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

[m11rphy]

First of all, you're applying pricing to a hypothetical TV and stand alone box using the current AppleTV box price. Who's to say this new AppleTV like box would also have to be priced at $99? The box could potentially cost upwards of $200-$300 if the hardware necessary came at a premium. And when I'm talking about functionality, we're mostly talking software and content. That's where Apple is making most of their money.

Apple make their money on hardware, the main purpose of iTunes and the app store is so the consumer buys iPhones, iPads and Macs. So Apple still wouldn't want you to give them $300 for a apple box and then give samsung $1000 for a TV when they could charge you $2000 for an all in one TV. They will offer you content and apps to get you to buy the all in one TV

 

[MacManTexas56]

I think you're missing the point. Why would anyone pay more for less? They won't. Apple, Google, ESPN, Disney, HBO, whoever, won't invest time and money to come up with an alternative if no one will buy it.

well someone earlier said they'd gladly pay $20/month for ESPN alone. I get that in my standard cable package that's around $40/month. So you are paying for half a cable bill with 1 channel??

 

[Lord Hamsa]

Right now I have Verizon 25/25 FiOS Internet only (phone is included but don't use & pkg w/o phone is actuall more expensive). If I wanted to add TV it would only be $30 more.

$30/month more for the cable service itself. Then another $10-$20/month per receiver you lease from them (or buy a standalone set-top box and pay $5/month for a CableCard). If you have 2-3 TVs in the house, or more, it adds up quickly.

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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.

First of all, that $6.50 is what it costs the customer, not what ESPN themselves are getting. The cable companies are getting a pretty heft cut of that.

If they can charge those kinds of rates to the cable company, then their channel is in high demand. Unlike a niche channel, they don't need 10x their base cable rate because they're likely to get a lot more than 10% of the folks who drop cable for ala carte. I'd guess it'd be a lot closer to $10/month than $50/month. Plus, they get to keep all of the commercial slots which they currently share with cable companies; more ads, more revenue. (Unlike produced content, live sports coverage has natural - and in some cases, artificial - breaks that will still be filled with ads, even on a subscription model.

And the ad thing is probably true for other providers, possibly in a 2-tier model where one has the standard number of ads (and again, those ads aren't shared with the carrier or reserved for local stations) and is priced lower accordingly, and one with a higher price but no ads.

There's also going to be a pricing difference between streaming content and the current iTunes Store model for TV where you buy the show and the copy is yours to keep, so using "TV season pricing" from the iTunes Store isn't necessarily a guideline for what a streaming-only subscription to a show might cost.

 

[hick9]

"well someone earlier said they'd gladly pay $20/month for ESPN alone. I get that in my standard cable package that's around $40/month. So you are paying for half a cable bill with 1 channel??"


Depends on how you look at it...If the person watches nothing but ESPN he just saved 20 bucks per month...the whole point is not to pay for something you don't use.

 

[paul4339]

Cable company will not lose in the dream. ....

No. There is not enough 3G/4G/LTE bandwidth to allow on-demand, al-a-carte to the masses. They have a hard enough time "as is" working mostly in voice & small data (somewhat managed by selling the masses on tiers so that we feel some financial punishment if we burn too much data). Imagine the combination of existing tiered pricing with all of the data burn of whatever the average Joe's household watches in television each month (one HD movie can exceed the 2GB typical tier).

Give it time. Technology doesn't change overnight. I'm old enough to have used 14.4 dial up. From 2006/2007 til now, things have changed drastically. 3G was first coming out and service was spotty. With LTE 6 years later which is faster than my internet at home I think it's safe to say in a few years the landscape of how we watch TV and how it's delivered to us will change.

I was going to use the same comparison, going from 1200/2400 dialup to cable, and now to mobile LTE. In some countries, they are either going fiber or skipping wired technology to multi-dwelling units completely.
(of course, the incumbents will put up a fight)


The growth is in wireless, and the money is in upgrading the wireless infrastructure today and will probably continue advancing for the forseeable future. As tech advances, bandwidth costs will always be dropping and usage will keep going up ....the tiered pricing will change depending on what the market will bear.

Personally, I can see a future that will move much more to advanced wireless (and fiber, of course), it's harder for me to see a future that will stay with the likes of cable/DSL.

.

 

[charlien]

Where did they get that screenshot? It looks like my ATV running Plexconnect. I tried to find settings to make the native ATV look like that and could not.

 

[bretm]

You know whenever someone pops up and is unhappy about being ripped off, someone else also pops up calls him a socialist, free-loader, and denigrates to some kind of criminal who doesn't deserve anything.
the issue is not just with the channels, but why do subscribers have to watch the same exact commercials as everyone else, what are they paying them 3 digit numbers for then?

The cable companies don't even want to supply local antenna channels. They're required to by law.

 

[LethalWolfe]

The cable companies don't even want to supply local antenna channels. They're required to by law.

Kind of. Local OTA stations can force cable/sat providers to carry their signals but if the local stations do this they cannot be compensated for it. If the local OTA stations do not choose the 'must carry' rule then they are free to negotiate a 'retransmission fee' where the cable/sat companies pay for the right to carry the local stations. Why would the cable/sat companies do this? Because their customers want access to the local stations w/o having to use an antenna (hence the recent tiff between CBS and Time Warner Cable).

 

[DaveN]

After reading this story I checked the offerings on AppleTV and must say that the prices for many of the older offerings are reasonably priced. I'll have to look to see if there is enough there to hold my interest.

 

[malexandria]

Ala Kart is more Expensive

I'm still not sure what people think they'd gain from "ala cart" services. You do realize that basically you'll end up getting nickel and dimmed to death. If you do the math at $60 a month for expanded basic you get of 500 channels - yeah you can whine about nothing being on. But really, with that many channels most people who LIKE Tv can find something.

Say you have 8 or 9 favorite shows, they are on 8 or 9 different channels. How is paying $8 or $10 a month per channel (because there is no way in hell networks would offer individual subscriptions for less than $7 or $8), then that means you are still paying over $80 a month for service and guess what? You'll have LESS choices and you STILL have to get your internet from somewhere. So the only people Ala Cart hurts are the VIEWERS.

I'm thinking about cutting off my cable to spite my face, simply because I'm sick of paying for a service that doesn't work - but even if I did that, I'd still have to pay for my internet through the company that I already hate. So face it, these weasels have us by the short and curlies and until there is real competition, its either have no cable and internet or nothing (at least for me.)

----------

you are exactly the problem why cable companies have done what they have done all these years. You are their dream customer!

here's what i get.....
A & E*
ABC*
ABC Family*
AMC*
Animal Planet*
Azteca*
BBC America*
BET*
Bravo*
Cartoon Network*
CBS*
CNBC*
CNN*
Comedy Central*
CSPAN*
CSPAN 2*
CSPAN 3*
CW*
Discovery*
Disney*
E!*
ESPN*
ESPN 2*
Food Network*
Fox*
Fox Business News*
Fox News Channel*
Fox Sports*
FX*
Galavision*
Golf*
HGTV*
HISTORY*
HLN*
HSN*
Lifetime*
MSNBC*
MTV*
National Geographic*
NBC*
Nickelodeon*
Oxygen*
PAC 12*
Palladia*
PBS*
QVC*
Speed*
Spike TV*
SyFy*
TBS*
Telemundo*
The Weather Channel*
TLC*
TNT*
truTV*
TV Guide Network*
TV Land*
TWC DEPORTES*
TWC SPORTSNET*
Univision*
USA*
Velocity
VH 1*

I don't have an HD box....not a single one. I stream in HD via Roku through the time warner cable app.

The problem is you are willing to go 3 or 4 tier AND add HBO AND add HD box or even multiple boxes. There are TONS of people like you. Why should they change their business practice if everyone is willing to fork out a car payment to have TV in their house?

It always amazes me when I see just 2 people living in a house and they have 5 tv's and each tv has a dvr attached to it.

Who are you to judge? People like what they like? You come across as some condescending snob. You don't like tv, that is fine, then don't get the service or just get basic.

 

[CapnJackGig]

Sony already locked down Viacom and a bunch of other networks. Apple arriving late to the party yet again. Time to fire Tim and get someone better.

 

[hick9]

Ala Kart is cheaper for some people.

malexandria,
What's good for you is not necessarily good for someone else. YES Ala Kart would be cheaper for some..You are assuming everyone watches things on more than channel. 4 of the Top rated shows on TV are all on AMC (Walking Dead, Mad Men, The Killing, Breaking Bad) and some people watch only these shows. Ala Kart would benefit them. An AppleTV will incur a one time payment of $99.00, no contract, plus the cost of each channel you subscribe to. For arguments sake lets say 2 channels AMC/HBO, Netflix and Hulu Plus would equal your $60.00. No DVR needed because the channels act as such. I will use DirecTV as an example only because it is available all over the country and the only option for some. The value package is 54.99/month. HBO 17.99/month, Channels in HD $10.00. DVR fee $10.00, Receiver fee $6.00. Plus you are locked into a 2 year contract. Thats roughly $100.00 (98.98) a $40.00 dollar savings. And if your price did not include equip charges then even more. I know there are different scenarios depending on where you live in the country but for many it is much cheaper to go Ala Kart.

 

[scapegoat81]

in an alternative universe i am enjoying unlimited access to tv shows and movies from the itunes library for sth like 29$ a month

Boom.

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Nice insult when you clearly don't understand people's motivation here. Cable cutters (I am one) don't mind paying, they just don't want to pay upwards of $80-$100 per month for a ton of channels they have no interest in watching. HBO + ESPN + Comedy Central + 5 other random channels are not worth that much. There's also the issue of not wanting to support oligopolies made up of dinosaur companies who have no clue how or desire to innovate, and actually oppose it until they are forced to act (DVRs). The cable companies have effectively halted the process of innovation in the television industry. It's well past time for a serious disruption.

This.

Well put my friend. *Tips hat

 

[Michael CM1]

All TV via Internet based on apps for TV, mobile and tablet, allowing you the same stuff no matter where you are?

THIS WILL BE THE MOST AWESOME THING EVER until Comcast decides to put some cap on my connection because competition.

I have maybe 10 or 15 channels I actually watch out of the 100 or whatever I get. So if Apple figures this out and allows many more package combinations, all the other content providers will really crap their pants. I mean moreso than all the old-school car manufacturers when Tesla starts selling cars in mass quantities that break the safety testing equipment because they're that safe.

 

[hick9]

Bad Comcast!

All TV via Internet based on apps for TV, mobile and tablet, allowing you the same stuff no matter where you are?

THIS WILL BE THE MOST AWESOME THING EVER until Comcast decides to put some cap on my connection because competition.

Thats why people have to push for this change or things will never change. Things like Google Fiber and other internet companies that are not owned by the cable companies will help pave the way. I did work for a cable company 15 years ago and they knew this was coming! They know what tech is in the pipe 10-15 years ahead of the mainstream public.Thats why they got into the Internet business. Comcast has already tried that with Netflix. Counts against your cap when their channels don't.

 

[handsome pete]

Apple make their money on hardware, the main purpose of iTunes and the app store is so the consumer buys iPhones, iPads and Macs.

Yet you don't need an IPhone, IPad, or Mac to purchase and listen to music from Apple.

So Apple still wouldn't want you to give them $300 for a apple box and then give samsung $1000 for a TV when they could charge you $2000 for an all in one TV.

Which is likely to be made out of Samsung parts.


If they go with a TV only option, then they will be missing out on a large percentage of the potential market.

 

[marconiusrex]

LOL - Cable Content

LOL! For instance Apple doesn't need to provide Swamp People, Ice Road Truckers and Amish Gangsters! Such horrid Crap on Cable that I can't believe anyone with half a brain would want to watch! I hope they can elevate the content...a lot! Jus the mere fact that I could get quality shows I want to watch A la carte and not get the rest of the crap would make it a sell for me!

 

[AmusedToDeath]

If you want to disrupt, disrupt the disruptor.

Netflix should be the benchmark here. I am waiting to throw fistfuls of money at anyone who can improve on this model with more compelling/up-to-date content and make it easily accessible within the Apple ecosystem.
Subscription-based content on demand with meaningful personalized recommendations. Do it, and do it right.

 

[MacManTexas56]

I'm still not sure what people think they'd gain from "ala cart" services. You do realize that basically you'll end up getting nickel and dimmed to death. If you do the math at $60 a month for expanded basic you get of 500 channels - yeah you can whine about nothing being on. But really, with that many channels most people who LIKE Tv can find something.

Say you have 8 or 9 favorite shows, they are on 8 or 9 different channels. How is paying $8 or $10 a month per channel (because there is no way in hell networks would offer individual subscriptions for less than $7 or $8), then that means you are still paying over $80 a month for service and guess what? You'll have LESS choices and you STILL have to get your internet from somewhere. So the only people Ala Cart hurts are the VIEWERS.

I'm thinking about cutting off my cable to spite my face, simply because I'm sick of paying for a service that doesn't work - but even if I did that, I'd still have to pay for my internet through the company that I already hate. So face it, these weasels have us by the short and curlies and until there is real competition, its either have no cable and internet or nothing (at least for me.)

----------



Who are you to judge? People like what they like? You come across as some condescending snob. You don't like tv, that is fine, then don't get the service or just get basic.

Then if u like what u like why are u whining about the price? Quit whining and enjoy what u like!!

 

[Harrycooke]

I think he's actually Jesuit now, instead of plain olé Catholic. Quite progressive.

In any case, he is still a nut.

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What if we are missing the focus? What if it's going to be the next 'BluRay'?

If it's rumoured to be 4K or UHD (whatever you want to call it), the only way to be able to access this content would be really expensive physical media, or downloads.

And what if the talks to cable companies aren't about subscription content, but rather having content made in 4K and bandwidth being greatly increased?

It could even be on top of that.

Just my little thought bubble.

 

[macs4nw]

….. Cable cutters (I am one) don't mind paying, they just don't want to pay upwards of $80-$100 per month for a ton of channels they have no interest in watching. HBO + ESPN + Comedy Central + 5 other random channels are not worth that much. There's also the issue of not wanting to support oligopolies made up of dinosaur companies who have no clue how or desire to innovate, and actually oppose it until they are forced to act (DVRs). The cable companies have effectively halted the process of innovation in the television industry. It's well past time for a serious disruption.

Hallelujah!

Once those rumored exclusive contracts between many content creators/owners and the cable/satellite monopolies end, and Apple and others can secure content as well, for internet distribution via their own model, we'll have some serious competition that will benefit consumers, who will ultimately decide with their wallets, which distribution model they prefer. Only then, will there be real competition in the television marketplace, which can only result in lower prices, and more choices for us, the consumer.

It's a sad state of affairs, that despite all these great new market changing technologies, that have come our way, in the last 20-30 or so years, when it comes to watching television, we're still stuck with the same old, outdated and inflexible, status quo.

Can these cable and satellite monopolies finally be broken?…..millions -including me- are holding their collective breaths.

 

[bretm]

LOL! For instance Apple doesn't need to provide Swamp People, Ice Road Truckers and Amish Gangsters! Such horrid Crap on Cable that I can't believe anyone with half a brain would want to watch! I hope they can elevate the content...a lot! Jus the mere fact that I could get quality shows I want to watch A la carte and not get the rest of the crap would make it a sell for me!

Exactly. More intelligent programming ... South Park, Family Guy, fuurama.

----------

Netflix should be the benchmark here. I am waiting to throw fistfuls of money at anyone who can improve on this model with more compelling/up-to-date content and make it easily accessible within the Apple ecosystem.
Subscription-based content on demand with meaningful personalized recommendations. Do it, and do it right.

It's called amazon Prime. Better, cheaper, and free 2-day shipping!

 

[bretm]

The real cable cutters are those happy with the free internet offerings. Just about every network sans Espn has some free offering. The major networks all show their shows. Hulu too. Oh no, have to wait 24hrs for the latest episode! Combine that with better quality HD over antenna and its pretty covered.

But know what's worse? People forking out for a home phone! All these Internet phone companies. They save you maybe 10-15 bucks a month. I've got Magicked Jack Plus. It costs around $30 a YEAR! It works great. Cancel your other phone service and get it. It's like saving yourself $600 a year. We have no problems whatsoever.

 

[LethalWolfe]

LOL! For instance Apple doesn't need to provide Swamp People, Ice Road Truckers and Amish Gangsters! Such horrid Crap on Cable that I can't believe anyone with half a brain would want to watch! I hope they can elevate the content...a lot! Jus the mere fact that I could get quality shows I want to watch A la carte and not get the rest of the crap would make it a sell for me!

Apple already provides us with horrible reality TV shows, lame pop-music and truck loads of fart and flashlight apps. That's not going to change because Apple is about the bottom dollar, just like every other global corporation.

Hallelujah!

Once those rumored exclusive contracts between many content creators/owners and the cable/satellite monopolies end, and Apple and others can secure content as well, for internet distribution via their own model, we'll have some serious competition that will benefit consumers, who will ultimately decide with their wallets, which distribution model they prefer. Only then, will there be real competition in the television marketplace, which can only result in lower prices, and more choices for us, the consumer.

So far Apple has only played the middle man (i.e. they don't fund movies, albums, indie iOS apps, etc.,) so I wouldn't count on them to blaze a trail and do something like drop $100 million to create their own content like Netflix did with House of Cards. Maybe Apple will change it's course but right now Netflix, Hulu, Amazon and even YouTube are more movers and shakers where Apple seems to be fine w/the status quo (they just want a bigger piece of the status quo).

Creating movies and TV shows is an expensive, risky business which is one reason their are so many partners involved to help diversify the costs and the risks. All those partners is part of what makes this such a slow moving process.

 

[fhall1]

Digital TV over rabbit ears plus EyeTV for Mac

Everyone in this country doesn't live 3 miles from their local broadcast station towers.