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Apple's 'Hard-Nosed' Negotiating Tactics Leading to Trouble in Television Market
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They don't have to. They share board members and have pretty sweet deals between them already.
[doublepost=1469731735][/doublepost]Apple is used to having significant influence. They seem to have a hard time when they aren't really adding anything to the equation for the people they are trying to strong-arm. In this case, Apple needs TV content a hell of a lot more than TV content needs Apple.
Apple's "assertive" negotiation tactics have made it difficult for the company to establish deals with cable providers and networks, reports The Wall Street Journal, stymieing its efforts to build a more robust television platform.
According to The Wall Street Journal, Apple started talking with the Walt Disney Company in early 2015 about getting Disney-owned content onto its then-planned streaming television service, but Apple executives, iTunes chief Eddy Cue in particular, made demands networks were not prepared to meet.
Apple sees TV as a way to push further product growth, but persuasion tactics that have worked in the mobile phone and music industries aren't working in the television industry. Content providers are reluctant to agree to Apple's terms because it would compromise traditional revenue streams. As The Wall Street Journal points out, inking a "sweetheart" deal with Apple could lead to traditional cable distributors demanding similar deals.
Over the last several years, Apple has made several attempts to enter the television market, seeking deals with Time Warner, Comcast, and other providers, but nothing has panned out. In one instance, Apple wanted full on-demand seasons of hit shows and a recording feature that would include ad-skipping in newly aired shows, something cable executives were surprised by.Up until last year, Apple was still in talks for a streaming television service that would bundle several popular live channels and on-demand television at a price point of approximately $30 per month, but Apple reportedly put the project on hold after being unable to establish the necessary deals because content providers were reluctant to unbundle their channels. Cue, who leads most of the deals, is known for his "hard-nosed" negotiating style and refuses to settle for less than what Apple wants.
Instead, Apple has shifted towards positioning its Apple TV set top box and the tvOS App Store as a platform to allow networks to share their own original content. Apple is also following in the footsteps of Netflix and Amazon Video with original programming aimed at promoting services like Apple Music and the App Store.
Three shows are in the works: a dark semi-autobiographical drama starring Dr. Dre called "Vital Signs," a reality series that follows App Store developers called "Planet of the Apps," and a music-based reality show that's a spinoff of "Carpool Karaoke."
Article Link: Apple's 'Hard-Nosed' Negotiating Tactics Leading to Trouble in Television Market
By no means do I like paying my cable bill but the fact that I turn my cable box on and it works each and every time, that makes it easier to pay the bill. I'm being patient and hope the the HomeKit platform continues to grow and that Apple will make it easier to access iTunes on my media centric iMac*. After all, iTunes already controls 99% of my media purchasing and playback. *I want more Airplay control.
And you get access to 99% of the TV channel apps with your Sony Vue login credentials. Amazing deal.
I think there’s something to the app approach. I finally picked up an Apple TV three months ago, and I think I’ve switched back to broadcast TV once since then, to watch some Harryhausen movies on an oldies station. Everything else I watch by app. And I’ve been getting so behind on free movie watching (Classix, Crackle, and others) that I temporarily canceled my Netflix account.
But did your research tell you where almost all of that cash is?
Hint: Apple only has about $17 billion on hand in the US, and has had to borrow something like $60 billion to cover expenses there.
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There's no tragedy here. If Apple can't get a significantly different deal for content than what's come before, there's no chance it will be significantly better either.
Ultimately, we consumers lose nothing if they can't get a deal done but might gain something if they can.
Ultimately, we consumers lose nothing if they can't get a deal done but might gain something if they can.
Did anyone really think Apple was going to just walk in and take over. Hollywood isn't the music industry it's much larger and has more money and isn't having the piracy issues that affected the music industry.
In short Apple has no leverage and so they sent Cue in to the slaughterhouse. I knew Cue wasn't going to get anything done. Hollywood isn't about to to let them have the type of control that Apple exerted over music with iTunes. Not going to happen...EVER.
In short Apple has no leverage and so they sent Cue in to the slaughterhouse. I knew Cue wasn't going to get anything done. Hollywood isn't about to to let them have the type of control that Apple exerted over music with iTunes. Not going to happen...EVER.
Here's my theory on all this recent chatter. It's all business strategy and the WSJ article is trying to paint a bad picture on Apple and their executive team etc... Conveniently coming after Apple's recent quarterly earnings. No doubt some negotiators are brutal and disliked; but they have one job and that is to get the best deal for their company done at the appropriate time and cost. Time is on Apple's side, the Cable companies are losing ground as the older subscribers will no longer be around.
However, hear me out on this. Apple's first iPhone partner was AT&T almost 10 years ago. We all know what that opportunity has done for both Apple and AT&T. Recently AT&T purchased Directv which now is the largest TV provider in the US. This past spring AT&T announced an upcoming streaming package to be called Directv Now. Can only imagine the negotiations behind the scenes on an exclusive full 100% streaming with cable/broadcast channels, SIRI and full on guide with cloud DVR and On Demand. History repeats itself with from iPhone to Apple TV. This is only Phase ONE! (Directv knows a bulk of their satellite subs don't have fast enough internet to immediately drop their satellite subs. Same reason Dish is hedging with Sling TV.) OTT regardless will be the new growing distribution method but it's only how long until dollars shift from one to the other. Cord cutting to OTA or Netflix is only accelerating the issues, and Apple is right Time is on their side.
Phase Two is now Apple has had an established TVos platform/App Store that will evolve over time. The key is providing features individuals will love and INTERACTIVITY between apps that has never been provided. They will see the usage and know how to adapt the TVos platform going forward. Sounds kinda like the past iOS updates and what's been introduced each year huh!?! TV is ripe for innovation just as the flip phone was back in the day!
Phase three is true ala carte shows/sports from the Content provider/Studio Apps as the OTT has gained leverage and more money is flowing into these areas vs legacy cable/satellite distributors. This will take Time. It will happen, but how long it takes the money and leverage to change will dictate this phase. Generational shifts in consuming media will change this, no matter how badly or stubborn those TV executives currently are.
Unfortunately our wired residential internet pipes will all become priced based on usage across the board.(Just like Wireless now)Interestingly AT&T/Directv announced an unlimited data/TV bundle between both services makes you wonder.) Google Fiber will buck this trend and keep competitive services in check in the areas it will be present. The future will surely be interesting but Tim Cook was right this is just the beginning with TVos
However, hear me out on this. Apple's first iPhone partner was AT&T almost 10 years ago. We all know what that opportunity has done for both Apple and AT&T. Recently AT&T purchased Directv which now is the largest TV provider in the US. This past spring AT&T announced an upcoming streaming package to be called Directv Now. Can only imagine the negotiations behind the scenes on an exclusive full 100% streaming with cable/broadcast channels, SIRI and full on guide with cloud DVR and On Demand. History repeats itself with from iPhone to Apple TV. This is only Phase ONE! (Directv knows a bulk of their satellite subs don't have fast enough internet to immediately drop their satellite subs. Same reason Dish is hedging with Sling TV.) OTT regardless will be the new growing distribution method but it's only how long until dollars shift from one to the other. Cord cutting to OTA or Netflix is only accelerating the issues, and Apple is right Time is on their side.
Phase Two is now Apple has had an established TVos platform/App Store that will evolve over time. The key is providing features individuals will love and INTERACTIVITY between apps that has never been provided. They will see the usage and know how to adapt the TVos platform going forward. Sounds kinda like the past iOS updates and what's been introduced each year huh!?! TV is ripe for innovation just as the flip phone was back in the day!
Phase three is true ala carte shows/sports from the Content provider/Studio Apps as the OTT has gained leverage and more money is flowing into these areas vs legacy cable/satellite distributors. This will take Time. It will happen, but how long it takes the money and leverage to change will dictate this phase. Generational shifts in consuming media will change this, no matter how badly or stubborn those TV executives currently are.
Unfortunately our wired residential internet pipes will all become priced based on usage across the board.(Just like Wireless now)Interestingly AT&T/Directv announced an unlimited data/TV bundle between both services makes you wonder.) Google Fiber will buck this trend and keep competitive services in check in the areas it will be present. The future will surely be interesting but Tim Cook was right this is just the beginning with TVos
I'm amazed at how cable and satellite companies bear the sole brunt of consumer anger. The networks and content providers are making huge revenue right now. The cost most of us pay for cable/satellite is directly related to revenue going for content. To that end cable/satellite companies actually try to keep prices down. They know higher prices mean their consumers will look for other options...but each network will push to get as much as they possibly can.
The current model is based on the reliable stream of bundled packages. If there was a true a la carte system, odds are the amount of quality content would be less and the prices wouldn't be much cheaper.
Yeah, we get hit hard for equipment fees. But it's similar to the movie theaters. Theaters don't make revenue on first run movies, that all goes to the studios. Their main revenue source is concessions, so they are going to have a pretty high margin. To that end, I'm OK with it. I've been with DirecTV for 15 years. They've consistently upgraded their technology and customer experience. It's worth the equipment fees I pay.
Apple should crack on. "Hard nosed negotiating" is what was required to drag the record industry into the 21st century, despite the fact they did exactly the same kicking and screaming and whining about risking their mountain of money not growing fast enough in the process (in the end, afaik, it was an enormous boon to them and much to no one's surprise, revitalised the music industry and stopped people feeling the need to pirate everything.
Netflix don't have the negotiating power of a goliath like Apple, which is why content keeps disappearing from it. The TV networks are greedy af and they still keep insisting on stupid regionalisation in a world whose media life has existed on a globalised network for well over a decade now. I've been waiting for the day someone like Apple would fight for a bit of common sense, and they go and back off...
Netflix don't have the negotiating power of a goliath like Apple, which is why content keeps disappearing from it. The TV networks are greedy af and they still keep insisting on stupid regionalisation in a world whose media life has existed on a globalised network for well over a decade now. I've been waiting for the day someone like Apple would fight for a bit of common sense, and they go and back off...
Would you expand on your response with some specifics?
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LOL, It's fine for Apple to be greedy, have an insane profit margin and have a pile of money....but heaven forbid anybody else want to make a profit.
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The problem is there are too many bottom dwellers feeding off the subscription model in the cable industry. Looking at Time Warner's cable lineup as an example, do that many people really watch channels like Freeform, Hallmark Channel, Jewelry TV, FXX, Pivot, Reelz, Cloo, Centric, Youtoo, I could go on but I'm really bored of looking through this list for crappy channels that a small fraction of the population actually cares about. Why should I have to pay for all this other crap?
I wish we could completely untether the idea of "channels" from the content. I dream of a day where TV is just delivered through a few big streaming services that pretty much have all the same content. Whatever good new show rises to the top and they get a fractional cut of playtime money just like streaming music services do. The more views, the more money. I don't see why the two should be any different except that the movie and TV industry is more of a monopoly where you have to put up a lot more money to get the ball rolling vs. making an album, so things move slower and you need investors.
The thing is that I'm finding more and more quality content on places like YouTube that makes me not even miss cable. The production value you can get today is incredible with the latest gear and editing software, and there's a lot of quality talent out there putting out great work. If the big media companies don't recognize that, then they deserve to fail.
Anyway, I'm willing to pay more for a streaming system for movies or TV than for music, as I understand it costs a lot more to put it all together than music does—especially since most shows and movies have a music soundtrack on top of everything else. So yeah, $30-50/mo seems reasonable. Maybe they could have tiered pricing based on how much you consume? 2hr/day for $30/mo, 4hr/day for $40/mo, 6hr/day for $50/mo, or unlimited for $60/mo. Or it could be out of a total number of hours per month, or per how many shows. I don't want to over-complicate it because that could kill it out of the gates, but I really want to have access to the latest stuff sometimes, but we don't watch a ton of TV in general, so I really don't want to pay for all this crap I don't use.
I wish we could completely untether the idea of "channels" from the content. I dream of a day where TV is just delivered through a few big streaming services that pretty much have all the same content. Whatever good new show rises to the top and they get a fractional cut of playtime money just like streaming music services do. The more views, the more money. I don't see why the two should be any different except that the movie and TV industry is more of a monopoly where you have to put up a lot more money to get the ball rolling vs. making an album, so things move slower and you need investors.
The thing is that I'm finding more and more quality content on places like YouTube that makes me not even miss cable. The production value you can get today is incredible with the latest gear and editing software, and there's a lot of quality talent out there putting out great work. If the big media companies don't recognize that, then they deserve to fail.
Anyway, I'm willing to pay more for a streaming system for movies or TV than for music, as I understand it costs a lot more to put it all together than music does—especially since most shows and movies have a music soundtrack on top of everything else. So yeah, $30-50/mo seems reasonable. Maybe they could have tiered pricing based on how much you consume? 2hr/day for $30/mo, 4hr/day for $40/mo, 6hr/day for $50/mo, or unlimited for $60/mo. Or it could be out of a total number of hours per month, or per how many shows. I don't want to over-complicate it because that could kill it out of the gates, but I really want to have access to the latest stuff sometimes, but we don't watch a ton of TV in general, so I really don't want to pay for all this crap I don't use.
Well, not exactly how I meant it but... to be fair, Apple at least produces something (when they can be bothered - as we know, with Macs right now, they can't). TV networks, much like record labels, are the middle man between people who create things and people who buy those things - the only reason they exist is shifting money about. At least you can argue that what Apple does is worth some of the insane money they make.
But I meant more like, if they're going to be big money mountains they might as well do something useful for consumers like they did with iTunes back in the day.
The cost of the 'bottom feeder' channels is negligible. A lot of those channels are bundled for little cost and probably provide more from ad revenue than subscription costs.
But a lot of channels rely on the idea of big subscribers to survive. In some ways it lets a show like Mad Men or Breaking Bad find an audience. Would networks take a chance on those shows naturally 'bubbling to the top' if they didn't have the safety net of subscriber fees.
Amazon and Netflix are showing there are alternative paths to original programming....but those are relying on a subscriber base from other products and neither entity is very profitable.
I think you're right in that most people will pay more for streaming movies/TV. The question becomes how do you find a price that still encourages a quality content (and not just the lowest common denominator) and still is palatable to customers.
Right now we are in this awkward in between stage. Lots of folks are cutting the cord to go with ATV, Vue, Sling, Roku, etc. But a lot of programs they enjoy on those networks are largely being subsidized by the current cable/satellite sub model. Would the prices be the same if they were the primary deliver method, rather than an upstart alternative.
I think everyone is trying to figure out how that move to a streaming model would work.
Those who ignore history are condemned to repeat it. TV cable companies know if they cede control to Apple in any way, shape, or form then they will slide into oblivion. Eddy Cue can be as hard-nosed as he wants but that's not how negotiations work. Perhaps if Eddy went to MBA school...
And what is your monthly Dtv bill? When mine hit $110 for tv only, I cut the cord and use sling on Apple tv with OTA for locals. $40 bucks month.
What I don't understand is what has happened here. Steve told Issacson for his autobiography that he'd figured out television. I just don't get why Cook and co didn't follow Steve's instructions to the T. The television industry would be in a better place right now if Steve's direction were followed five years ago.
Seems to me Apple has blown it by trying to Think Different.
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We call it maximizing shareholder's return, here in the U.S. of A.