. HBO, Showtime and CBS among others are showing them the way.

Similarly, Hulu won't last either at current pricing. Why does ABC + NBC + FOX happily carry on for a share of a cheap monthly Hulu rate while CBS collects $6/month?

Both work now because the masses haven't moved and existing contracts are in place. All you have to do is put yourselves in content owner's shoes and think about what you would do to see where this is all going. Are you really going to let Netflix keep getting richer with your content without demanding more money? Is ABC, etc really going to happily accept a share of existing Hulu revenue while CBS gets $6/month?

 

[Rigby]

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.

Actually this exists. Comcast calls it "Internet Plus", and it's obviously designed to keep cord cutters on board. I currently have a package that includes 100Mbps Internet, local channels and HBO. It costs less than $50 for the first 12 months, which I think is a pretty good deal. I haven't even connected the cable box (I watch HBO on the Apple TV via HBO Go, which is also included). After the 12 months I'll see if I can get it extended, otherwise I may switch to pure Internet plus HBO Now (but I suspect it will be more expensive in total than what I'm currently paying).

I think this is a first sign of the Internet competition breaking up the old monopolies. If Apple's TV service is attractive, I'm sure the cable companies will come up with competitive offers, and that's fine by me.

 

[gotluck]

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.

directtv doesnt give credentials for the watchespn app? espn was one of the first channels that allowed streaming outside the home on my provider - brighthouse

 

[d21mike]

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.

Hulu is not being forced by the CABLE companies to do anything. They are owned by three (I think 3) of the main networks. The President of Hulu was ask once how much money is made by the advertising and he said $8 per month (so $8 + 8 = $16 per month in revenue per subscriber). Not sure it would be that hard to add a commercial free tier at a higher cost. Not sure it would need to be $16 or maybe $12 or maybe less. They just added Showtime for $9 as an option so it would not be out of the question to add a commercial free tie to Hulu. My point is would they DOUBLE the number of subscribers with a commercial free tier or not. I would personally pay the higher fee. Again, if they had the same number of subscribers as Netflix how much more would they have to charge for a commercial free tier? The networks that own Hulu could take a risk and assume they will get a huge increase in subscribers. Netflx took the risk and it paid off big.

 

[HobeSoundDarryl]

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.

Go to YouTube. Content retailing at that kind of price is going to have to be created by amateurs much like content you see on YouTube.

The whole industry is built atop a revenue model of about $70/month per household PLUS about $55/month per household in subsidy (paid for by commercials). That's about $125 per household. Any new model that is intended to replace that model will need to show everyone beyond us consumers how they are going to at least replace that level of revenue (but likely increase it; else, why change).

We're already seeing clear examples of how channels are going to be priced: CBS at $6/month, Showtime at $10/month, HBO at $15/month. I saw a story the other day that suggested ESPN al-a-carte would be priced at around $30/month (that's hard to imagine but that's what I saw). Found one cut of that http://www.slate.com/blogs/moneybox/2013/07/17/a_la_carte_espn_would_cost_30_a_month.html but I remember seeing the same $30 price on a site like Marketwatch.com or similar.

The point is that all of the other players have zero motivation to give us everything we want while giving themselves huge revenue haircuts. I'd love to see your wish become reality too but none of the other links in the chain are motivated.

Here's an interesting WSJ article "Cord-Cutters Beware" that talks to this point pretty well: http://www.wsj.com/articles/prices-add-up-with-a-la-carte-tv-1413501679

 

[BuffaloTF]

Hulu and Netflix won't last at those rates forever. As contracts come up for renewal, Netflix loses more desirable content (like the big Starz package). This will only expand as each group of content owners decides to make more profit by going direct than offering content through Netflix. HBO, Showtime and CBS among others are showing them the way.

Netflix lost some Starz content, but picked up the entirety of Disney's content out from under Starz, first-run and historical, all studios in the family. They didn't adjust their price, save for number of devices allowed for streaming and 4K upgrade. Netflix got the better end of that deal. I'll gladly pay the same 15 bucks I'd have to pay Starz for Netflix, but it's 9.99...

But to the other end of what you're saying... yeah, no way commercials are going anywhere. It just isn't realistic to expect to get content for free when some of these shows have ridiculous budgets. And a full a la carte option sounds to me like an incredibly expensive proposition.

 

[Juicy Box]

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.

The average price is a lot higher.
That link you posted is about the FCC's survey of average basic cable cost. The article wasn't that clear about that though.

The average subscriber pays a lot more for TV service. That survey also lists equipment costs such as rental equipment in a separate list. it also has the average equipment cost for $7.

I know the prices differ from place to place, but $7 seems low to me. In the baltimore area, Comcast charges $10 for HD box, and Verizon is $14 a month. Plus with the Fios, you are required to have a wireless router with the TV service regardless if you have internet with them. That is another $7.

 

[Thunderhawks]

But this is not cord cutting. Cord cutting is paying less for content. Usually by getting it from alternative services like streaming.

By this logic, Netflix would be the same as paying for cable.

If cord cutting was only how you explained it above, then it would probably be a near existent movement.

But that already exists, as in Netflix etc. charging less per movie than individual downloads/streams.

I think cord cutting is getting out from under having to buy packages.

 

[thekeyring]

Hope they negotiate something here in the U.K. too. Can currently get by with Freeview + Netflix but paying to stream Simpsons and Friends would be nice (through Comedy Central / Sky One) without having to pay the ridiculous fees for Sky TV.

 

[MarkNY]

That is a great point. Most models for al carte TV or skinny bundles show that after adding about 15 channels (broadcast/ESPN/HBO/Discovery/A&E etc...) you actually pay MORE than a bundle with all 120 channels.

What a lot of people do is get internet and cable TV from the same provider, so Cable TV is actually around $65 and internet adds the difference to get to the $110 a month. If you add al carte channels and keep cable internet you would pay more.

None of these companies are going to make less. They are looking to take more money from the consumer using clever marketing and packaging techniques.

There is some truth to this, but as long as the bundle has ESPN + the local affiliates (needed for college and pro football), I'm happy and will drop cable and get it. Why? No outrageous box fees + an interface that won't be total crap. I loathe the non-responsive, clunky interface on my TWC box.

 

[MarkNY]

I wonder why we in 2015 are discussing channels at all! Only news and sports require live streaming, the rest are just programs

Exactly.

 

[CaryMacGuy]

I can see WRAL (local CBS affiliate in Raleigh, NC) jumping on board with this pretty quickly. They tend to be early adopters of new technology.

 

[Kar98]

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

You wouldn't be able to FIND my antenna even if I told you I had one and where it is. It's not 1968 anymore

 

[Juicy Box]

But that already exists, as in Netflix etc. charging less per movie than individual downloads/streams.

I think cord cutting is getting out from under having to buy packages.

Maybe you are missing the point and I think we are in agreement for the most part.

I was responding and disagreeing to the post saying that cord cutting is paying $0 for content, and paying anything, such as Apple's TV service, would not be considering cord cutting.

My point was that cord cutting is using an alternative way of getting content that would cost less than paying the traditional cable TV providers. Using Netflix is one of these alternative ways. Cord cutting does not mean free service.

It does not necessarily have to do with buying packages, although this is a big problem with a lot of cord cutters.

 

[jdag]

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.

Remember, my $73/mo is BOTH my TV expense and my internet expense (2nd highest tier with my provider). So even using the average of $65/mo for cable/sat, plus my internet, I'm still saving $52/mo. I could easily go down a tier or even 2 for my internet speed and save another $10-$20/mo if I wanted.

I am not trying to make a point of how much I am saving. The point is that I am in fact saving, yet still 100% satisfied with my programming and user experience.

Cutting the cord requires changing viewing habits, but is do-able with relative ease. I hope Apple can even make it easier.

 

[HobeSoundDarryl]

Netflix lost some Starz content, but picked up the entirety of Disney's content out from under Starz, first-run and historical, all studios in the family. They didn't adjust their price, save for number of devices allowed for streaming and 4K upgrade. Netflix got the better end of that deal. I'll gladly pay the same 15 bucks I'd have to pay Starz for Netflix, but it's 9.99...

Just stand by. It won't last. Disney is as profit hungry as Apple. They want to maximize their profits off of their content, not enrich someone like Netflix by giving it to them indefinitely. Imagine you are Disney. Why do you stay with Netflix long-term when others are proving there is a direct market for a cut much larger than whatever you are getting?

According to this: http://www.cnet.com/news/the-skinny-on-netflix-disney-deal-faq/ apparently Netflix coughed up a LOT of money for this deal- apparently $300M/yr. While Netflix can keep putting huge money in content creators hands, they can keep it all going. However, eventually such expenses must be covered by income. Give this a read: http://seekingalpha.com/article/1800332-netflixs-profitability-is-an-illusion Eventually, real money is needed to pay for all these content deals. And the content owners will only come back for more, more, more (money)!

 

[noles1983]

another plus of these services is you don't have to rent stupid cable boxes for like 12 each a month.

 

[BuffaloTF]

Just stand by. It won't last. Disney is as profit hungry as Apple. They want to maximize their profits off of their content, not enrich someone like Netflix by giving it to them indefinitely. Imagine you are Disney. Why do you stay with Netflix long-term when others are proving there is a direct market for a cut much larger than whatever you are getting?

Again, CBS at $6/month. I doubt Netflix is giving Disney $6/month out of the $9. Or, if they are via Debt or Stock sale revenue, that's not sustainable. If I'm Disney, don't I want that $6 too? Or maybe Showtimes $10 or HBO's $15 for my treasure trove of highly desirable content? So why do I stick with Netflix when the contract comes up for renewal?

They're with Netflix because they paid them considerably more than Starz. And they have, and have had, the direct market covered already. They don't compete with Starz today/Netflix Jan 1 2016, they operate in unison - they always have, digital is just a new medium where it was disc and tape based prior. People that buy movies will continue to buy movies. Disney Movies Anywhere sells them directly and allows direct downloads, and also links in to iTunes and Vudu services for streaming. It's really a push here. If it isn't Netflix, it's going to be because one of the other channels offers them a richer deal for first-run TV rights.

 

[Juicy Box]

another plus of these services is you don't have to rent stupid cable boxes for like 12 each a month.

This is a great point.
Many large families pay more for equipment charges in each month's cable bill than the high end cost of Apple's rumored TV service.

 

[mtc44]

I'd like to see an option to pay a flat fee for all of iTunes' content (Music, TV, Movies, Podcasts) in addition to free streaming of HBO, news, and sports. I would pay $100/month for this and when bundled with my local internet, my total cost would be roughly the same as today.

The benefit would be a user interface that makes sense on any device (TV, iPad, iPhone) and a substantially easy whole-home setup. Other than gaming consoles, you could basically watch or listen to anything on the same input.

Even better, I'd like to see iTunes Match apply to TV Shows and Movies as well - so that the content that I have can be uploaded and streamed anywhere and re-downloaded if needed. Then I could do away with all my hardware for storage (DAS/NAS, etc) and having to upkeep a Plex server. Apple wins because they are already streaming 99% of the content I would upload, but I would be willing to pay for the extra iCloud storage.

 

[HobeSoundDarryl]

If it isn't Netflix, it's going to be because one of the other channels offers them a richer deal for first-run TV rights.

Right and that's what's coming... again and again but we keep revolving our al-a-carte cost thinking around Netflix at $9/month. It can't stay there "as is". Just go to the math...

• Disney's content costs $300M/yr
• Netflix has about 57M subscribers (I'll assume them all at $9/month) http://www.forbes.com/sites/laurengensler/2015/01/20/netflix-soars-on-subscriber-growth/
• $300M/57M = a cost-per-subscriber for just the Disney content of about $5.25 per month
• $5.25/$9 = about 58% of Netflix monthly subscription fee for ONLY this Disney content.
• Now pay the other Studios that contribute content on Netflix
• Pay Netflix staff, pay for infrastructure, etc.
• And show a real profit for Netflix itself

When reality sets in (when Netflix has to start actually covering the cost of the content with income) I picture Netflix adding tiers as they probably need the $9 number to keep enticing new subscribers. Content owners demanding prices beyond what can fit into the $9 tier will be offered in higher-priced tiers. In short, there's not enough revenue in $9 to go around. The costs far exceed the income. That can't last. So anyone pretending that $9 is representative of how al-a-carte can be for all is buying into an illusion of how pricing has been for the smallish crowd of earliest adopters (of cord-cutting). Netflix is a massively successful stock story... but eventually it has to actually make real money in the calculation of revenue - costs = profit. While it's able to artificially seem successful, we are easily fooled into believing that we too can have everything we want to watch in a Netflix-service like way at a Netflix-like (dirt cheap) price.