Apple's TV Plans Fell Apart Over Content Owners' Resistance to Skinny Bundles

[jozero]

We will get to see how a la carte channel selection plays out early next year. Starting March 2016 the Canadian Cable providers have to provide basic cable for $25, and then allow individual selection of channels.

Our Cable providers suck in Canada, so I have no doubt they will somehow scam their way around this. Still it will be interesting to see what happens.

 

[cmwade77]

I don't think he could have. A lot of other media industries were weary of apple after what they did to music

Which is very odd, because Apple saved the music industry from the mass piracy that was beginning to occur and would really be going on now if Apple didn't get their way. Imagine if the music industry said that in order to get two songs, you had to buy the entire album, so instead of paying $2, you had to pay $15 for the entire album. Given today's internet speeds, no one would do that, they would be pirating the music constantly. Instead there is a reasonably priced alternative to buy just the two songs now and while it hasn't eliminated piracy, it has indeed greatly reduced it.

 

[mantan]

Yeah, because I am the ONLY person in the world who's ever complained about that.

I've owned hundreds of albums in the past. I can count on one hand how many of them were good from start to finish. Unless, of course you include greatest hits albums.

The benefit of the new paradigm is that artists and record labels are forced to produce a quality product if they want to sell an album. See how it works when the consumer has the power instead of the seller?

That wasn't the shift in the music industry. The shift is that artists make a lot less from album sales. It's essentially become a vehicle to get enough exposure to support money touring. Whether that's good or bad depends on if you're a consumer or an artist.

 

[cmwade77]

We will get to see how a la carte channel selection plays out early next year. Starting March 2016 the Canadian Cable providers have to provide basic cable for $25, and then allow individual selection of channels.

Now are Cable providers suck in Canada, so I have no doubt they will somehow scam their way around this. Still it will be interesting to see what happens.

I don't even want a basic package like that, I want each individual channel, my line up above should run around the $5-$7/month range, total for all channels listed.

 

[cmwade77]

That wasn't the shift in the music industry. The shift is that artists make a lot less from album sales. It's essentially become a vehicle to get enough exposure to support money touring. Whether that's good or bad depends on if you're a consumer or an artist.

But now Artists have the option of going and selling direct on Apple, Amazon, etc. and eliminating the middle man of the record labels. Yes, Apple still takes a cut, but they also take a cut of sales that go through record labels as well and it is the same cut, so artists can do far better selling direct to the consumer.

 

[mantan]

Lets make this simple:
Completely free streaming for anything that I can get OTA, this could be verified by billing zip code on credit/debit card.

For addition channels, offer me a per channel price and a discount at say 5, 10, 15, 20 & 25 channel bundles, but let me pick each channel in the bundle. Do not bundle totally useless stuff for me with it. While some will want ESPN, I don't, instead I want a very simplistic bundle of:
BBC America
Disney Channel
Travel Channel
History Channel
Food Network
Discovery Channel
HGTV
Animal Planet

And I want full access to all of their shows on demand and if I am paying a monthly fee, I expect them to not have any advertisements.

Just for schits and giggles, what would you consider a fair price for this product?

Being as you don't have the benefit of other networks in those family helping to float your cost (Disney and it's ESPN empire), my guess is it would cost $50-60 for a skinny bundle of those networks. That may be low.

edit: HSD mentioned the commercial aspect of it. I forgot that piece when I calculated cost - so add at least 40% to my estimate. I LOVE how people hate advertising....but don't think they should supplement what advertisers pay for content.)

 

[HobeSoundDarryl]

Lets make this simple:
Completely free streaming for anything that I can get OTA, this could be verified by billing zip code on credit/debit card.

For addition channels, offer me a per channel price and a discount at say 5, 10, 15, 20 & 25 channel bundles, but let me pick each channel in the bundle. Do not bundle totally useless stuff for me with it. While some will want ESPN, I don't, instead I want a very simplistic bundle of:
BBC America
Disney Channel
Travel Channel
History Channel
Food Network
Discovery Channel
HGTV
Animal Planet

And I want full access to all of their shows on demand and if I am paying a monthly fee, I expect them to not have any advertisements.

Now price that dream of yours. What price will you as consumer pay? And what price would you as the other players (not us consumers) want to deliver that dream?

Hint: just getting rid of all of the TV commercial revenues (the surprisingly large subsidy paid for by other people who put many millions into the pot on our behalf to run commercials on those 180 channels we "never watch") would make the monthly bill start at about $54 per U.S. household per month. And that's with you not having a single channel in your lineup yet.

I share everyone's desire for the dream of everything for a fraction of what we pay now. It's a lovely, highly desirable dream that even seems like it might be possible because of Netflix pricing. But then one needs to do the math and objectively think it through. Once one engages in the harsh realities of business math from the perspective of the other players that are not us consumers, the dream collapses.

What you've done above is easy. Now do the same for other players in the chain showing them why THEY want to do what you seek. And identify which of them will want to significantly cut their revenue throats to let Apple cash in as another new middleman AND give us consumers the huge discount we seek. As soon as one of us can show the rest of the chain how they win big by shifting to this "new model", the shift will quickly happen.

 

[mantan]

But now Artists have the option of going and selling direct on Apple, Amazon, etc. and eliminating the middle man of the record labels. Yes, Apple still takes a cut, but they also take a cut of sales that go through record labels as well and it is the same cut, so artists can do far better selling direct to the consumer.

That's an excellent point...

 

[HobeSoundDarryl]

Which is very odd, because Apple saved the music industry from the mass piracy that was beginning to occur and would really be going on now if Apple didn't get their way. Imagine if the music industry said that in order to get two songs, you had to buy the entire album, so instead of paying $2, you had to pay $15 for the entire album. Given today's internet speeds, no one would do that, they would be pirating the music constantly. Instead there is a reasonably priced alternative to buy just the two songs now and while it hasn't eliminated piracy, it has indeed greatly reduced it.

2 problems with the implied "we'll just steal it" mentality. One is that it is fundamentally wrong and the masses won't generally go that way. And 2, a key player in the chain between the video creators and us consumers completely controls the broadband pipe. So if we could all get over the "thou shalt not steal" morals (because the evil Studios & Cable players won't just do whatever Apple wants so they deserve it), the broadband tollmasters could pinch mass video piracy over the Internet right out of existence for those masses. How? An easy move is simply jacking up the price of broadband for "high bandwidth users like video streamers."

Music was different because file sizes were relatively small. A music pirate could steal a song even via a dial-up connection. Video file sizes won't lend themselves to Napster levels of piracy when the broadband masters would feel the direct pain of video piracy en masse.

I get the point you are trying to make but video and music scenarios are very different. Cable did not feel direct pain of music piracy. They would feel direct pain of the masses engaging in video piracy. And they control the pipes the pirates need to do their pirating.

 

[Dmunjal]

This isn't about money in the instant. It's about power. Once the media companies give up the ability to bundle their crap with their gold they know there's no way to put the genie back in the bottle. They don't want things to change, because they know that a la carte will cause their product to correct to its true value, and everyone in the industry will have to tighten their belts. No more pedestrian stars making $12 million for a movie. No more gold plated private jets. No more champagne waterfalls. Red carpet dresses might need to be worn more than once. Egads!

This is funny considering that Apple has higher profit margins and higher revenues than all of the media companies combined.

 

[HobeSoundDarryl]

Apple should approach ESPN directly.
In Canada, Sportsnet and TSN.

While not explicit, it's likely that this is exactly what Apple was trying to do per this article. ESPN would likely be one of their targeted 25 channels given it's mass popularity. But their close, close corporate friend- Disney- doesn't want to sell only their most important channel on it's own. They want to push the rest of their channels as part of getting that most desirable channel. Why? Because there is sooooo much more money in the commercials running on the bundle of channels than they'll get out of us for paying even a steep premium for just ESPN alone.

It's not so much that the Studios want to force a bunch of channels on us to get a tiny slice of subscription dollars on those extra channels; it's that they want all the added revenues that come from the potential of our eyeball counts to maybe see commercials running on that bundle of channels if we happen to tune in at the right time. We collectively seem to forget that television is so much more about the commercials than the programming. The programming is just there to try to lure us into being exposed to the commercials. If we would watch channels that were nothing but commercials, all the channels in cable would be nothing but commercials. But they have to make enticing programming to try to lure us into watching so that our eyeballs can be tallied up in the pitches to the companies that pay for the commercials. That's where sooooo much of the money in the "as is" model lies.

And that's much of the money that does pay the Studios to make the shows that we DO want to watch. We're simultaneously wishing away that commercial-based subsidy (paid by other people for us) AND we want a steep discount of subscription fee too. We also want Apple to get to plug in as another middleman and get their 30%. But we wonder why everyone is dragging their feet toward this wonderful "new model." Hint: we're the biggest problem to getting to some kind of new model.

 

[teknikal90]

While not explicit, it's likely that this is exactly what Apple was trying to do per this article. ESPN would likely be one of their targeted 25 channels given it's mass popularity. But their close, close corporate friend- Disney- doesn't want to sell only their most important channel on it's own. They want to push the rest of their channels as part of getting that most desirable channel. Why? Because there is sooooo much more money in the commercials running on the bundle of channels than they'll get out of us for paying even a steep premium for just ESPN alone.

It's not so much that the Studios want to force a bunch of channels on us to get a tiny slice of subscription dollars on those extra channels; it's that they want all the added revenues that come from the potential of our eyeball counts to maybe see commercials running on that bundle of channels if we happen to tune in at the right time. We collectively seem to forget that television is so much more about the commercials than the programming. The programming is just there to try to lure us into being exposed to the commercials. If we would watch channels that were nothing but commercials, all the channels in cable would be nothing but commercials. But they have to make enticing programming to try to lure us into watching so that our eyeballs can be tallied up in the pitches to the companies that pay for the commercials. That's where sooooo much of the money in the "as is" model lies.

And that's much of the money that does pay the Studios to make the shows that we DO want to watch. We're simultaneously wishing away that commercial-based subsidy (paid by other people for us) AND we want a steep discount of subscription fee too. We also want Apple to get to plug in as another middleman and get their 30%. But we wonder why everyone is dragging their feet toward this wonderful "new model." Hint: we're the biggest problem to getting to some kind of new model.

So you're saying ESPN won't ever get independent because Disney wants us to watch the commercials on HBO?

I don't think so. I think there's something else at play here.

Your comment is fair though - I don't disagree that advertisement is the crucial aspect of commercial TV, and the reason why cord cutting is so hard is probably that.

 

[HobeSoundDarryl]

But now Artists have the option of going and selling direct on Apple, Amazon, etc. and eliminating the middle man of the record labels. Yes, Apple still takes a cut, but they also take a cut of sales that go through record labels as well and it is the same cut, so artists can do far better selling direct to the consumer.

So naturally, as record label contracts have come up for renewals, just about every artist imaginable has jumped all over this much more lucrative opportunity, right? Can you name 5 or 10 of the thousands of artists that have gone this way?

I (also) feel no particular love for record labels but they appear to be doing something to earn their cut from the perspective of the artists. Else, why are almost all artists still with their record labels instead of selling their art direct as you describe above?

 

[lparsons21]

I don't even want a basic package like that, I want each individual channel, my line up above should run around the $5-$7/month range, total for all channels listed.

I'm sure you would like that, I'm just as sure you're not going to get it for anywhere near that price. Why would a company want to sell you a package that was so skinny that it has no or extremely little profit for them? The answer from any company to that request would be a nice 'no sale'!

 

[HobeSoundDarryl]

So you're saying ESPN won't ever get independent because Disney wants us to watch the commercials on HBO?

Well, if Disney also owned HBO (they don't) and if HBO was a commercial-based channel like most cable channels, then YES, that would be what I'm saying. Instead, as the article states, Disney wanted Apple to bundle in the other Disney-owned channels like Disney channel itself (see the list of channels in the original post). All those channels are not like HBO because they do run commercials. Thus, what I wrote is what applies to those channels.

It's the same in the "as is" model now. The Studios like Disney want cable & SATT distributors to take ALL of their channels, not just the most desirable channels... not because they want the fractions of the cable TV subscription revenue we might mentally assign to each channel but because they want the commercial revenues they can make from all of the commercials that run on all of those channels.

Think of it like this. Suppose that ESPN was the ONLY channel in the Disney group that anyone would want. 5 commercials every 15 minutes = 20 commercials per hour and 480 commercial slots per day that Disney can sell. If Disney has no trouble selling all 480 commercials- and that is no problem at all- what else can they do to make more money from the kinds of products (this kind of product) they sell? Enter ESPN2. 480 slots times 2 ESPN channels = 960 channels to sell. No problem. They sell all of them. Then what? Enter ESPN News. No problem, then what? Enter ESPN Classic. No problem, then what?

Same on the kiddie channels. Disney channel sells all of it's commercials with no problem. Then what? Enter another. No problem, etc.

Now, work that into this "new model" we think we want. We want only ESPN. And even there, many of us want ESPN commercial-free. Oh, and we want to pay a fraction of what we pay now so even the subscription revenue from the channel would probably take a hit. Why does Disney have ANY interest at all in that? Even when it's their close corporate friend Apple pitching that very concept?

It's really simple. Step out of our consumer shoes and into Disney's shoes. Why do you make this deal with Apple? How will that help you make more money next year than you made this year? Answer those 2 questions well and we should quickly find our way to this "new model". But therein lies just one of the reality variables that slaughters the dream.

 

[Mactendo]

Bundles are evil. Channels should be sold separately. And available worldwide. We live in 21st century and still have to deal with those stupid limits and barriers. Imagine a TV where you can buy and watch any major channel from any country. A channel could just hire a dozen of translators and add at least subtitles for the most popular languages to its shows.

Game of Thrones for example is popular in a lot of countries but maybe most people watch it from torrents not paying a cent. And even if they get the current version of Apple TV there's no way to watch it there. Same things applies to other shows.

 

[Mr. Buzzcut]

For the love of Pete,

Here's what you do Apple:

Figure out a way to integrate this:

into this: ------->

and also add this:

to this --------------------->


Pour your billions of dollars and engineering to perfecting OTA reception. Slap on the usual Apple interface polish (7.1 WHABC-TV listing = ABC) and....

Voila! The TV industry will collectively **** its pants and will come back to the table and reason for a more acceptable price.

This would terrify them.

Windows Media Center has done this for years and years and MS is finally giving up on it since it isn't how people want to watch TV any more.

 

[HobeSoundDarryl]

I don't even want a basic package like that, I want each individual channel, my line up above should run around the $5-$7/month range, total for all channels listed.

So if your lineup now in the "as is" model costs the approx. $100 that everyone throws around for their current cable bill, that's about 93% off. Apply that to something else. I want 93% off all of my future purchases of products made by Apple. The ridiculousness in that concept for us Apple fans should be viewed as just as ridiculous by those who understand the realities of costs, etc in the media creation and media distribution worlds.

93% off won't work for anyone involved, whether that's 93% off of Apple products or 93% off of our collective cable bills. 93% off of Apple prices would fairly quickly bankrupt Apple. Guess what 93% suddenly sucked out of the media industry cash flows would do to those companies?

It's this kind of thinking that makes me appreciate the apparent lack of televisions or TV-watching by anyone in shows like Star Trek TNG. Instead, the senior officers were apparently ship-board entertainment by putting on plays for the crew-mates. I'm guessing that the world eventually embraces commercial-free, al-a-carte at about 93% off our bills or bust... and the whole new media creation machine went extinct. Then everyone feasted on the Netflix services showing old shows already long-since in the can, until those were all consumed over and over and there was nothing to watch anymore that hadn't been seen. Then, one had to join Star Fleet and climb to the top ranks of the service so they could put on live plays to entertain their fellow crew-mates. Ahhh, the future! Let's hurry there!

 

[acrakes]

No one wants 100 channels, but everyone wants 20-30 plus their own special 6-10 chosen a la carte. The problem is that we all want a different 6-10 extra, but consumer participation in expensive bundles ends up subsidizing everyone's own special 6-10- which adds up to a ton of 'unwanted' channels, channels wanted only by a small number of customers.

It'll only work if Apple can set up a pricing model and ecosystem that results in more customer spending.. like short-term a la carte purchases. Like, a bundle of 20-30 channels for a flat fee, but instead of options for another 'tier' (which cable companies do, which everyone hates), an option for short and long term a la carte. Like, 'Show X is streaming on channel Y at 10 o'clock' gives the options of: paying a premium to subscribe for an hour, paying a lower rate to subscribe to the channel for a day, week, month, six months, year. Like magazine/newspaper pricing.

This would also increase efficiency, and content producing networks could consolidate, shut down, etc.- but the industry's not going to willfully contract itself for anyone else's benefit.

 

[HobeSoundDarryl]

One could say that Apple has already delivered commercial-free, al-a-carte for many years now. The iTunes store is stocked with just about everything (except live speciality stuff like sports) commercial-free and al-a-carte. Since that is pretty much exactly what we seem to want, why hasn't that dominated how we consume television now?

Pricing. We want basically that (plus live sports, etc) at a big discount. But nobody else want to deliver that at a big discount (Apple included). When we can solve THAT problem, we get what we want. Else, we are expecting what should be viewed as a consumer's economic miracle.

 

[Mr. Buzzcut]

How do people think they will cut the cord and only watch Netflix, HBO Now when they have no cords that provide Internet connectivity?

Comcast is only 1 of two providers in our area, and if you call them to even cancel tv service and just go with Internet service the price is the same or more to JUST have Internet service. They make it hard to cut the cord. You can't stream tons of video on your cell phone plan. Most people do not have unlimited data.

Can you provide an example of this? I've never seen it. People seem to be comparing either their short term promo rate for the bundle or a decent >50Mb Internet service to a bundled <5Mb one.

I just looked at Comcast's prices online and they have 75Mb Internet for $75 non-promo. The TV / 75Mb Internet bundle post-promo is $160 per month.

 

[shiseiryu1]

" TV executives will say that they understand that consumers don't want to pay for channels they don't watch, all of them will argue that their channels are must-haves."

They should have wrote instead, "TV executives say that they understand that consumers don't want to pay for channels they don't watch...they just don't care because they are greedy and selfish"

 

[s2mikey]

Right. Apple wanted to allow the user to choose what they wanted rather than offering up 100s of channels worth of content people aren't here for. I'd rather pay per channel. Then I can decide how much product I want.

Correct - the content providers basicaly want everything to stay as it is, meaning their service is an on/off switch and you either buy all of it or none of it. Its a prehistoric way of doing things. They know that but dont want to cave just yet. Ive been antenna/streaming/owned blu-rays for years now. I was one of the first to cut the cord!

The argument is made that if people just choose what they want then several channels will fold up since they arent self-supportive. I say let them die off then, naturally. Thats the way of things. Why do we have to subsidize the Farming network, golf tv, etc, etc? No thanks.

Its the sports that keep a lot of people subscribed. Sports are what cost the most to "get" rights to. ESPN alone eats up a ton of the channel budget. The local sports team networks too like MSG, Mets channel(SNY), Cubs(WGN), etc, etc. all cost money and have die-hard viewers.

 

[DaveN]

I'm doing my part as a cord cutter. I get the OTA channels plus HBO, Netflix, and Amazon Prime.

My prediction is that when Netflix and Amazon Prime start scaring cable and broadcast channels, we'll see some deals. Until then, they will continue the slow bleed.

I'm also a cord cutter. My setup is OTA (for most) plus Netflix and iTunes. I don't miss cable at all.

 

[TsMkLg068426]

Apple should worry about improving ATV3 by adding Apple Music app and no I do not care about Airplay.