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

[ckurt25]

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??

Not exactly sure what you're trying to say here. We were talking about my point that I thought something around $15 was fair for ESPN. For argument's sake we'll call it $20. That is still better than what the other guy was saying - $40-50+ for just ESPN. That was what my comment about paying more for less came from. IMHO, no one would pay for just ESPN for $40+, not when they can get cable, with ESPN for the same price.

 

[HobeSoundDarryl]

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.

Google Fiber is not a broadband pure play. See for yourself: https://fiber.google.com/features/ Scroll down and look at their cableTV-like offerings. An Apple "cableTV Killer" service would be direct competition for Google Fiber too. If the Apple service depended on Google Fiber for delivery and Google didn't enjoy losing it's TV subscription revenues by a competitor who's replacement is entirely dependent on using Google's pipe, what will Google do?

 

[ckurt25]

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.

First, you can get 500 channels (of TV, not Music and PPV) for $60? That would be close to $200 where I live. If that were the case I don't think anyone would complain.

Second, I doubt the shows are going to run $8 to $10 a month per channel. If the majority of channels cost that much no one would use that service. In earlier posts people have supplied articles that say ESPN charges cable networks $5.05 for ESPN. ESPN 2, News and ESPN Classic are under $.50 each, totaling about $6.50 for the ESPN family of networks. It was documented in those articles that ESPN is the most expensive non pay channel. With mark ups and Apple's cut, the number I'd feel comfortable paying for that bundle would be about $15. I'd also get a few more other channels. If I'm picking Discovery or HGTV, I don't expect those to be more than a couple bucks. I'll go back to what I've said a few times, people won't pay more for less. If and when a-la-carte service comes out, it has to be priced better than what people pay for cable or no one will use it. Apple didn't get rich off itunes by charging people more for music than they would have paid at Best Buy for a CD. They gave them a chance to pick and choose the songs they wanted and at a fair price to the consumer. If Apple / Google or whoever can't provide this service at a savings to the consumer, the service will fail.

 

[HobeSoundDarryl]

Not exactly sure what you're trying to say here. We were talking about my point that I thought something around $15 was fair for ESPN. For argument's sake we'll call it $20. That is still better than what the other guy was saying - $40-50+ for just ESPN. That was what my comment about paying more for less came from. IMHO, no one would pay for just ESPN for $40+, not when they can get cable, with ESPN for the same price.

I'm that "other guy" and again, you are probably right about not many wanting to pay $40+ for al-a-carte ESPN if they can get it cable "as is" with ESPN for about the same price. My point was- and continues to be- that that's exactly what they want the masses to think... that the "as is" model is the better value vs. this "al-a-carte" model.

The only stakeholder in that chain that wants al-a-carte is us consumers, and then it's only a segment of us that think that somehow we can go from paying $100/month (or $40/month in your case) to $5 or $10 per month and still keep everything we like to watch coming to us, and still motivate the system to keep cranking out new shows that we'll want to watch in the future, and that somehow the broadband provider who is also our cable provider will just roll over and let Apple take those cable revenues without raising broadband rates to make up the difference, etc. And some of that segment wants it commercial-free too, ignoring the $50/month subsidy equivalent that commercials (mostly running on channels "I" never watch) chip into the existing system.

The Studios and distributors like the system "as is." Apple would like to inject itself into the system and scrape 30% off the top, which requires the other 2 to take a big hit or for costs passed through to us customers to go UP. And still, some of us imagine we're going to get everything for nearly nothing because Apple rolls out a new TV or television. Were we the same people who believed an Apple iPhone was going to deliver unlimited everything cell service for $5 or $10 per month?

I get why we love the dream. But for it to come true, the other players in that chain have to see why they should love the dream. How do the Studios, broadband pipe tollmasters and Apple all make more money if we consumers end up paying a lot less? Show them the money in al-a-carte and they might get interested.

 

[BaldiMac]

and that somehow the broadband provider who is also our cable provider...

That's the big assumption you keep making in your theory. I think that a lot of us have more choice for broadband internet than you are acknowledging. Cable companies won't be able to jack up broadband rates arbitrarily without putting themselves at a competitive disadvantage to other providers who aren't tied to TV revenues.

And that's exactly where the savings would come from in an a la carte model. The 50%+ margins of cable companies.

 

[HobeSoundDarryl]

Second, I doubt the shows are going to run $8 to $10 a month per channel. If the majority of channels cost that much no one would use that service. In earlier posts people have supplied articles that say ESPN charges cable networks $5.05 for ESPN. ESPN 2, News and ESPN Classic are under $.50 each, totaling about $6.50 for the ESPN family of networks. It was documented in those articles that ESPN is the most expensive non pay channel. With mark ups and Apple's cut, the number I'd feel comfortable paying for that bundle would be about $15.

Again, you're only seeing the math to support your end goal. Let's work with that $6.50 per subscriber number. How they get that "cost" down to $6.50 is by working from a total revenue standpoint. Let's say a cable company has 20 million viewers of the tier that includes ESPN. 20 million times $6.50 = $130 million dollars on that system. So the revenue gain or loss by switching to an al-a-carte system needs to offer more than $130 million in that market or else, why make the change?

Let's keep the gain small but interesting enough to maybe motivate Disney to take a big risk on making a change like this. $150 million/$15 per month from the al-a-carte takers = 9.333 million subscribers or 46% would need to keep just ESPN at your $15/month number to yield only a $20 million gain for risking the switch to al-a-carte.

Disney would also be worried about all of the eyeball counts lost because now this new "al-a-carte" model wouldn't be able to force a bunch of channels "I" never watch in with the ESPN agreement. So their commercial revenues would feel the pain too unless we all paid up to buy all those other Disney channels that typically come within the same tier as ESPN. So that needs to be made up as well if Disney is to be motivated to switch. How much is that? That also needs to either be added on top of the monthly price of a very desirable offer like ESPN or a higher percentage of the public will need to pay your $15/month to wash out the losses of their value as eyeballs that helps ad salespeople sell ads for channels those eyeballs might never watch.

I completely get your view that "no one would pay more than about $15" for al-a-carte ESPN. You're ignoring the total-revenue-and-then-some that Disney would need to see to even consider selling ESPN al-a-carte, particularly how the math actually works, which is not "each subscriber pays $6.50 for ESPN" but that ESPN is priced down to $6.50 per subscribers because- in the above example- 20 million subscribers are mandated to pay $6.50 each for it, whether they watch ESPN or not. Disney does not think in terms of getting $6.50 out of each subscriber. They think in terms of getting $130 million each month out of being in this <cable company market> tier. To change, an al-a-carte model needs to show them how the change is going to help them make more than $130 million from that same pool of subscribers. The math can't automatically assume that 46% or up to all of those subscribers will opt for ESPN at $15/month (and at 46% or less, there's no gain in making such a risky change to a well-established, working model "as is").

----------

That's the big assumption you keep making in your theory. I think that a lot of us have more choice for broadband internet than you are acknowledging. Cable companies won't be able to jack up broadband rates arbitrarily without putting themselves at a competitive disadvantage to other providers who aren't tied to TV revenues.

Who are these "lot of us" people? Almost everywhere I look in the U.S., one is lucky if they have a choice of 2 wired broadband competitors (I exclude wireless because bandwidth tiers on wireless is fundamentally incompatible with switching to an al-a-carte television service that would burn through tier caps in as little as one HD movie). For every person that could post that they have 3 viable competitors, I bet 10+ could post that they have 2 or less. Many will have 1 real choice for broadband.

And, of those that have 2+ broadband provider options, how many of those providers are NOT in the TV Cable business too? For example, I live in a fairly rich area and we have 2 viable choices of broadband: Comcast and AT&T. Both are in the cable television business too. Both would feel the pain if an Apple could take that business from them. It seems reasonable that both would work in lockstep to price broadband higher- or implement ever-tigether tiers- to make up the difference. Look at cell service pricing as an example. We generally have more than 2 choices for iPhone cell service almost anywhere in America but are the plans throughly competing on price so that we consumers feel like we "win"? Haven't just about all of them adopted tiers & throttling to manage "higher bandwidth users"? Streaming HD video will be the highest bandwidth usage of anything- especially at the equivalent of what is consumed in a monthly cable TV service equivalent.

You believe what you wish but I personally have no doubt that if Apple- or anyone else- ever significantly starts eating into cable TV revenues with some "replacement" that depends on the cable company's broadband pipes, that broadband will just go up in price to make up the difference. Why not? Where are most people going to go if they have 1 "choice"? And much like AT&T vs. Verizon vs. Sprint have about the same pricing for cell service, I find it hard to believe that a Comcast vs. AT&T or similar would yield any real broadband price competition if an Apple was biting into both of their cable TV revenues.

 

[ckurt25]

I'm that "other guy" and again, you are probably right about not many wanting to pay $40+ for al-a-carte ESPN if they can get it cable "as is" with ESPN for about the same price. My point was- and continues to be- that that's exactly what they want the masses to think... that the "as is" model is the better value vs. this "al-a-carte" model.

The only stakeholder in that chain that wants al-a-carte is us consumers, and then it's only a segment of us that think that somehow we can go from paying $100/month (or $40/month in your case) to $5 or $10 per month and still keep everything we like to watch coming to us, and still motivate the system to keep cranking out new shows that we'll want to watch in the future, and that somehow the broadband provider who is also our cable provider will just roll over and let Apple take those cable revenues without raising broadband rates to make up the difference, etc. And some of that segment wants it commercial-free too, ignoring the $50/month subsidy equivalent that commercials (mostly running on channels "I" never watch) chip into the existing system.

The Studios and distributors like the system "as is." Apple would like to inject itself into the system and scrape 30% off the top, which requires the other 2 to take a big hit or for costs passed through to us customers to go UP. And still, some of us imagine we're going to get everything for nearly nothing because Apple rolls out a new TV or television. Were we the same people who believed an Apple iPhone was going to deliver unlimited everything cell service for $5 or $10 per month?

I get why we love the dream. But for it to come true, the other players in that chain have to see why they should love the dream. How do the Studios, broadband pipe tollmasters and Apple all make more money if we consumers end up paying a lot less? Show them the money in al-a-carte and they might get interested.

I was saying $40 is the basic cost that includes ESPN. I pay around $80 because I have HBO and some channels that are only offered in the 3rd tier package. I honestly don't think the bill at the end of the day for a-la-carte is going to be $5 to $10. For the Espn(s), Big Ten Network, Discovery, HBO, HGTV and a couple of others, if I can get my bill to be like $50-60 for that I would definitely consider switching. It'll also depend on how much the hardware costs to run it too. If consumers can buy a $99 Apple TV you'll see more adopting it. If they need to buy something over $300 you'll see less adoption (or something close to those numbers - just my gut feeling). Now if an integrated service along with a physical television and not the current apple tv box is an option (not a requirement) and it's priced right, that will help too.

I think it'd be a dream for people to think they'll cut their bill to a small fraction of the what it is today. I also think if and when this comes out that the first iteration may not be the one that Apple and others stick with. It won't be some drastic shift overnight either. It will take time. Even today, not everyone uses a smart phone and I think my first one was purchased in 2004. This service may not be right for everyone (thinking families with diverse tastes in content who watch many different channels) but for many people, this may make sense, but only if it's priced right. I don't think Apple would be putting forth this much effort if they didn't think they could deliver something consumers would buy.

 

[BaldiMac]

Who are these "lot of us" people. Almost everywhere I look in the U.S., one is lucky if they have a choice of 2 wired broadband competitors (I exclude wireless because bandwidth tiers on wireless is fundamentally incompatible with switching to an al-a-carte television service that would burn through tier caps in as little as one HD movie). For every person that could post that they have 3 viable competitors, I bet 10+ could post that they have 2 or less. Many will have 1 real choice for broadband.

And, of those that have 2+ broadband provider options, how many of those providers are NOT in the TV Cable business too? For example, I live in a fairly rich area and we have 2 viable choices of broadband: Comcast and AT&T. Both are in the cable television business too. Both would feel the pain if an Apple could take that business from them. It seems reasonable that both would work in lockstep to price broadband higher- or implement ever-tigether tiers- to make up the difference. Look at cell service pricing as an example. We generally have more than 2 choices for iPhone cell service almost anywhere in America but are the plans throughly competing on price so that we consumers feel like we "win"? Haven't just about all of them adopted tiers & throttling to manage "higher bandwidth users"? Streaming HD video will be the highest bandwidth usage of anything- especially at the equivalent of what is consumed in a monthly cable TV service equivalent.

You believe what you wish but I personally have no doubt that if Apple- or anyone else- ever significantly starts eating into cable TV revenues with some "replacement" that depends on the cable company's broadband pipes, that broadband will just go up in price to make up the difference. Why not? Where are most people going to go if they have 1 "choice"? And much like AT&T vs. Verizon vs. Sprint have about the same pricing for cell service, I find it hard to believe that a Comcast vs. AT&T or similar would yield any real broadband price competition if an Apple was biting into both of their cable TV revenues.

More awfully convenient assumptions. Particularly the assumption that nothing is going to change! Wireless caps aren't forever. Increased prices for cable companies mean more opportunities for investment by competitors. A la carte and internet delivery mean more revenue opportunities from advertising.

Don't get me wrong, it's definitely more complicated than most a la carte fans make it out to be. But it's hardly a zero-sum game for consumer pricing.

 

[HobeSoundDarryl]

As has been shared many times before in many threads like this...

Apple already provides an al-a-carte, commercial-free cable TV alternative

The iTunes store has long carried Apple's own shot at giving the people what they want in terms of on-demand & commercial-free television. The problem: few want to pay the price that the market wants for television in that way.

Instead, we want to dream about getting access to all of that for a fraction of what we pay now and think Apple is going to get all of the other stakeholders to just take the hit so that Apple can get theirs and we can spend a lot less than we do now. We love the dream (me too) but it's such a mess when it tries to go from dream to reality.

 

[BaldiMac]

As has been shared many times before in many threads like this...

Apple already providers an al-a-carte, commercial-free cable TV alternative

The iTunes store has long carried Apple's own shot at giving the people what they want in terms of on-demand & commercial-free television. The problem: few want to pay the price that the market wants for television in that way.

Instead, we want to dream about getting access to all of that for a fraction of what we pay now and think Apple is going to get all of the other stakeholders to just take the hit so that Apple can get theirs and we can spend a lot less than we do now. We love the dream (me too) but it's such a mess when it tries to go from dream to reality.

With the enormous exception of live sports. I'd be willing to pay using the iTunes model for cable shows if I wasn't already paying for the shows in order to get ESPN.

 

[HobeSoundDarryl]

Wireless caps aren't forever.

Why aren't they? A few "competitors" owning most of the spectrum are going to be motivated to deliver more value for less cost to us consumers why exactly?

And why do you think entrenched cable/broadband players are going to allow any competitors to pop up in their markets? When does that actually happen in reality? Personally, I'm only seeing broadband rates rise where I am. And no competitors have popped up here in this heavily concentrated market that seems ideal for such new competition. Why not?

Baldimac, why don't you start a broadband business in my area and sell us all broadband for less than what Comcast or AT&T wants for it? Or why don't you start a wireless provider and sell us iPhone service without caps for less than AT&T, Verizon, Sprint, etc?

That said, I agree that caps are probably not forever... but not because of direct competition (that ship has long since sailed). I think caps go when there's some technological breakthrough that would allow the masses to bypass the current middlemen. If a Comcast, AT&T, Verizon, etc are allowed to be the Internet toll masters, they have little incentive to drop those tolls. In fact, we have literal toll roads where I live that have long been completed but the tolls spun to build them didn't end at completion, nor have they been reduced since now those roads are more maintenance rather than actually building them. Those who collect the tolls have zero incentive to cut them even though we consumers that need to use those roads would benefit greatly by paying less out of our pockets.

I see broadband as just a digital toll road. A few have themselves in control of the toll booths and they crush or absorb any competitors that try to build a new road. Even a few cities that have tried to implement "free wifi" at taxpayer expense have been smacked down by the few companies that like their tolls to keep on flowing "as is".

 

[BaldiMac]

Why aren't they? A few "competitors" owning most of the spectrum are going to be motivated to deliver more value for less cost to us consumers why exactly?

In order to take money from the wired providers.

And why do you think entrenched cable/broadband players are going to allow any competitors to pop up in their markets? When does that actually happen in reality? Personally, I'm only seeing broadband rates rise where I am. And no competitors have popped up here in this heavily concentrated market that seems ideal for such new competition. Why not?

Because they won't have a choice.

Baldimac, why don't you start a broadband business in my area and sell us all broadband for less than what Comcast or AT&T wants for it? Or why don't you start a wireless provider and sell us iPhone service without caps for less than AT&T, Verizon, Sprint, etc?

What a ridiculous argument.

That said, I agree that caps are probably not forever... but not because of direct competition (that ship has long since sailed). I think caps go when there's some technological breakthrough that would allow the masses to bypass the current middlemen.

There you go.

 

[ckurt25]

Again, you're only seeing the math to support your end goal. Let's work with that $6.50 per subscriber number. How they get that "cost" down to $6.50 is by working from a total revenue standpoint. Let's say a cable company has 20 million viewers of the tier that includes ESPN. 20 million times $6.50 = $130 million dollars on that system. So the revenue gain or loss by switching to an al-a-carte system needs to offer more than $130 million in that market or else, why make the change?

We don't know how many consumers will switch to a-la-carte. I think it would be small at first, like smart phone adoption. There have been plenty of posts here from people that have already cut cable that would be interested in ESPN for $X. Let's call it $15. If 10% switch to a-la-carte and only 1/2 of those pick up ESPN for $15, ESPN has just about broken even after Apple's cut. Add in those that would be interested in ESPN that had cut cable previously and now ESPN is making more money than they did before.

For channels like HBO this makes sense too as they're a stand alone station. I think it's safe to assume that nearly every person that has HBO and switches will pick it up. They can also add viewers that don't have cable right now so they could make more by offering this service.

I suppose there is also ways they are thinking of to increase advertising revenue with delivering content this way. If I'm using my smart tv / apple tv and an ad comes up for Pizza Hut I suppose I'll be able to tap a couple of buttons to place an order because a pizza sounds great right now. ESPN will be able to charge Pizza Hut more money to advertise because they're offering them an opportunity to increase sales.

In no way I'm saying service will be $X. I'm suggesting that if it's more than consumers pay right now they won't have an incentive to switch service.

 

[HobeSoundDarryl]

We don't know how many consumers will switch to a-la-carte. I think it would be small at first, like smart phone adoption. There have been plenty of posts here from people that have already cut cable that would be interested in ESPN for $X. Let's call it $15. If 10% switch to a-la-carte and only 1/2 of those pick up ESPN for $15, ESPN has just about broken even after Apple's cut.

I'm not following your math here. 20 million times 5% (that take ESPN at $15) = 1 million at $15 = $15 million. How is $15 million = $130 million so that Disney would "break even" on al-a-carte ESPN in that 20-million person market?

In no way I'm saying service will be $X. I'm suggesting that if it's more than consumers pay right now they won't have an incentive to switch service.

And I'm saying unless consumers pay more, why do they want to change? If we consumers pay less, others in the chain will have to make less money than they do now (not just so that we consumers spend less but to also give Apple it's big cut too). Why do they want to make that change to make less money?

I'm with you in wanting to pay less than I do now. I get lost in why the sellers & handlers want to make a change so that I can pay less at their expense.

 

[RobNYC]

makes sense to circumvent the cable providers and offer individual channels/shows as apps. People are pretty cheap (look at all the cable cutters who always pop up in these threads wanting something for nothing), so remains to be seen how well that'll work.

It's more like people know they're paying way too much for what they have. Most people don't watch half the channels they get but are forced to get the higher packages if they want specific channels. I think most people would agree we really do overpay for cable and internet.

 

[BaldiMac]

I'm not following your math here. 20 million times 5% (that take ESPN at $15) = 1 million at $15 = $15 million. How is $15 million = $130 million so that Disney would "break even" on al-a-carte ESPN in that 20-million person market?

Because you are ignoring all of those people that stayed with cable.

And I'm saying unless consumers pay more, why do they want to change? If we consumers pay less, others in the chain will have to make less money than they do now (not just so that we consumers spend less but to also give Apple it's big cut too). Why do they want to make that change to make less money?

Again, because parts of the chain won't have a choice. I'd bet ESPN isn't exactly happy to be negotiating with slow-moving regional monopolies with 50%+ margins.

 

[gregs826]

Who wants channels

I'm hearing so much talk of channels, but that's not what most of us want. We want shows. We should be able to subscribe to a Show, just like we can a Podcast. Or buy a particular episode. iTunes has it right, but I feel it's too expensive. Currently a season is $30-$40, for one show, which is too much. If you break it down for cable (avg $40 a month for a bunch of channels) -- a season of a show is a few dollars. Maybe more popular shows could cost more, who knows. But the picture at the top of this article says it best... a Favorites screen on your TV with all the shows you watch with an Unwatched count. I'd also like the same flexibility for live sporting events. We should also be able to buy a game and watch just that. For example I want to watch the Giants/Eagles on Sunday - so I pay $4.99 or something.

 

[LethalWolfe]

I'll go back to what I've said a few times, people won't pay more for less. If and when a-la-carte service comes out, it has to be priced better than what people pay for cable or no one will use it.

The nature of a la carte is paying more for less if buying a comparable amount of goods/services. Look at situations where a bundle is offered and the bundle is cheaper than buying the same items individual. Purchasing individually is only cheaper if you don't want all the items offered in the bundle. For example, if you only buy one or two songs of an album from iTunes it's cheaper than buying the album, but if you want all the songs the album price is cheaper than buying all the songs individually.

For channels that go a la carte the prices will certainly rise above what the cable company pays for them as those channels will be taking on more financial risk and responsibility by de-valuing (or possibly even eliminating) their partnerships with cable/sat companies.

Apple didn't get rich off itunes by charging people more for music than they would have paid at Best Buy for a CD. They gave them a chance to pick and choose the songs they wanted and at a fair price to the consumer. If Apple / Google or whoever can't provide this service at a savings to the consumer, the service will fail.

Apple didn't get rich off iTunes. The iTMS was conceived as a break even service designed to drive iPod (and later iPhone and iPad) sales. Music, movie and app sales do generate a lot of revenue but it is a small sliver compared to Apple's overall revenue. There also isn't a lot of, if any, cost savings as many digital albums on the iTMS are the same price as at Best Buy. Services like the iTMS give consumers convenience and convenience costs more.

Again, because parts of the chain won't have a choice. I'd bet ESPN isn't exactly happy to be negotiating with slow-moving regional monopolies with 50%+ margins.

I bet ESPN is happy though to have business partners that help alleviate ESPN's financial risk and share advertising costs. Going direct to consumer will put more financial risk and responsibility on ESPN's shoulders and that's as good a reason as any to take it slow like everyone else. Right now ESPN, HBO (owed by TW by the way), etc., have a good thing going and I think will be reluctant to rock the boat until they see a better thing just around the corner.

The $8/mo price points for Netflix and Hulu plus should also be taken in the context thats these companies are by and large distributors of other peoples' content. Yes, that's slowly changing but if Netflix and Hulu had to foot the production and marketing costs of all/the majority of the content they offer (like ESPN or HBO for example) the monthly fee would be north of $8/mo.

Another thing to keep in mind is that many times the channels themselves are sold to cable/sat companies as bundles. That was a big sticking point last year between DTV and Viacom where DTV (irony of ironies) was mad because it wanted to be able to get Viacoms channels a la carte, not just as a bundle.

 

[ckurt25]

I'm not following your math here. 20 million times 5% (that take ESPN at $15) = 1 million at $15 = $15 million. How is $15 million = $130 million so that Disney would "break even" on al-a-carte ESPN in that 20-million person market?

The other current cable subscribers aren't going anywhere. They'll still subscribe to cable at first (stay with dumb phones).

----------

The nature of a la carte is paying more for less if buying a comparable amount of goods/services. Look at situations where a bundle is offered and the bundle is cheaper than buying the same items individual. Purchasing individually is only cheaper if you don't want all the items offered in the bundle. For example, if you only buy one or two songs of an album from iTunes it's cheaper than buying the album, but if you want all the songs the album price is cheaper than buying all the songs individually.

For channels that go a la carte the prices will certainly rise above what the cable company pays for them as those channels will be taking on more financial risk and responsibility by de-valuing (or possibly even eliminating) their partnerships with cable/sat companies.

So from going from $6.50 to $15 isn't rising? Maybe $15 is enough for ESPN, maybe it's $20, maybe it's in between or maybe it's more... All I know is if it does become a case of less for more (as a total against current cable bills), no one will switch. My pkg, that is the U-Verse 300 is roughly $80 (with HD and HBO). 99% of my viewing is done on about 6 channels. If I can get those 6 channels for $50 or less it's a no brainer. If it's $60 it's a toss up. If it's more then I'd probably stay with cable.

 

[Darrin Bell]

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

In my experience, their "$90/month" price routinely cost me about $130/month. DirecTV is better at about half that (without premium channels, $80 or so with HBO). But it's possible to go a la carte using Netflix, Hulu, Boxee or Roku, and an OTA antenna for about $16/month; if you're willing to sacrifice 24 hour news channels and HBO.

 

[alent1234]

In my experience, their "$90/month" price routinely cost me about $130/month. DirecTV is better at about half that (without premium channels, $80 or so with HBO). But it's possible to go a la carte using Netflix, Hulu, Boxee or Roku, and an OTA antenna for about $16/month; if you're willing to sacrifice 24 hour news channels and HBO.

does that $80 include internet as well?

 

[derbladerunner]

Cos there's no profit made from a $99 hockey puck and you still have a fugly TV UI overlay and a remote with 50 buttons that most of which you have no idea what'll do.

It'll be a flat panel that'll look like most other flat panels out there, but the UI will be slick, you'll be able to search across the all sources, there'll be a real API that developers will actually want to write to. Most importantly there won't be the switch to input 2, 3 or 4 for AppleTV and wait for it to wake up.

Name one TV hardware company making money on TV sets - only Samsung is barely in the black, all others are losing billions every year.

This is not the iPhone and the iPad market all over again. I was convinced with both products from day one - these products offered real advantages and unique user experiences not found in phones or tablets at the time.

I don't see this for a TV set. Today's set are excellent in terms of picture quality.

Regarding the user experience. You won't need the TV remote any longer. Apple will for sure include an universal remote in an upgraded Apple TV box. Once the TV is set to the correct input (Apple TV), the Apple remote can turn on /off the TV and adjust the volume.

TV hardware is a really bad business to be in, I see no advantage in Apple producing its own TV screen.


PS: The profit in the "hockey puck" (Apple TV) lies in content sales and interactive ads. I can see Apple using iAds for personalized ads.

 

[Darrin Bell]

does that $80 include internet as well?

No, but even with the cost of Internet, and even after my introductory discounts expired, DirecTV's turned out to be cheaper than TWC was; and it has a better channel lineup and a much better DVR.

Downside is it's a 2-year contract. And I'm still paying for a lot of channels I don't ever watch. If I could wean myself off HBO, I could drop pay TV altogether and Hulu, Netflix, Crackle, etc. would be more than enough.

 

[Michael CM1]

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.

Comcast has some Netflix-wannabe service called Streampix. For $5 I can get that, or for $8 I can get actual Netflix.

The thing that worries me is if Apple does come out with this awesome service, I have only a few choices for service where I live. I had Windstream, and the speed was slow (6 Mbps for $45/month) and for some reason one device downloading something would clog up the pipe for everything else. Then they screwed me over by half-canceling my account and I paid $150 for service I didn't use after I said "CANCEL MY ACCOUNT." So I'm never going back. I got Comcast because it's faster. I don't know of any cap, but if Comcast were to put one on, where would I go? Dish Network's service via satellite has about a 15 GB per month cap, which means it's useless for me.

When Apple put out the iPhone, people used the crap out of it and "unlimited" cellphone data got limited in a hurry. Why would such a revolution in TV options be any different?

 

[MacManTexas56]

Not exactly sure what you're trying to say here. We were talking about my point that I thought something around $15 was fair for ESPN. For argument's sake we'll call it $20. That is still better than what the other guy was saying - $40-50+ for just ESPN. That was what my comment about paying more for less came from. IMHO, no one would pay for just ESPN for $40+, not when they can get cable, with ESPN for the same price.

If standard cable with a bunch of channels and includes espn and it's only $40...why would someone pay $20 for ONE channel. What if they want 10 more channels that they watch and they are $5/each?

you're going to end up paying $30 more/month than standard cable and only have 11 channels. Keep in mind the greed of these companies. Channels aren't going to be 99cents/month.

You are thinking in your head this is going to be some cheap option. The consumer will have a choice, but will be penalized in some way. Also, if everyone is dropping cable tv and their provider also provides their internet connect....what do you think is going to happen?

Internet prices will rise heavily and data caps will appear.

The whole idea in theory sounds great, but until consumers change their habits we will still have high prices. We show them that we are willing to pay the expensive cable plans so why should they change? If they do change, it won't be for them losing any money.

Go look at the AT&T Next program. People will be dumb enough to sign up for that.