Disney, Apple Arguing Over Channels to Be Included in New Streaming Television Service

[tasset]

I agree with many of the previous posters sentiments on ala carte and the Grotesque cable industry with channel packages that are unbreakable.
The only creative thing I can see Apple doing that will work out mathematically in some users favors, like myself, is allowing family sharing with a subscription. Meaning will simultaneous streams be allowed? Netflix has two on the base plan. I have a hard time believing Apple will not allow multiple Apple TVs in the same household. So in that case what is to say I am watching that show in my home and cough a family member cough is watching a stream from their home. Sure I suppose Apple could do some IP-based blocking like major-league baseball, but I doubt it.

 

[LethalWolfe]

My guess is if we ever get 100% ala carte IP based cable you'll end up paying just as much as we are now for cable but with a lot less channels.

Which has always been true in a la carte vs bundle/bulk scenario. Buy more, you get a discount. Buying a whole album on iTunes is cheaper than buying each song individually. Subscribing to a magazine is cheaper than buying them one at a time at cover price. Ordering a value meal at a fast food place is cheaper than ordering each part of the value meal separately.

If you want a lot of something go with a bundle, if you want a little of something go a la carte. At some point those avenues will cross and if you order too much a la carte you will be spending more money for less product than if you had gone the bundle route.

Between Netflix, HBO Now, and FOX Soccer 2Go, I can probably put together a package that is a whole lot better for my needs than anything cable has to offer. But why should I have to go select content from a bunch of separate services? We need someone to bring together the "a la carte" TV content marketplace, and create economies of scale with a unified service that licenses content from various different providers.

Unless I misunderstanding you this is already happening. For example, I can search for a show/movie on my Xbox and it will show me all the services I'm signed up for that offer that show/movie (Netflix, Amazon Streaming, Xbox video, etc.,). I don't need to know which service has Law & Order, I just need to know I want to watch Law & Order.

To answer a broader question, and a big reason why a la carte is trickery than it seems, is that the channels pay to create their own content. For example, HBO pays to create Game of Thrones so people will subscribe to HBO (either via cable/sat or via HBO Now), Netflix pays to create House of Cards so people will subscribe to Netflix and CBS pays to create NCIS: NOLA so people will turn into CBS (at a specific date and time).

The tv/film industry, in terms of business model, is drastically different (I'd say nearly polar opposite) of the music industry. Some people wonder why Apple can't/hasn't done for the tv/film industry what they did for the music industry and the very basic answer is that they can't. It's like trying to shove a round peg into a square hole.

 

[Art Mark]

Ugh...

Please don't make me get ESPN if I only want to get some other Disney channels. Every subscriber subsidizes ESPN. Or we all subsidize all the little channels in-order to get ESPN. For all those free market types, I imagine they to would support the idea of paying for what you want to get. As I understand it ESPN is very costly for cable companies to carry and the carriers are forced to provide all kinds of other channels.

 

[samcraig]

I looked into these the last time someone posted about them, a few weeks ago (may have even been you). I was a little bummed that the guide service is a recurring fee, but it looks like you miss out on some nice features if you don't use it.

I assuming you're using yours with their guide? If not, how's the experience without it?

I do. They give you 30 days free. For 49.99 a year - it's a bummer vs the fact I used to get it for free via a Windows Media computeer - but I like Tablo's interface and the I see it as a small price to pay over time given the fact that I have saved about $1200 a year by cutting the cord.

I love that I can also watch anywhere/everywhere on just about any device. Well worth the fee for that.

I had looked into Simple.TV - but read so many complaints and on top of that, doesn't work connected via WIFI, you have to have a hardline to connect it and my cable modem isn't in the same room as the Tablo.

 

[HobeSoundDarryl]

So basically it sounds like we may end up with what amounts to a cable subscription (paying for a lot of channels you won't watch), but with lower quality (more compression), no local sports, and that also counts against your monthly data cap. Awesome.

Don't forget that if this works well enough to move the masses to cut the cable, the broadband suppliers (who are also the Cable guys for many) will make up for the loss of cableTV subscriptions with higher-priced broadband "for heavier bandwidth users". We will pay more no matter how this can play out.

 

[gugy]

Both already exist.

Apple already has the iTunes store in which people can choose commercial-free shows and has for years now. Problem: we don't want to pay for that; we want it dirt cheap.

DirecTV/Dish/others have services where you can hide all of the "useless" channels you don't want and only display the ones you do want in a "Favs" guide. This way the subsidy dollars made from commercials (including most of that subsidy made from commercials running on channels we never watch or while we sleep) keep contributing to the pot. Problem: we instead have this delusion that an Apple can plug in, offer us just the channels or shows we want for for a fraction of what we pay now. Nobody else- Apple included- is interested in turning that delusion into reality; they all want to make MORE money, not less in any "new model".

I'll guess that neither of those would be what you want and I'll further guess that what you want is closer to the usually-spun dream of "everything I want, commercial-free, for a tiny fraction of what I pay now". Problem: we're not going to get that.

If there's ever some kind of al-a-carte option other than what we have now in iTunes, I fully expect the math to work that we'll get our 10 favorite channels (or shows) for about 30% MORE than we can our 10 favorite channels + 190 channels "we never watch." And then we'll probably be clamoring for some kind of bundling with discounts and subsidies to try to get back to how it "used to be."

You nailed man. I would like to disagreed with you but I would be like you say: delusional.

 

[samcraig]

Don't forget that if this works well enough to move the masses to cut the cable, the broadband suppliers (who are also the Cable guys for many) will make up for the loss of cableTV subscriptions with higher-priced broadband "for heavier bandwidth users". We will pay more no matter how this can play out.

I just don't see an advantage.

Further - I'm disappointed that Apple isn't simply opening up their TV to all of these channels to put their own on the Apple TV. Why a need for a bundle? I don't suspect their bundle will solve any problems nor be of price benefit. Single channels will at least offer flexibility - not necc a price advantage.

However Apple clearly wants to bundle so they can become a cheap reseller. Not having to actually host the streams makes it very economical for them.

 

[HobeSoundDarryl]

As a user above pointed out, my choices are popcorntime or what you said we're not going to get. As has been shown time and time again, you can't litigate away piracy, and you can't legislate away piracy. Spotify has shown that the only option is to appeal to people's better judgement and to their wallets, and to compete with piracy. Yes it also means the content owners have to swallow the bitter pill that the gravy train is over. They can take less money or they can take no money - the choice is simple.

Setting aside the ethical/legal issues with this concept, we can't even pirate our way to much lower prices. That only works for the minority. Hit the cableTV revenues too hard (such as the masses going with this option) and those who make money on cableTV will simply make up for their losses with higher-priced broadband service. So whether you pirate or buy just a little programming from suppliers to "beat the evil cable companies", they are still going to get theirs. Even piracy can't "win" this one when it (too) is completely dependent on a broadband pipe that is most likely fed by those who like their cableTV revenues "as is".

Furthermore, even if we legally suck the gravy out of the model, the quality & breadth & depth of the programming must go down if we expect massive discounts. Can you say cheap reality programming? Can you say YouTube-quality programming? All those people who's names fly by (in the credits) at the end of each episode or movie don't want to take 85% hits to their incomes in order to give us 85% discounts. Similarly, the entrepreneurs who take huge financial gambles on piloting the new shows- some of which could become of future favorites- need enough gravy to motivate those risks. And so on.

Might as well be telling Apple to "swallow the bitter pill that the gravy train is over" while suggesting Apple stuff should be priced at a huge discount... or else, we'll all steal it. That probably has about the same chance of success.

 

[Marlor]

Unless I misunderstanding you this is already happening. For example, I can search for a show/movie on my Xbox and it will show me all the services I'm signed up for that offer that show/movie (Netflix, Amazon Streaming, Xbox video, etc.,). I don't need to know which service has Law & Order, I just need to know I want to watch Law & Order.

That's exactly the functionality I'm talking about - but it's far from unified. One of the services I subscribe to work best from a web browser (football streaming via Fox 2GO), Netflix works best via a STB such as the Apple TV, live news from my native Australia works best via the iPad.

I don't want ten different UIs and billing systems for content. I want a unified service that just brings it all together, sends me one bill, and provides a consistent user interface.

Content should be content. I don't care who produced it.

I don't have to care whether a song was released by Universal, Sony or Warner when I want to buy it. I shouldn't care whether a show was produced by HBO, Netflix or ABC when I want to watch it. There should just be a unified UI, with the ability to pay for one-off streaming, or to subscribe to a content package.

If Apple is trying to replicate the "channel" model, they are pursuing a dead end. Channels were a way of broadcasting content in the days of limited airwaves. They make no sense now with IP delivery. Content is what matters, and it should be delivered seamlessly and on-demand.

 

[newdeal]

...

The problem is that the content providers want to give Apple the same deal as they give the cable companies, and that would force Apple to offer a product just like the cable company offers and at the same price, which would make no real sense.

As far as I am concerned I don't even see why I pay for cable at all? I mean I don't have cable but if I did shouldn't it be supported by ad revenue and not by monthly subscription fees? I mean I watch plenty of channels over the air for free on my antenna that are ad supported, why isn't cable ad supported also?

 

[Gizmotoy]

We're going to end up with "Internet Cable" at the same prices as regular cable, aren't we? That seems to be the way things are going.

About 20% of the programming costs you pay for regular cable go to ESPN alone. That's just the primary channel, ESPN2 adds another 3%. It would be nice to be able to get more targeted offerings so everyone's not wasting their money on a bunch of crap they don't want.

I hope Apple is able to keep the costs down.

 

[HobeSoundDarryl]

Give me access to anything that is older than 3 months ad free and you can have $100 a month from me. If they made "super netflix" i would join in a heartbeat.

Since the national average cable bill is about $74, $100/month could work if everyone else felt the same way.

However, the subsidy revenue generated by the commercials is about $54 per household per month by itself. So if the "ad-free" piece is crucial and we don't want to see cuts to the quality or breadth & depth of programming, the price for 0 channels would start there.

My guess: if we could all unify around a realistic "new model", we could probably get it for about $130/month. If the cableTV industry can't show MORE revenue for their cut out of that, broadband pricing would rise to make up the difference and then some. And Apple would be getting their cut out of that $130.

Ad-free and I suspect the average would need to be about $155 plus more for broadband if CableTV couldn't make more money in their cut out of that. And Apple would get it's cut out of that $155.

Else, we all have to agree on what channels or programming is to be our favorites so that lots of other programming can be killed off. While that's extraordinarily easy to write down, good luck actually making that happen. One person's favorite is sports programming while another love Kardashians and still another watches fishing and so on.

I know those numbers look crazy but any "new model" is usually driven by the players involved being able to make more money, not less. So if we show the players more money and we want Apple to pile on for a cut too and we want to jettison the subsidy, any concept of $10-$30 or $50/month just completely ignores reality. It only kind of works now for some because not that many (relatively) are cord-cutters and are willing to take the sacrifices that come with the streaming hodge-podge solutions currently in play. Let a Comcast feel much pain because too many move that way and broadband for all of these video-streamers will go up.

 

[ChazSch]

$100 a month? Man...I got $120 bill a month without even trying. You guys are underachievers

 

[MikePLP]

We have plenty of "cable consolidators" already. Since I don't watch sports, if it must include ESPN, then I won't buy it - I shouldn't have to pay an extra $10. Sports fans should be able to subscribe to what they want - ESPN or whatnot, and shouldn't be excluded just because I'm not interested. Lets see some competition, not more of the same.

It's not more of the same. I can watch live TV on the iPhone with the Apple service. I can finally watch TV while driving. Actually, I meant listening while driving.

 

[splogue]

I've seen estimates that ESPN by itself costs every subscriber $5 a month. It really grinds my gears that I'm paying that much for something I never use and don't even want, just because of the power Disney wields.

And now they are pushing Apple around over the same issue. Pathetic.

 

[LethalWolfe]

I don't have to care whether a song was released by Universal, Sony or Warner when I want to buy it. I shouldn't care whether a show was produced by HBO, Netflix or ABC when I want to watch it. There should just be a unified UI, with the ability to pay for one-off streaming, or to subscribe to a content package.

If Apple is trying to replicate the "channel" model, they are pursuing a dead end. Channels were a way of broadcasting content in the days of limited airwaves. They make no sense now with IP delivery. Content is what matters, and it should be delivered seamlessly and on-demand.

This goes to what I was saying about the difference between the music industry business model and tv/film industry business model. Basically, the music labels would sign bands, the bands would make an album and the album would go out to retailers (Walmart, Target, Best Buy, Apple, Amazon, etc.,). The album was a product sold to the consumer/end users and the iTMS was basically just another retail store.

TV is a whole different beast (and significantly more expensive and complex beast). TV channels make money by selling eye balls to advertisers. And just because it's streaming doesn't change this. Netflix, Amazon, Hulu, etc., all make original content and they all do so with the specific purpose of getting people to sign up for Netflix, Amazon, and Hulu. Selling new episodes of shows directly to the consumer/end user is a completely new and foreign concept for an industry that's been built on advertising since it's inception in the 1940s.

 

[oneMadRssn]

Setting aside the ethical/legal issues with this concept, we can't even pirate our way to much lower prices. That only works for the minority. Hit the cableTV revenues too hard (such as the masses going with this option) and those who make money on cableTV will simply make up for their losses with higher-priced broadband service. So whether you pirate or buy just a little programming from suppliers to "beat the evil cable companies", they are still going to get theirs. Even piracy can't "win" this one when it (too) is completely dependent on a broadband pipe that is most likely fed by those who like their cableTV revenues "as is".

Furthermore, even if we legally suck the gravy out of the model, the quality & breadth & depth of the programming must go down if we expect massive discounts. Can you say cheap reality programming? Can you say YouTube-quality programming? All those people who's names fly by (in the credits) at the end of each episode or movie don't want to take 85% hits to their incomes in order to give us 85% discounts. Similarly, the entrepreneurs who take huge financial gambles on piloting the new shows- some of which could become of future favorites- need enough gravy to motivate those risks. And so on.

Might as well be telling Apple to "swallow the bitter pill that the gravy train is over" while suggesting Apple stuff should be priced at a huge discount... or else, we'll all steal it. That probably has about the same chance of success.

First, pirating TV shows is not the same as stealing macbooks and ipads.

Second, with the regulatory trends going the way they are and other technical expansions, I am cautiously optimistic that there might be some semblance of competition in the ISP industry within the decade. Maybe not, maybe you're right. I would still consider it a win if cost of internet went up and cost of cabletv went down as a result of piracy - cabletv is an anachronism anyway, good riddance.

I totally don't buy the notion that everyone who works in the industry would have to take a massive paycut for the economics of reasonable pricing to work. Clearly HBO has made a business model of charging $15/month for lots of quality commercial-free entertainment. Clearly Netflix is currently on a hot streak with new original content that rivals some big budget movies in quality all at a very reasonable cost and commercial-free; and they're only getting started.

ABC, CBS, NBC, and FOX need to stop whining or give us our public spectrum back - if they won't use it for a public good, someone else will. That spectrum and the massive audience that comes with it is payment enough in ad revenue; if they charge even a $1/month it's just greedy.

I also hope that this Apple service actually competes with SlingTV, and they actually compete with another service to come later (Amazon?), and so on. Hopefully they we see a price fixing scheme again.

 

[LethalWolfe]

I've seen estimates that ESPN by itself costs every subscriber $5 a month. It really grinds my gears that I'm paying that much for something I never use and don't even want, just because of the power Disney wields.

It's not really the power of Disney, but the power of live sports.

 

[HobeSoundDarryl]

This is the way I think too. The current business model is not helping what we really want. However, I think of Netflix, Amazon and Yahoo Screen. These guys are providing original content (series) for a really low monthly cost. Especially when compared to HBO Now. And above all, these are cheaper than buying the whole season on iTunes. So there is a way... but we have some time to get to it. Not in June though.

I appreciate the "but look at Netflix" and "Netflix original series" implications as much as anyone. But how many original series is Netflix producing? And isn't much of the Netflix library B-movie and long in-the-can TV programming other than these handful of original series? (Plus it's only a matter of time until Netflix has to tier their service as the value of the ever-rising stock can't keep subsidizing the $8 pricing, but that's a whole other story).

Then look at- say- CBS. Relative to Netflix, how many more episodes of original programming do they produce? If original programming is a lot of the value (and I'd argue that it certainly is), shouldn't they logically be priced more? Let's deny them that and expect them to magically keep producing far more original programming than Netflix anyway... and they price themselves at Netflix's $8 too. Sure that makes no sense but let's just pretend it works.

Well how about NBC, ABC, Fox and CW who all produce more original content than Netflix? Let's limit them too. $8 times 4.

Well how about TNT, USA, SyFy, BBC, TBS and other who also produce at least as much original programming as Netflix. $8 times 5.

Well then how about HBO, Showtime, Cinemax, Starz? They all produce more original programming than Netflix too. Even though we've already seen that HBO wants $15 for Now, let's wave our magic wand and price them at $8 too. 4 times $8.

Like national sports?
Like regional sports channels?
Like adult?
Discover-type networks?
Etc.

If the national average is about $74 for the 10 channels we want and the 190 channels we don't want, how many $8/month channels can we "buy" and not exceed $74?

Then, get real. If HBO is going to roll out at $15, expect at least Showtime and Starz to roll at $15. There's $45. CBS has already announced $6 but it's not clear if that includes all first-run programming as it's run on Cable.

It's all (price) modeled now to get an average of about $74 out of us plus about $54 out of the subsidy of the commercials. Any new model will be modeled to improve upon that. Not as we want it (everything for almost nothing) but to actually make the owners of everything MORE money. Else, why change models?

Subbing in an Apple for a Comcast should not automatically deliver huge savings either (that's just one for-profit middleman replacing another) and a Comcast is likely THE source for the broadband pipe through which a "new model" replacement from an Apple must flow. So they get theirs either way too.

I love the dream of it but the business math doesn't work. If the source of the revenues (us) gets a huge discount and Apple gets to pile on and the Comcasts of the world basically have a monopoly on the pipe, who takes the hit to deliver our huge discount. If it's the other end of that chain, how do we expect them to eat all that revenue loss but still deliver everything we all want?

 

[HobeSoundDarryl]

You nailed man. I would like to disagreed with you but I would be like you say: delusional.

I don't like it but one always has to turn the dream into the business reality. For all the innovation potential we can imagine at Apple, they don't own the broadband pipes into our homes and they don't own the Studios that make the content, etc. All the other players want to grow their businesses too. We're the source of all of the money. Somebody in the chain must take the big hit to give us our big discount and none of them want to- nor have to- do so.

Until we change our thinking about the big discount, it just can't happen.

 

[LethalWolfe]

ABC, CBS, NBC, and FOX need to stop whining or give us our public spectrum back - if they won't use it for a public good, someone else will. That spectrum and the massive audience that comes with it is payment enough in ad revenue; if they charge even a $1/month it's just greedy.

There is no charge for OTA TV. If you want cable/sat or IPTV with on demand functionality then you have to pay for it which seams reasonable to me since you are getting increased functionality and convenience. Also, IPTV is very disruptive to the ad revenue TV is built upon so that has to factored in to to cost customers are charged as well. IPTV eliminates the concept of scarcity (which makes ad time less valuable) and there is also currently no agreed upon ratings system for IPTV (like Nielsen for TV) and until there is, an ad-based industry like TV won't stray too far from its roots.

 

[HobeSoundDarryl]

I just don't see an advantage.

Further - I'm disappointed that Apple isn't simply opening up their TV to all of these channels to put their own on the Apple TV. Why a need for a bundle? I don't suspect their bundle will solve any problems nor be of price benefit. Single channels will at least offer flexibility - not necc a price advantage.

However Apple clearly wants to bundle so they can become a cheap reseller. Not having to actually host the streams makes it very economical for them.

I don't think it's Apple. I can easily imagine Apple would like to deliver some variation of al-a-carte (as long as the could get their cut). The content producers and owners like the bundles because more channels means more eyeballs. More eyeballs means more ad revenue. Ad revenue is BIG and it doesn't come out of our pockets (directly).

If I'm a Disney or a Viacom, I want bundle deals too. If I'm a Comcast or a Time Warner, I am obligated by shareholder to maximize profits so I will not roll over and just give my CableTV revenues to an Apple while providing the broadband pipe on which Apple's replacement will entirely depend. If I'm the artists and Studios on the other end, I won't take the huge hit to my revenues unless that's forced upon me... and if it is, I'll kill lots of programming and/or cut the budgets for lots of programming so that my production house can survive the revenue scalp. If I'm the new show entrepreneurs who take huge risks in hopes of getting an occasional pilot picked up and the "gravy" of "huge profit potential" is pinched out of this much more revenue-squeezed model, I take my investments somewhere else.

It all just comes apart if the dream as it's often dreamed would become reality. And even Apple can't do too much about most of that, no matter what they would do (profitably).

 

[dmcdougle73]

The one thing I am curious about is the mention of Fox and ABC. I'm gonna assume this is not going to be local channels by any stretch. It sounds like to get local channels your gonna have to go back to a separate antenna. Logistically it would be almost impossible to do local without going to each local station and hammering out another contract and then setting up and pulling the antenna feed in. I don't think this is something apple is ready to do just yet.

 

[Mercury]

25 Channels huh? OK, let's see...

1. ABC
2. CBS
3. FOX
4. NBC
5. CW
6. Discovery
7. AMC
8. A&E
9. FX
10. TBS
11. TNT
12. USA
13. Spike
14. Animal Planet
15. Food Network
16. Travel Channel
17. Science Channel
18. History Channel
19. TLC
20. FYI
21. National Geographic
22. Nat Geo Wild
23. CNN
24. CNBC
25. SyFy

Yeah, those would work for me.

No Comedy Central, Cartoon Network, or FXX?

 

[HobeSoundDarryl]

As far as I am concerned I don't even see why I pay for cable at all? I mean I don't have cable but if I did shouldn't it be supported by ad revenue and not by monthly subscription fees? I mean I watch plenty of channels over the air for free on my antenna that are ad supported, why isn't cable ad supported also?

Because the majority of us voted with our wallets long ago to pay for cable even with advertising. That battle was lost long ago.

And the big 4 appear to be working hard on monetizing their content over IP such that I'm not that confident over-the-air free* will survive for that much longer. From their perspective, they crank out far more original programming than a Netflix and have far deeper libraries too. If you look at Nielsen ratings, most of the highest rated original programming on television is delivered on those 4-5 channels. In some IP-oriented new model replacement, I expect them to each demand more than Netflix with ads and much more than Netflix without. If you were them, what would you do?

----------

First, pirating TV shows is not the same as stealing macbooks and ipads.

Second, with the regulatory trends going the way they are and other technical expansions, I am cautiously optimistic that there might be some semblance of competition in the ISP industry within the decade. Maybe not, maybe you're right. I would still consider it a win if cost of internet went up and cost of cabletv went down as a result of piracy - cabletv is an anachronism anyway, good riddance.

I totally don't buy the notion that everyone who works in the industry would have to take a massive paycut for the economics of reasonable pricing to work. Clearly HBO has made a business model of charging $15/month for lots of quality commercial-free entertainment. Clearly Netflix is currently on a hot streak with new original content that rivals some big budget movies in quality all at a very reasonable cost and commercial-free; and they're only getting started.

ABC, CBS, NBC, and FOX need to stop whining or give us our public spectrum back - if they won't use it for a public good, someone else will. That spectrum and the massive audience that comes with it is payment enough in ad revenue; if they charge even a $1/month it's just greedy.

I also hope that this Apple service actually competes with SlingTV, and they actually compete with another service to come later (Amazon?), and so on. Hopefully they we see a price fixing scheme again.

It's easy to be an armchair entertainment industry CEO. But get in their shoes and you'd view all of this differently.

And stealing is stealing. Video content is a product like MacBooks. It may not have a physical form but there was a cost to make it by employees working for businesses in the hunt for profitable success (just like Apple). That you can dismiss it as different is missing the point that this dream of "everything I want for a fraction of what I pay now" might as well be wanting all Apple hardware at a fraction of what Apple wants for it. It's just the same. Neither can happen.

Even Apple can't make it happen (profitably) since they have huge dependencies on these other players.

Your piracy can work while you are in a minority. If the masses followed that lead, the broadband gatekeepers will make up for their losses. Even your "free" programming will then come at a toll of higher broadband costs.