Apple Frustrated by Inability to Reach Deals With TV Programmers for Television Service

[mantan]

I'm just glad someone is going to bat for us consumers. I know they are just doing it "for us" as there is a wrinkle to be exploited but it is still nice to see someone attacking rather than us stand still and be in the same situation 10 years from now.

I have cast my vote over 5-10 years ago by ditching cable. Screw them and their bundles. Just give me the internet and I'm good. I know they realize this but they need to wake up. People younger than me are only going to be more adamant, at least to me.

Netflix and Amazon seem to be creating nice content as well! I find myself watching their stuff if I want to veg out at all. Props!

I hope you don't truly believe that Apple is 'going to bat' for you on this issue. Apple is just trying to replace the cable/satellite companies as the middle man. Their main objective is and always be to maximize their revenue in profit. When it aligns with things you like (such as great smartphones and laptops) you win, but when they essentially just replace the current middle man with themselves, I don't see them as much of a white knight.

I mean if you believe the hocus pocus math of the skinny bundle and getting everything you like for $50, then you think it'll be a great win. If you live in the real world where it essentially means you get what you like for $130 and a slightly better interface provided by Apple, then it seems like a wash.

 

[Rigby]

Well cbs has their own service which is $5.99 and has a decent back catalog of cbs shows to boot., so add them together you still under $20 but cbs' service does have commercials.

Well, while CBS doesn't make most of their current shows available on Hulu, there is actually quite a bit of their back catalog, and you can get it ad-free too on Hulu:

http://www.hulu.com/companies/cbs

 

[HobeSoundDarryl]

Is it though? I haven't seen any subscriber numbers, but I can't imagine many people biting at that price for a single station, and with commercials to boot (I know I haven't even though I like some of their shows).

Not really that long after launch...
http://www.cnet.com/news/cbs-ceo-our-streaming-service-beats-dishs-sling-tv-on-subscribers/#!

I don't love that price either but that is more along the lines of what I expected each "channel" to cost in some al-a-carte fantasy... not the 50 cents or $1 that we so commonly throw around.

As I've shared before, should any al-a-carte model actually come into being for the masses, the pricing modeling will be such that the other players make MORE money, not less. So in the end, we'll end up comparing something like how it used to be- 200 channels for $100 to the "new model" of 20 channels for $150... and then gripe about how great it used to be in the good old days.

And if it's not "channels", sub in "shows" or "media packages" or whatever you want to call it. The driver of a big change like this is showing all of the players how they will make more money. That means showing the Studios how to make more, cutting Apple in and letting them get their 30%, Cable will get theirs either way (because they control the broadband pipe), etc. Nobody wants to take the big hit to give us our coveted 80% or 90% off.

Getting twice the fee isn't making them more profit if they have half the customers ...

True but as a part of Hulu they split up the revenues and share it with whoever else is caretaker of Hulu.
While this is very old, it tells a story: http://www.cbsnews.com/news/hulu-makes-a-profit-video-content-owners-not-so-much/ and try #5 on this page: http://www.digitaltrends.com/home-theater/which-makes-networks-more-money-hulu-vs-netflix-and-more/

Besides it's not hard to imagine some concept of content value envy driving some internal thinking here: "if CBS can get $6/month direct for their content, we (the other 3 or 4) need to get at least that much for ours to show that our content is worth as much as theirs." Remember, streaming is none of these players bread & butter right now, so posturing & positioning may matter more than maximizing every possible dollar.

I stand by what I wrote. Hulu "as is" will not last. It's like Netflix having all of Starz for years but then losing Starz when the contract term expired. ABC, NBC, FOX and probably CW will not tolerate a portion of Hulu's monthly (shared with others besides those 4) while CBS is getting $6/month. They have a long history of playing "it's not fair" games in cable pricing negotiations.
[doublepost=1453317205][/doublepost]

I hope you don't truly believe that Apple is 'going to bat' for you on this issue. Apple is just trying to replace the cable/satellite companies as the middle man.

Good post. Of course they can't even actually REPLACE cable as their "replacement" completely depends on cable's broadband pipe. So they may steal some cableTV subscribers but Cable broadband will make up for the financial losses of them in higher broadband rates for those who unbundle from broadband + cableTV. Count on it.

 

[Rigby]

Not really that long after launch...
http://www.cnet.com/news/cbs-ceo-our-streaming-service-beats-dishs-sling-tv-on-subscribers/#!

OK, so they have "more than 100,000" subscribers. But Hulu has about 9 Million subscribers as of April 2015. You do the math ...

 

[HobeSoundDarryl]

Excellent point about advertising! You're absolutely right.

I was simply following the money from consumers to cable companies... and from cable companies to the content providers.

But you're right... advertising adds a whole other dimension to this

Most of us tend to leave that one out. But it's the golden goose of the whole industry. It's basically a system where somebody else- those who buy the commercials- pays a LOT of money that doesn't come out of our own pockets just for the chance that we might see one of their commercials running at any given time on any of 200 channels.

It's a big amount of revenue- about $54 per household per month- that doesn't come out of our pockets. It's much like the iPhone subsidies that makes the masses think iPhones cost about $200 or $100 or are free. Same here. We see a $100 cable bill as some kind of huge ripoff but it's actually that low because another approx. $54 is paid for us by others. Unlike cellular subsidies where they will get their spend back in contractual service commitments, these advertisers spend that much just for a chance that we MIGHT be watching the channel(s) where their ad runs when it runs. We never even see most of the commercials that help pay for our television subscription.

We'll go to a 2-hour movie and spend $50 for a small family. But we'll gripe about 200 channels running some kind of video programming upwards of about 18+ hours per day times 30 days every month. Again, it's a "be careful what you wish for" if I ever saw one.

Cable has done a terrible job of conveying the concept of value. Most people hardly even grasp that it's all actually about the commercials and not the shows (the shows are just the bait to help them sell more commercials). Even the relatively smart people that frequent this site seem to generally lean towards a concept that they're paying for every single channel and maybe it really is 200 channels/$100 = 50 cents per channel. I want 10 channels so my bill should be $5.

Replacing the "greedy" cable company with an Apple is just swapping out one profit hound for another. But that's not even an actual swap as the latter's replacement solution depends on the formers broadband pipe. That dependency basically forces any real switch to an Apple al-a-carte solution into costing more than the "as is", as Cable is going to get theirs no matter what.

The dream is a lovely one... until we do the math and/or put ourselves in the shoes of all of the other players and then ask ourselves why we want to make this happen. Then it falls apart as long as the source of the money clings to "huge discount" and "commercial free" (as both are gigantic revenue killers).
[doublepost=1453318386][/doublepost]

OK, so they have "more than 100,000" subscribers. But Hulu has about 9 Million subscribers as of April 2015. You do the math ...

I hear you. And I knew you'd come back with that. How long has Hulu been around? How long as CBS been around? Time will tell.

By the way, Windows still has 90+% of the computer market. So I guess that means OS X basically sucks as judged by the sheer numbers. Select facts can imply many things. Such facts need to be viewed in broader context.

Stand by and watch it all play out. If CBS keeps growing (and original programming is coming), I don't see how ABC, NBC, FOX and CW will not demand higher fees or else. It's what I would do if I was them. Hulu as is won't last. It just works now because it's a relatively small part of a much bigger pie. Netflix "as is" won't last either... for the same reasoning. Both help with the delusion that we can get everything we want for nearly nothing, but if we all moved on that "solution" things would change quickly (and not to our liking).

 

[johncarync]

Solution:
1. Apple buys network that won't deal with them fairly.
2. Apple now can negotiate a deal (careful to include no expiration date in the contract) with the network they now own.
3. Now that they have the deal the want, Apple can sell the network.

They may wind up buying high and selling low on the networks and lose a few billion dollars, but they'd make up the loss by having the only product with a truly full line up of channels and shows.

 

[Rigby]

I hear you. And I knew you'd come back with that. How long has Hulu been around? How long as CBS been around? Time will tell.

Hulu has grown by 3 million subscribers just from 2014 to 2015. It seems unlikely that All Access will come near anytime soon.

Stand by and watch it all play out. If CBS keeps growing (and original programming is coming), I don't see how ABC, NBC, FOX and CW will not demand higher fees or else.

If CBS wants to compete with premium channels like HBO and Showtime, I'd welcome it. But they have a long way to go.

I don't see how ABC, NBC, FOX and CW will not demand higher fees or else. It's what I would do if I was them. Hulu as is won't last.

Maybe. But judging from the subscriber numbers, they probably make a lot more money from being on Hulu than CBS does with All Access. It's just as well possible that CBS will eventually fully support Hulu (they already partially support it with their back catalog) and All Access will be the one that doesn't last.

 

[2010mini]

Well, either way that's the way we are forced to consume content at the moment, and I'm probably not alone in my dislike for it.
[doublepost=1453252349][/doublepost]
Boy, you sure do seem sour at Apple. I don't need to explain a darn thing to you. If you don't get it, I can't help you. How do you suppose Apple got all that cash? By selling cheap PC's? Come on. So, since they have a ton of money they should lower the price on their premiums machines? No. BMW doesn't do that. Mercedes doesn't do that, etc. And why should they?

I feel your pain, but if all the channels were completely unbundled and you had to buy them separately. It would cost you more for less channels.

Buying in bulk is always cheaper no matter if it's a pay tv service or Netflix.

 

[blut haus]

I'm just not some pretentious jagoff

I disagree.
[doublepost=1453321862][/doublepost]

First of all, Cable providers have to provide bundling because it is the content creators who create the bundles in the first place. And the content creators are the ones who make more money by bundling their content.

Second, what people want is EVERY CHANNEL. That is what the vast majority of people want. Few people want a poor man's thin channel lineup. They want EVERYTHING. And EVERYTHING costs money. And people are willing to pay for cable.

After all, the cost of an iPhone is $1600 a year alone for the hardware, data, phone, and text messaging expenses.

In contrast, Comcast gives you nearly all channels, high-speed internet, and home alarm system for $2400 a year. That is a bargain for what you get.

The problem for Apple is that the content creators, not the cable providers, don't want to reduce their profits to bottom of the barrel to simply provider Apple with unbundled product. ESPN for example has several channels. It is also part of the ABC-Disney group - which wants also the ABC channels and Disney channels bundled. The same with the other content creators.

Apple is NOT going to lower its own profits by buying content. Apple always makes a profit on its products and services. No way in hell Apple will lose profits. So this is where the impasse is. Both sides want to make profit and not lower their own profit.

Apple is smart to simply be the conduit by selling apps.
[doublepost=1453282104][/doublepost]

Netflix hardly makes any profit compared to Apple.
Wasting money on Netflix will dilute the value of Apple's stock. It is money down the drain.
This is true particularly since Apple can have Netflix broadcasts its content via an app on AppleTV. This way, Apple gets Netflix's content without having to pay for any of it.

You think comcast is a bargain? haha.
[doublepost=1453321971][/doublepost]

No more so than any other business. Don’t be so short sighted. It’s no different than Apple bundling lots of app that you never use, (and there are plenty), but still charging you for the whole OS, and this is the only option they give you.

It suits their business model to do it this way and they sell it to you under the guise of, 'you’ll need it to be productive out of the box’. You pretty much need just a mail client, a browser and a word editor as basics.
How about reduce the price of the hardware, (PLEASE DON’T say the OS is free because it isn’t), and let me download the apps I actually use. Wouldn’t have saved me a lot admittedly but I’d rather the money was in my pocket than that of Tim Crook.

I have NEVER used;

• Chess.
• Facetime.
• Game Centre.
• iBooks.
• iDVD.
• LaunchPad.
• Photo Booth.
• Photos.
• Stickies.

I don’t use, (but did try out once);

• Twitter.
• Time Machine.

This goes for iOS and OSX. Oh, and this business about needing certain apps so as not to break the OS, again, all part of the model to monetise you.
It’s what all businesses are about. Especially Apple. If they really were about the user there would be two USBC and not one, there’d be a choice of 32/64/128GB iPhones. etc. etc.

There is an option in ESPN's contract with Sling TV that lets the deal be terminated should it cannibalize ESPN's core pay TV business, something Apple likely wouldn't have agreed to.
Is this any different than we won’t allow your app the functionality to do ‘X' but our in house version will do it?

Wow, you've never used those built-in apps? Better complain that Apple is being greedy and somehow draw a parallel to entertainment...

 

[rdrr]

All I want is a way to pay $5 to ASPCA and Feed the Children each through an app, so I don't have to see another Sarah Mclachlan or Sally Struthers commercial. I would like to eat my supersized meal while locking my dog out in subzero temperatures without feeling guilty.

 

[maxsix]

Based on Apple's business model of controlling everything and collecting high premium pricing, it's unlikely the ones they've approached are ready to work on even thinner margins than they presently make.

Apple would have had something done by now. It's possible they never will get it on their own terms. Apple may need to accept that they can't make this work. They can't do everything.

 

[69650]

Why not bypass the current networks and create their own TV channels like they've done with Beats1. Make their own original programmes and buy up international sports rights. Has to be simpler than trying to make deals in each country.

 

[4jasontv]

Why not bypass the current networks and create their own TV channels like they've done with Beats1. Make their own original programmes and buy up international sports rights. Has to be simpler than trying to make deals in each country.

I'll take a stab. Radio is a form of advertisement for albums and live shows. A song is consumed repeatedly over the course of a week, year, or lifetime. TV shows, and movies have far less value to the end user after they have been used.

 

[johnjstanton]

The reality is that I only watch sports and sci-fi, and wife only watches a small handful of channels. But to get the sports I have to get the "Extreme" package with all the crap I don't want.

I was talking to a Cox Communications VP and he said the cable companies would love to offer a completely a la carte option but the content provides don't want to allow that option

 

[attila]

Wish apple would just do a service like apple music with their whole movie and tv catalog

^this!!! Why would we want TV subscriptions when we have services like Netflix (which all can be improved upon)

I'm frustrated Apple is trying to strike sub deals instead of this.

 

[Nunyabinez]

I was talking to a Cox Communications VP and he said the cable companies would love to offer a completely a la carte option but the content provides don't want to allow that option

I would imagine it is similar to what happened with the music industry. Artists didn't want individual songs to be available to buy because most artists have one or two good songs and a bunch of mediocre tunes. When you have to buy the whole album they get paid for crappy product.

Similarly, there are lots of shows that really are not very good, but are packaged with good shows on a channel. Then the channels get bundled at the cable company.

So of course the content providers don't want this model, because it may expose that no one actually likes your show enough to purchase it on its own. So, while i don't doubt what your contact said, I doubt that he is being completely honest.

If we got true a la carte, the cable companies would be the tower records of the TV industry. I think your friend was simply trying to place the blame on someone else.

 

[jlc1978]

Similarly, there are lots of shows that really are not very good, but are packaged with good shows on a channel. Then the channels get bundled at the cable company.

So of course the content providers don't want this model, because it may expose that no one actually likes your show enough to purchase it on its own. So, while i don't doubt what your contact said, I doubt that he is being completely honest.

Since it was a cable company contact, I would think he was saying they'd love to over each channel separately rather than have tried bundle pricing; that could reduce their cost for content since they would no longer pay for the channels no one wants without significantly reducing the price. They know you are willing to pay $X to be able to watch one or maybe two channels so the could still charge close to $X in total of those two, since they know there are willing buyers at that price point, while paying less in fees for the content, thus upping their margins. Content providers don't like it because revenue streams would dry up with getting more for the ones that remain, and since content is ultimately the deciding factor they have some power over how cable networks pay for content.

 

[s2mikey]

I was talking to a Cox Communications VP and he said the cable companies would love to offer a completely a la carte option but the content provides don't want to allow that option

That is true. Take Disney for example. They KNOW damned well that ESPN is the big channel that they have. But, they make the providers also buy the disney cartoon channels, the kids channels, and whatever other garbage they have in their lineup in order to get ESPN. Im amazed that Sling TV was able to pull off what they did.

Ive been cable/satellite free for almost 10 years now and have saved thousands and thousands of dollars. We have MORE to watch now than we ever had with cable. Cant even keep up with the shows we want to watch. A roof antenna, Netflix/Hulu/Amazon Prime & a decent sized blu-ray catalog takes care of of our viewing needs.

 

[JonneyGee]

What is preventing ESPN from doing the same as CBS All Access, HBO Now, Netflix, Hulu and others? Why does Apple have to create their own bundle? I mean they are already on the Apple TV 3/4 which requires a Cable Subscription. If they could make a deal with Sling and also with Apple why not just offer it standalone. It appears to be something that cost the most and a lot of people what sports (not me but a lot).

ESPN is owned by Disney, which also owns ABC and a ton of other networks. Disney probably realizes they'll lose most of the revenue from their other channels (Disney Channel, ABC Family, etc.) if they do an ESPN bundle because many people are only keeping cable TV for live sports.

 

[Siris4]

Just make your own network...

 

[mantan]

^this!!! Why would we want TV subscriptions when we have services like Netflix (which all can be improved upon)

I'm frustrated Apple is trying to strike sub deals instead of this.

LOL. This is the simple thinking my 18 year old daughter has. She thinks that if she pays for Apple Music and Netflix it would result in the same wide variety, diversity and quality of content.

It's the result of the Netflix/Spotify era where people get the idea the mass subscriptions to video content for a modest fee is possible. That completely misses the fact the majority of cost for Netflix/Spotify content is paid from a different source.