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Apple To Reinvent Apple TV...For The Rest Of Us

Posted by: Peter Burrows on November 02

It seems Apple is rethinking its TV strategy, in a way that might—if the company can pull it off—give consumers the option to pay Apple less than half as much as they currently pay their cable or satellite provider for a monthy TV subscription.

According to All Things Digital’s Peter Kafka, Apple has been trying to convince programmerrs to make their shows available as part of a subscription, available via iTunes. The monthly price would be around $30, he reports.

We’ve heard these rumors before—but that doesn’t mean they’re not true. And the approach makes sense. It would give consumers more of what they really want—a lower bill, anywhere access, without having to buy another gizmo.

It also fixes some problems with Apple’s current TV plans. It’s clear, by Steve Jobs’ own admission, that the company’s Apple TV device is mostly for hobbyists. The products tepid sales may be less a reflection of the product’s quality, than of the simple fact that most humans conceive of TV as a service—something that is simply delivered into their homes, not something they have to buy, set-up and repair. It’s no surprise that Apple tried this approach first; it’s the ultimate “product company,” filled with employees (and a CEO) that like coming to work to great some neat new object of desire. But unlike other forms of media (music fans, for instance, have long purchased their music in the form of a product such as a vinyl album, CD or digital download), TV viewers have always paid that monthly cable or satellite bill (or received terrestrial broadcast TV service for free).

The new subscription approach also fits with what’s happening in the world. Technologically, it fits with the rapid rise of digital streaming, in which a consumer views a piece of content that resides out on the Internet, as opposed to having to store a copy of that content on the hard drive in their PC, iPod or iPhone. So long as the content can be delivered in this manner glitch-free, streamed content fits better with how many people want to get their digital video: on whatever screen is most convenient. While the Apple TV might appeal to people that are fixated on watching Web-fare on their big screen TV, more people I know are far more interested in getting TV content, and any other kind of content, onto their laptop, PC or smartphone.

No company is as well positioned to satisfy this demand than Apple. Many carriers have plans to make their content available in more numerous, and interesting ways. Microsoft continues to push its “Three Screens and a Cloud” vision. But only Apple has iTunes. Hundreds of millions of people have tthis program installed on their PCs, Macs, iPods and iPhones, and more than 75 million have an ongoing billing relationship with the online store by the same name. Rather than any one product, it seems to me Apple’s greatest imperative should be maintaining iTunes’ role in these consumers’ lives. The Apple TV may never be a hit. But consumers that decide to get their TV via iTunes rather than their current provider will be much more likely to buy new Apple products down the road. Certainly, many would consider a device for watching TV that is more portable than a MacBook, but larger than an iPhone. A tablet device, for example.

All of this remains conjecture, and assumes that Apple iTunes chief Eddy Cue can land the necessary content deals. It won’t be easy, since these partners will be loath to cross their current distributors. But don’t count Cue out. I wrote about him in the magazine recently, and my sources all say he’s an immensely talented negotiator, that has pulled off many deals that looked impossible.

Such was the case when Apple first got studios to sell downloads via iTunes in 2005. After Jobs won over Disney, Cue wooed many of the others, says one former Apple manager. “Once a deal is worked out with a leader in a particular deal—in this case Disney—Eddy’s great at convincing the others that they better get on the bandwagon.” He does it with charm, rather than threats, says the source. “He’s a schmoozer in the grand style—in a good way. Most of the people he deals with think of him as a close personal friend.”

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Reader Comments

pk de cville

November 2, 2009 07:54 PM

"and more than 75 million have an ongoing billing relationship with the online store by the same name."

Apple has announced that the count is now 100mm.

Mark Sigal

November 2, 2009 09:53 PM

If the goal was to pick off the dollars that customers currently allocated towards pay-channels; namely, HBO, Showtime, Starz, etc. it might work if for no other reason than when Tablet comes out you could have a TV anywhere offering to view same content on iPhone, Tablet, Desktop and Apple TV for one price.

I do agree with others, though, that it sets up somewhat of an ALL-or-NONE as to whether same price includes Movies/TV and Music.

Some fodder on this one in my post:

Apple, TV and the Smart, Connected Living Room
http://bit.ly/k4rOf

Check it out, if interested.

Mark

Mark Sigal

November 2, 2009 09:56 PM

If the goal was to pick off the dollars that customers currently allocated towards pay-channels; namely, HBO, Showtime, Starz, etc. it might work if for no other reason than when Tablet comes out you could have a TV anywhere offering to view same content on iPhone, Tablet, Desktop and Apple TV for one price.

I do agree with others, though, that it sets up somewhat of an ALL-or-NONE as to whether same price includes Movies/TV and Music.

Some fodder on this one in my post:

Apple, TV and the Smart, Connected Living Room
http://bit.ly/k4rOf

Check it out, if interested.

Mark

annonymous_man

November 3, 2009 12:03 AM

Yes this is the type of service I've wanted all along so I could ditch my digital cable TV provider -- we get so many channels we don't even watch all of them why waste you money paying for channels you don't even watch (none of the channels I have are premium channels you have to order on top of your TV service) they just bundle so many channels with digital cable half you don't even watch why pay so much for them?

Only thing is I would miss my HD DVR from the cable company I have and the interactive on screen program guide with scheduling features if I ditched for an iTunes subscription TV service but could save money. I hope users who sign up for this will be able to choose an iTunes TV subscription that is Standard Def only or HD that would include the SD copies also for a video iPod as an added bonus.

rosetaylor12

November 3, 2009 12:59 AM

Hello
I think Apple TV is good for all fan of Apple products.I also like Apple's products.They are really very efficient.Thank you very much for sharing this with us.

vitamin c

No Cable Free TV

November 3, 2009 04:18 AM

I'm happy very happy, this is the end of the cable era. I dont have cable and I still rely on ( LoggTV.com ) for good movies and music. Sorry, I wont pay for TV or Downloads. FTA Satellite is a good option too.

Jelly

November 3, 2009 04:24 AM

I'm happy very happy, this is the end of the cable era. I dont have cable and I still rely on ( LoggTV.com ) for good movies and music. Sorry, I wont pay for TV or Downloads. FTA Satellite is a good option too.

Brian

November 3, 2009 10:38 AM

I think this could work, especially if they sold actual TVs with the Apple TV built in. I am waiting to buy one. I want to sync it all with my iPod touch. I will need a 64GB model though... by this time next year... (Another reason they will end up doing it.)

SteveP

November 3, 2009 11:16 AM

The trouble is that many of the USA residents get their internet via their CABLE provider. These companies have already seen the coming threat and have started to institute bandwidth caps under the auspices of "quality of service". The real threat is here, if you can avoid paying them for the programming on their channels, they can't survive on their internet income, so they will fight this. Interesting how bandwidth you consume while watching their own streaming content doesn't ding you, but anyone else's does. What good is $30 unlimited usage if you are limited by how much you can stream before paying exorbitant overages? The cell industry and cable industry both need drastic overhauls in their revenue and service models.

Bob Forsberg

November 3, 2009 11:27 AM

Content is currently available from free, legal sources in low quality format that appears acceptable on small portable screens.

1080i or 1080p is required for this distribution to work. Netflix offers 720p TV show streaming today for $8/mo, including movies on DVD. If Apple gets the distribution rights for network shows in their bag of goods for $30/mo, you can bet Netflix will also.

Streaming today is mainstream from multiple sources, quality streaming has yet to arrive.

max

November 3, 2009 11:55 AM

An unbelievably good idea. I'd do it in a heartbeat. I'm so sick of paying through the nose for basic cable when all I'm interested in is the premium packages - HBO, Sundance, IFC a few others like AMC (Mad Men), and various channels that give me English Premier League and Champions League games. Arsenal ftw, by the way...

macmanchgo

November 3, 2009 12:37 PM

YES!! Put the cable company monopolies out of business finally!! Next: put the cellphone monopolies out of business!! Two industries that need to be regulated by a consumer protection agency that is non-existent.

Steve

November 3, 2009 02:19 PM

I think the subscription service would be doomed to failure unless the package contained content from 100+ channels. Just getting content from the major networks would not be enough.

As for the AppleTV hardware, sales are tepid because the hardware is weak. It can barely handle 720p/24. I know many people that are interested in the device but won't touch it until it fully supports 1080p.

RokJohnson

November 3, 2009 03:22 PM

The content producers may be lining up to get this done now that Comcast and NBC Universal may be teaming up. It's not exactly a marriage made in heaven for content producers in that one of their biggest competitors owns that access pipe into millions of homes and is then in a position of leverage against them. By opening up their distribution channels they can counter any leverage the Comcast may gain in the deal. Net Neutrality would insure that Comcast couldn't penalize their content over NBC Universal content.

I think that Apple may be able to pull this off. They finally realize that we don't want to own TV shows unlike our music.

neflobserver

November 3, 2009 05:33 PM

Cable continues to move desirable content to "premium" paackages, so just a bunch of crap is left and you still have to pay a high price. If Apple, or anyone can figure out a way to have "a-la-carte" channels, all the crap would dry up an blow away. Only then will you see truly desirable content at a fair delivery price. I hope Apple, or anyone else, blows away Crapcast any all other cable companies just like it.

Lionel Felix

November 3, 2009 07:41 PM

Netflix and Tivo and others are also completely ready to deliver media on demand and in fact already do. In fact Scientific Atlanta has the ability to do so in their antique hardware. The method to deliver and charge isnt the barrier at all. Apple TV would be only yet-another-delivery-method. And it's good that there will be many but the category killer is the one place for all media.

The holy grail which is the box / app that gives you PPV & Free OD for the entire back catalogue of all TV, movies and archival footage everywhere. The barrier is not technology, it's licensing and the Gordian knot of who gets paid for what type of performance. The fractions of cents that go to each extra, AD, script supervisor for each download and viewing is what kills this. That and people fighting about how much they want to charge for each property and its delivery method. It's herding a exabyte of cats.

The tech piece is simple. Regional / global datacenters that are paid for by the media owners as the primary holding facility for their on-line property. Each provider, netflix, blockbuster, apple, Hulu and the rest all resell that content just like reselling long distance minutes. They pay to access it, they pay for each sale / download / performance and they manage how they market and monetize that resold product.

But back to the real problem because spinning disk and content delivery networks are really simple things to set up and manage. The solution to the licensing nightmare is flat licensing and that is where Apple might again have it together already because of their methods in place for iTunes. All of the complexities with who gets paid what for what that exists in DVD sales, broadcast, etc all need to be leveled and tiered. Some make more some make less but everyone gets their money from a new, robust channel that sells everything ever made, 24 hours a day, all around the world. yes, they need to break down international barriers.

This also, as a side benefit, solves piracy. In one fell swoop piracy will be reduced by half if not 75%. Piracy is not about people not wanting to pay, it's mostly about access. The game of hide-and-seek the networks play on their "come to our site and watch this weeks episode" is pointless. people want to be able to see any of that show, and the others and dont mind commercials or even paying for it. They just want access. People dont seem to get that.

If Apple / netflix / whoever offers the big buffet in the sky of everything with a reasonable pay-per-view model, no one is going to bother to sit through another bad Russian Telesync or worse, a cam. For those who continue to pirate after that, they wouldnbt pay for it to begin with so it's not a lost customer, the fact is you eat some losses, its the nature of the digital beast. But while the few scavenge bad pre-3d Wolverine test prints, make a fortune on everyone else clamoring to pay for the content Holywood is sitting on and not making money from.

siphandone

November 3, 2009 07:45 PM

Apple won't get my $$$ for Apple TV... It is junk...

Charles Romer

November 4, 2009 12:19 AM

@siphandone

you clearly have never owned an AppleTV, it's actually quite powerful, endless free content, for about $150 for the older models, $200 for the newer ones.

just pair it with your regular tv remote, and enjoy.

FastOnlineGuy

November 4, 2009 02:33 AM

Good to see another mind trying to solve the love/hate relationship we have with content. I loved the initial strategy of Hulu. Missed a show, you get go back and get many of the old shows later (with revenue ads). While the revenue was not as strong as live TV ads due to cost per eyeball in the delivery, it was as close as I could get to having content available when I wanted it.

I own an Apple TV and find it delivers even my cable TV shows via a TIVO-->MP4 automated process. My TIVO is never full and the Apple TV delivers all of the content from the computer where it is backed up.

About ready to dump Cable for iTunes/Netflix/Hulu/Digital TV over the air. Then Hulu stops showing all of the old shows. Netflix to my Tivo works well. Movies I can get that way or Blockbuster to TIVO as well as iTunes. Shortly even run Hulu Desktop on Apple TV.

If Apple does not head in the direction of a monthly fee, I think Netflix will make major inroads. Also Hulu has shown it is very interested in delivering content. If they or Apple offered a premium service $10-$30/month where I could get current and past shows, I would dump cable.

On the subject of 1080p vs 720p, this may be a younger generation issue. Research has consistently found that sound and plot are the major factors in the movie experience. Therefore DVD quality is fine except for a few movies and sports. Watching Monk/NCIS or Friends (not my shows but merely sample) I won't even notice the difference. We had Cable HD and I find the response time and lack of content cause me to spend most of my viewing/recording on the standard channels.

Owning shows/movies is less about owning and more about being able to watch them when you want. Hulu or iTunes done right would allow the need to minimize. Want to watch that special movie or show and it is not available on the cable, SOL. Own it and you have the control to watch it when and how you want. Deliver that service and most will sign on and stay. Hulu had that potential, but they are showing signs of their studio lineage. They now have them expire.

In closing, come on Apple get Netflix and Hulu either worried or collaborate with them to break the lock the wild boys of cable have on the industry. Don't make me have to think about a monthly fee for each viewing device like the current content providers. Change the visual content lock like you changed the wireless lock.

If it can be done, I think Apple has the best chance if they are not viewed as too powerful already by the content studios.

Aaron Uribe

November 4, 2009 11:17 PM

Sports- how do you account for live sports? The killer app for many.

Lori

November 5, 2009 04:28 PM

typo: "it’s the ultimate “product company,” filled with employees (and a CEO) that like coming to work to great some neat new object of desire." I believe "great" should read "create."

iSlate

November 7, 2009 11:26 AM

Finally, some competition for the cable companies. The Apple iSlate is going to help change this Oligopoly that the cable companies have had for decades. islate.org

iSlate

November 11, 2009 08:50 AM

Apple TV would be great on the iSlate. islate.org

r4i card

November 14, 2009 12:52 AM

I would miss my HD DVR from the cable company I have and the interactive on screen program guide with scheduling features if I ditched for an iTunes subscription TV service but could save money. I hope users who sign up for this will be able to choose an iTunes TV subscription that is Standard Def only or HD that would include the SD copies also for a video iPod as an added bonus.

r4i card

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A blog on the daily doings of Apple and the many companies in its orbit, with insight and analysis by two longtime Apple-watchers BusinessWeek Senior Writer Peter Burrows and BusinessWeek.com Senior Technology Writer Arik Hesseldahl.

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