Apple in Negotiations With Content Providers for Internet-Based Subscription Television Service

[JAT]

I'm surprised at the number of similar comments here; I had previously assumed that most would-be cord cutters were frustrated at the expense of subsidizing the high-cost channels like ESPN and were at least looking for an a la carte plan that would get them the few other lower-cost channels that they really want for some savings per month.

If even the high-cost and premium-channel viewers are clamoring for a la carte, then the TV viewing market is apparently much more segmented than I thought.

Well, I fit that, sorta. I finally got sick of ESPN's crap. (not enough sports variety, too much news, not enough HD) Once I didn't care about them, anymore, I had no reason to keep paying for TV. That's when I cut the cord.

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If cable companies start losing revenue, they will just increase the price of internet service to everyone. And/or worse, have tiered plans. COUNT ON IT!

They already have tiered plans. Tiered on speed. Always have. And, while I seldom say anything positive about Comcast, here is one comment: Comcast just cut its pricing in half this year (in my area) for its 50Mbps and 105 Mbps tiers.

 

[osaga]

These are subscription based Network apps, not a la carte channels.

BTW Called it!

https://forums.macrumors.com/showthread.php?p=17526935#post17526935

 

[Count Blah]

Phones are commonly replaced items. TVs are expected to last 5+ years. Name one Apple hardware product that follows that mold.

My quad i7 cMBP. When I get around to putting in an SSD, the machine should last a good long while. The misses is using you 2008 2.53 C2D with 8 gigs of RAM just fine.

Which is exactly why Apple is switching to the iPad model - max it out on initial purchase, and buy a new one in 2.5-3 years. No thanks.

 

[DaveN]

But what if ESPN was all you wanted? There are plenty of people that would be content with one or two channels. And even at $20/month for each channel, it's still cheaper than the alternative of having to subscribe to hundreds of other channels that are, essentially, useless to that person.

I am one of those. The only cable channels I watch are Turner Classic Movies, TV Land, and the local. My cable company charges me $79.02 for that service. I don't think those two channels would cost me that much a la cart.

 

[giantfan1224]

If cable companies start losing revenue, they will just increase the price of internet service to everyone. And/or worse, have tiered plans. COUNT ON IT!

Except cable companies are not the sole providers of internet service. It wouldn't be such a bad thing if "cable" companies went the way of newspaper (like actual paper) companies.

 

[Bill Killer]

My quad i7 cMBP. When I get around to putting in an SSD, the machine should last a good long while. The misses is using you 2008 2.53 C2D with 8 gigs of RAM just fine.

Which is exactly why Apple is switching to the iPad model - max it out on initial purchase, and buy a new one in 2.5-3 years. No thanks.

So, items that you personally have upgraded, not as offered by Apple, are lasting 5+ years. Good to know.

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Except cable companies are not the sole providers of internet service. It wouldn't be such a bad thing if "cable" companies went the way of newspaper (like actual paper) companies.

In many areas, they are. I cannot access the Internet unless it's through TWC.

 

[Illusion986]

I do not have cable for 5 years now and don't miss their business model a single bit. Felt like I was paying so much for so many channels I never watched and was tied down to their time line when shows air. And DVR is not a solution because I don't know what will I want to wach in couple days and I can't record everything.

 

[HobeSoundDarryl]

In many areas, they are. I cannot access the Internet unless it's through TWC.

Exactly, I'm "lucky" enough to live in an area that has 2 competitors for wired broadband: Comcast & AT&T.

Both are in the video subscription business through those same pipes.

If Apple started taking that video subscription revenue from them, both would almost certainly make up the difference with higher broadband costs.

There are no other choices for broadband where I am. And many people have 1 "choice" of broadband (which will typically be the same company from which they get their cable television programming).

Yes, there's a few pure players here and there but most broadband providers are also television subscription package players too. Some point to "google" which is in what- 2 or 3 cities ONLY. And they too are bundling broadband with television in those cities. So they too would feel the pain if Apple started taking that tv subscription revenue from them while using googles own broadband pipe for delivery.

Except to the complete dreamers, it's obvious where this would go.

 

[musicianm]

What you really need is a neighbor, and a long enough ethernet cable and split that internet cost.

 

[BornAgainApple]

Comcast owns the local sports channel in my area, NESN, which carries Redsox and Bruins games. Guess what channel I watch the most? But if I could buy subscriptions to MLB.TV and NHL Gamecenter, I think I could be happy. $70/month (Internet + subscriptions) is a heckuva lot better than $120/month (Digital Preferred + HD service for 3 TV's).

 

[JAT]

Source? Everything I've seen says it's under $5/month.
https://duckduckgo.com/?q=how+much+do+cable+companies+pay+for+espn

Per this article ESPN charges $5.05 per subscriber/per month.

http://www.forbes.com/sites/greatsp...p-raising-prices-with-competition-heating-up/

It's much closer to $5. Which is still the highest amount for any channel on basic cable. Every subscriber is paying $5.

Compare this to HBO charging $20/month, where only a small percentage pays for the premium HBO package.

Of note, this price is for ESPN, afaict. That's one channel, not ESPN2, ESPN News, etc. I've been trying to find it, but many of the disputes between Disney and the TV providers over the years have been over the pricing for the 'other' ESPN channels, like Classic. Those appear to be additional cost. They won't talk about all the terms of these deals in the media, it's hard to find the facts.

 

[giantfan1224]

Phones are commonly replaced items. TVs are expected to last 5+ years. Name one Apple hardware product that follows that mold.

20 years ago TV's did last a lot longer but the technology seems to be picking up speed. My 3 year-old 55" Sony Flat Panel already seems obsolete. This arena is right up Apple's alley. They might come out with a new phone every year but that's just because of all the new technology being rolled out and the idea that we consumers just have to have it. When the 4k TV's become mainstream, once there's enough available content, then we'll all have to have that too.

 

[oneMadRssn]

Because typically the channel foots the bill to create its own content. ESPN foots the bill to cover the sporting events that air on ESPN. NBC foots the bill to pay for the Tonight Show and Law & Order: SVU. Showtime and HBO foot the bills to pay for Dexter and Game of Thrones (respectively). Etc.. Yes, there is syndication and some content is pre-made and then sold, but TV networks are typically more like manufacturers selling direct to the public than middleman conduits like Best Buy or Macy's.

I guess channels are more like private equity fund's then; they foot the bill to create content, and then make money from it's sale. There's nothing wrong with that; but in theory any investor can foot the bill, even if that investor happens to also have a different non-traditional distribution mechanism. Look at the shows Netflix has footed the bill for; Amazon is also getting into that business.

Channels are a good way to group similar forms of entertainment, especially if there are options - you could, say, subscribe to Food Network as a whole for one fee, or just individual shows for less each, with maybe 3-4 shows being the break-even point for the whole channel. Options are good. More options are better.

I 100% agree than options are good, and more options are better. I think this idea of grouping is illusory though. Consider what iTunes has done to the grouping system of music albums, what pandora, spotify, rdio, etc have done to the grouping system of radio channels.

There is more than one channel that has food shows, not just the food network. Sometimes I just want to watch food shows; whether it's on the Food Network, it's a clone show on National Geographic, or a re-run on FX doesn't matter as much. If I'm in the mood for a food show, all I care is that the system plays for me a food show that I have not yet seen.

That's why I think the computer-curated system like Pandora's is the key.

 

[Hakone]

HBO please

I'll take HBO at $15-20/mo without hesitation.

I've been satellite/cable free for a year when I swapped to Netflix and Amazon Prime and I have no regrets at all. That's roughly $75/mo to about $15/mo.

That ~$720 i saved went to gas, sadly.

 

[giantfan1224]

In many areas, they are. I cannot access the Internet unless it's through TWC.

If there really is only one internet option (no DSL? No satellite broadband?), and if they do up their fees that are well above competing platforms in other areas, then you have a pretty good case for breaking up a monopoly. At least that would be my hope as a consumer.

 

[HobeSoundDarryl]

Of note, this price is for ESPN, afaict. That's one channel, not ESPN2, ESPN News, etc. I've been trying to find it, but many of the disputes between Disney and the TV providers over the years have been over the pricing for the 'other' ESPN channels, like Classic. Those appear to be additional cost. They won't talk about all the terms of these deals in the media, it's hard to find the facts.

And note, the battles are not just about how much a Disney can get a Comcast to pay in subscriber fee per ESPN channel. A Disney also leverages consumer demand for channels like ESPN to "force" a Comcast to carry a bunch of other Disney networks too. Why? Because there is so much money in the commercials that run on all of those other networks. Yes, that kind of thing gets us into this mentality of "hundreds of channels I never watch" but the commercials running on those hundreds of channels help make it all go... including the quality, breadth & depth of programming on those channels we do watch.

The al-a-carte dream kills all that. But we still expect the quality of programming we do want to be at least as good. And we still expect the casualties of the dream (the cable companies) to NOT raise our broadband costs to make up the difference (even though there's nothing to stop them). And we still expect Apple to get their big, profitable cut. And we still expect our out-of-pocket to be cut by 85% or more. Somebody has to be the loser in all of that. It won't be Apple, the Studios, the pipe toll masters (cable company & broadband providers). Who's left?

 

[Bill Killer]

20 years ago TV's did last a lot longer but the technology seems to be picking up speed. My 3 year-old 55" Sony Flat Panel already seems obsolete. This arena is right up Apple's alley. They might come out with a new phone every year but that's just because of all the new technology being rolled out and the idea that we consumers just have to have it. When the 4k TV's become mainstream, once there's enough available content, then we'll all have to have that too.

My point wasn't entirely based upon replaceability....it's replaceability + price. You can replace a phone every 2 years for $200. iPads can be replaced every 2-3 years for $500 average. A television, presumably 55" with either 1080p or 4K resolution with online features is going to cost roughly $2K (which includes the typical Apple tax). That is why I think Apple would have a much tougher time competing in the flat panel/TV arena than in phones, tablets, computers.....and it is why I'd much rather see a new STB from them instead of an all-in-one. I have no plans to replace my 55" Samsung LED anytime soon.

 

[paul4339]

An attempt to bypass the cable companies, yet the cable companies own the broadband lines. Interesting battle ahead among multiple parties.

Too bad there is not also an Apple Fiber to help Google make the cable companies irrelevant.

Too bad ATT, Verizon and Sprint hasn't entered into the home broadband market yet. Wireless carriers are already experimenting with broadband wireless to compete with the traditional cable and DSL providers. I guess the infrastructure isn't quite there yet, but once it's available you'll have national providers that can team up with players like Apple, Amazon, etc.

.

 

[Bill Killer]

If there really is only one internet option (no DSL? No satellite broadband?), and if they do up their fees that are well above competing platforms in other areas, then you have a pretty good case for breaking up a monopoly. At least that would be my hope as a consumer.

I think we get AT&T DSL in our area, but the price + speed options made no sense versus TWC's offering.

 

[giantfan1224]

Of note, this price is for ESPN, afaict. That's one channel, not ESPN2, ESPN News, etc. I've been trying to find it, but many of the disputes between Disney and the TV providers over the years have been over the pricing for the 'other' ESPN channels, like Classic. Those appear to be additional cost. They won't talk about all the terms of these deals in the media, it's hard to find the facts.

http://www.jsonline.com/blogs/sports/141097593.html

ESPN = 5.06
ESPN2 = 0.67
ESPNU, ESPN News, ESPN Classic < 0.37 per.

Probably less than $6.50 for the package.

 

[bommai]

some people are dumb and will a la carte themselves to high prices

time warner and comcast both offer cable + internet for $90. stand alone internet is $50. why would i spend close to $40 a month for a few channels when i could just buy the whole package and get the streaming with it as well

unless ESPN and others will start selling the streaming separate and it won't be part of the cable TV price

I buy 10Mbps internet for $30/month and no cable tv. Just netflix for $8. Way better than paying $90/month. I have an OTA antenna for local HD channels. I am all set!

 

[Bill Killer]

I'll take HBO at $15-20/mo without hesitation.

I've been satellite/cable free for a year when I swapped to Netflix and Amazon Prime and I have no regrets at all. That's roughly $75/mo to about $15/mo.

That ~$720 i saved went to gas, sadly.

You'll be paying more than $15-20 for HBO monthly. That's the cost that cable subscribers get it for. No way would HBO do something that crazy to undercut and sever its relationships with cable providers.

 

[HobeSoundDarryl]

Too bad ATT, Verizon and Sprint hasn't entered into the home broadband market yet. Wireless carriers are already experimenting with broadband wireless to compete with the traditional cable and DSL providers. I guess the infrastructure isn't quite there yet, but once it's available you'll have national providers that can team up with players like Apple, Amazon, etc.

Oh boy. Individual 4K streams on demand over LTE bandwidth. Yikes!

Remember the old Verizon guy: "Can you hear me now?"

 

[handsome pete]

These are subscription based Network apps, not a la carte channels.
[/URL]

Well they're pretty much the same thing.

I am one of those. The only cable channels I watch are Turner Classic Movies, TV Land, and the local. My cable company charges me $79.02 for that service. I don't think those two channels would cost me that much a la cart.

That's the biggest obstacle to an a la carte model. You would think networks like that shouldn't cost much individually, but they are directly subsidized by the bigger networks like ESPN. Break all of that up into individual pieces and the cost necessary to support the "smaller" channels goes up.



As for another quote from the article:

Quartz claims that Apple does want to release a much-rumored television set -- not just a set-top box like the current Apple TV 'hobby' -- to "usurp the role of the cable box" and "control the entire experience of watching TV".

I'm not sure how an actual tv helps usurp the role of the cable box any more than a stand alone box. A tv monitor and AppleTV can already exist without the cable box.

I have nothing against Apple offering a tv, but I'd hope they'd still offer the same functionality in an AppleTV like box. I'd rather keep them separate.

 

[HobeSoundDarryl]

http://www.jsonline.com/blogs/sports/141097593.html

ESPN = 5.06
ESPN2 = 0.67
ESPNU, ESPN News, ESPN Classic < 0.37 per.

Probably less than $6.50 for the package.

Even if true, that's $6.50 forced upon all of the subscribers of the tier that gets ESPN for a total revenue from that provider of $X. Conceptually in al-a-carte world, some of those people wouldn't want ESPN or the ESPN bundle for $X - (that loss). ESPN would only be interested in a new model that would yield $X + (more money). So, they would price worst-case al-a-carte accordingly. In other words, it would not be $6.50 plus a little markup (plus Apple's markup) but probably something more like $30-$50 for the ESPN bundle al-a-carte. That's a guess on my part but that could be a guess that would go either way, meaning I could be too conservative in that guess as easily as it being too high.