Apple restarts talks with content owners for over-the-top, web-based TV service

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  • Reply 61 of 78

    Of course, if cable prices were lower, then everyone could or would have cable and...that would provide enough income to the providers.

     

    There must be something we are missing in that equation. Maybe it is not cost-effective for everyone to have cable. The maintenance problem and outages and dealing with that and dealing with customers would probably be huge. Anyone in the industry or similar industry know why?

     

    And it wouldn't have to be a monopoly issue if everyone had service. Something could be worked out between industry and government the the franchise thing as they do now.

  • Reply 62 of 78
    pfisher wrote: »
    Of course, if cable prices were lower, then everyone could or would have cable and...that would provide enough income to the providers.

    There must be something we are missing in that equation. Maybe it is not cost-effective for everyone to have cable. The maintenance problem and outages and dealing with that and dealing with customers would probably be huge. Anyone in the industry or similar industry know why?

    And it wouldn't have to be a monopoly issue if everyone had service. Something could be worked out between industry and government the the franchise thing as they do now.

    Personally, I'm OK with not paying a cable bill and limiting my TV viewing to over-the-air content. I end up watching less.
  • Reply 63 of 78
    fallenjtfallenjt Posts: 4,054member
    rogifan wrote: »
    So instead of one cable bill I'll have a bunch of separate bills for all the different content providers? No thanks. How about Apple just updated the hardware and UI that is incredibly out of date? It sure sounds like a grand solution isn't happening anytime soon.
    Instead of making you pay separate bills, Apple TV can bundle all subscribed channels into 1 bill under an App called Subscribed TV where all of your channels are in one place.
  • Reply 64 of 78
    MarvinMarvin Posts: 15,326moderator
    kent909 wrote: »
    Why doesn't Apple just buy Netflix and Hulu. That gets them immediate access to the content, unless there are exit clauses in the contracts with the content providers if sold.

    Hulu doesn't seem to be valued at much, the following suggests $2b, it's a private company:

    http://fortune.com/2013/07/12/hulu-is-no-longer-for-sale/

    Netflix on the other hand is valued at $27b:

    http://www.google.com/finance?cid=672501

    Even with over $100b in the bank, paying $27b for a video streaming service would be too much, especially considering the profit they make:

    http://ir.netflix.com/sec.cfm

    Last year it was $5.5b revenue and $267m net income with 57m subscribers - it would take 100 years of those earnings to pay off $27b (it would grow of course but they already have more subscribers than huge TV networks). They are managing to grow net income much faster than the subscriber base is growing so it looks like it will continue to be profitable but if Apple bought Hulu for $2b with 6m subscribers, they could replicate much of Netflix's success (assuming the owners want to sell). Taking it international should be able to drive it above 10m subscribers and they could lower the price too.

    Apple just needs to offer a good conduit and subscribers will come on board. Talking with the content providers directly is a good way to go because they aren't having to fund or cater to middlemen.

    Net neutrality laws will enable Apple to use the existing networks without being subjected to anti-competitive throttling.

    If Apple can provide a setup that can be monetized enough to give the content providers a return and easy enough for consumers to access, it will come together. A big problem with streaming services is old content being removed. Netflix is always removing huge batches of content when the license runs out. The conduit shouldn't be setup like that. It's better if the content is just put up for viewing and Apple can guarantee a minimum fee from the subscriber revenue plus payments based on how popular the content is.

    The average US consumption is about 5 hours of TV per day. Say it's about 6 TV shows per day without adverts and filler content and maybe 2 movies per week. On iTunes, this would be 6x$1.99x7 + 2x$3.99 = ~$92/week so about $360 per month.

    The iTunes prices are the prices the content providers want to charge so how do you provide $360/m of content to everyone for a subscription of $5/m? For the cable networks, it's far easier because they can charge $60-100 per month. When you think of what an internet connection is, it's just a cable. You are renting someone plugging your computer into a socket. Once the infrastructure is paid for, you are charging people for support and maintenance. They provide a lot of filler content and ad content on top but you still won't get premium movies on cable.

    The vast majority of streamed content on 3rd party services is old content because it costs more:

    http://www.techradar.com/news/video/don-t-hold-your-breath-for-newer-netflix-content-1054518

    It almost needs something like the App Store where they just let people put content up to monetize themselves and the iTunes movie store is like this but the App Store has gone free-to-play and monetization comes from the app providers using persistent ads or in-app purchases.

    If Apple had their own network, this would be far easier. $50b to build the network, get 30m subscribers and charge $50/m = $18b per year revenue. The cost is paid off in under 3 years. The service would stream to any device and people would just submit content. Live feeds would be tricky to curate but one slip and they're gone so most should comply with the rules.

    If they just offer a subscription for content, it's not going to make enough to get good content unless that subscription price is high.

    - people watch a lot of content
    - content providers want a lot of money for the content
    - subscribers don't want to pay a lot on top of the utility bill

    The utility bill will always be the decider on what extra gets paid for.

    It might be enough to just use a subscription as a means of letting people access iTunes movie content more affordably. So if you pay $10/m, you'd get unlimited access to start watching any content but you'd only be allowed to fully watch say $30 worth of content per month, which would be like 3 movies and 7 TV episodes per month, more if the content is older. That would at least let them assess demand and pricing. I'd subscribe to that just for the movies because they have recent movies. I'd rather it was instant-on and automatically picks up where you left off on different devices. Netflix does this via the cloud syncing, Apple can use their Continuity branding.
  • Reply 65 of 78
    fallenjtfallenjt Posts: 4,054member

    There's 3 things Apple need to do to make stream TV appealing:

    1. Price: competitive as Sling TV

    2. Flexible package or bundles: like 5 channels for $15/mo or 10 channels for $25, user selectable. 

    3. Channel organization: all subscribed channels should automatically organized under 1 folder/App such as "Subscribed TV", so users can just click on one app icon and all subscribed channels are there, no need to go around to look for those channels in the main window.

    If Apple can do that, it'll be a hit.

     

    My prediction is that Apple will merge the TV service with current Movie streaming service into one place. Will see.

  • Reply 66 of 78

    I most definitely DO NOT want channels on Apple TV. Doing so only makes it another cable box.  I will not pay for channels.  I will pay for programming. Apple TV needs to let us buy any single episode/show on the "air".

     

    I'm doing that already (as are millions of others) through iTunes.  All Apple TV needs is a TV interface that adopts a more iTunes-like appearance.

     

    Channels are the wrong way to go.  Does anyone really care what channel something airs on?  I'd say no.  What we care about is watching the shows we like.  I don't have any idea what channel most shows air on and I have no interest in caring.  I want to see it, I buy or rent it.  How is that difficult?

  • Reply 67 of 78
    pfisherpfisher Posts: 758member
    Personally, I'm OK with not paying a cable bill and limiting my TV viewing to over-the-air content. I end up watching less.
    Agreed. Many of us like that. In our case we only have Apple TV and nothing else except the web on other devices.
  • Reply 68 of 78
    MarvinMarvin Posts: 15,326moderator
    yensid98 wrote: »
    I most definitely DO NOT want channels on Apple TV. Doing so only makes it another cable box.  I will not pay for channels.  I will pay for programming. Apple TV needs to let us buy any single episode/show on the "air".

    I'm doing that already (as are millions of others) through iTunes.  All Apple TV needs is a TV interface that adopts a more iTunes-like appearance.

    Channels are the wrong way to go.  Does anyone really care what channel something airs on?  I'd say no.  What we care about is watching the shows we like.  I don't have any idea what channel most shows air on and I have no interest in caring.  I want to see it, I buy or rent it.  How is that difficult?

    It might not be all that bad, it wouldn't have to be like a channel where you watch shows in a programmed order. Imagine it like an iOS folder where you click on it and it opens each show and each show opens the episode list. You'd subscribe to say HBO and get all the shows under than brand. You can then subscribe to as many channels and they'd each set their own monthly pricing but you only get a single bill through iTunes for all of them. That would be better than Apple trying to set a flat subscription to cover everyone. Average prices might be $2.50 per channel per month. HBO made $1.1b last year so they'd need 36m subscribers on iOS to match it at $2.50/m and they'd have other revenue sources. It can add up to more than cable for the same package but at least it's on-demand and you don't need to be watching ads.

    There's some interesting details in Comcast's SEC filings:

    http://www.cmcsa.com/sec.cfm?DocType=Annual&Year=

    They own a significant portion of Hulu so I doubt they'd relinquish that to Apple to compete with them. They spent $19b on programming and production in 2013 and almost as much on their operation and made $65b in revenue. After all costs were taken off, they ended up with $6.8b net income.

    $36b was from video subscribers, split between about 35m subscribers. That's $86 each per month. If you deduct business revenue, home revenue seems to be around $50b so an average bill would be $120/month for internet, phone and the TV package.

    Apple has to compete with that $36b per year to pay for the content Comcast can get. Until they can get that, providers won't break their exclusive contracts. That stranglehold is hard to break because the reason the cable networks can charge so much for the connection is the exclusive content and the reason they get the exclusivity is because they have the subscribers paying them so much.

    They might not have to compete with the cable companies though. If they don't plan to be a cable company then it doesn't matter so much. They could agree with the cable providers to share the costs of the programming and production to get access to the content. Cable subscribers have to use the same internet connection anyway. Apple could put up $5-10b to lower Comcast's (maybe others') production costs and recoup it with a smaller subscription fee. While it could drive people to an alternative cable provider, Comcast is saving money anyway. They could afford to lose about 1/5 of their subscribers to a different broadband provider.

    The scenario that consumers want seems to be a separation between the connection and the content. Rather than paying for the bundle of exclusive content with a service, they want just the network service and get the content opened up to multiple providers on multiple platforms. Ideally just paying the content providers directly because the networks effectively act as gatekeepers just now.

    Owning the network is the ultimate point of control. If Comcast ever saw that people were leaving their broadband services and just paying another provider for a la carte content, they'd cut any content agreements and increase broadband costs for people not getting content from them too. Then it just goes back again and they'd tie up the content exclusivity. They're very reluctant to let people get access to content on other platforms unless they are also with their network service.

    This reluctance to open up content affects their growth potential worldwide - mainly the growth of the content providers. HBO could have 100 million subscribers worldwide at $2.50 per month and increase their revenue about 3x. It's risky though because when you stand on your own, you stand on your own merit. That doesn't happen on cable bundles. People will watch shows that aren't very good just because they have them. Going direct-to-consumer could leave some productions so unprofitable they go under. The channel route would help counter that somewhat.

    To break the cable network exclusivity, Apple would pretty much have to pay each channel up-front for going it alone on their platform and then get people to subscribe to the channels, which could run on ?TV and iOS. People could start out with individual channels and then gradually cut back their cable packages or just leave them the same if it's more convenient that way. The cable providers are clearly worried about losing their USP. If they don't have exclusive content and there are loads of network providers and their prices are high, they'll lose customers.

    The annoying thing is that this setup exists. It's like SMS being controlled by the networks and how people got excited about more texts, image attachments and lower costs and for years people have been using email or WhatsApp, which are out of their control. P2P services allow you to get any movie, any TV show at any time, anywhere in the world. The flaws include that it's not instant-on, not guaranteed quality and not everything is available but it exists and it's what they need to offer for a monthly fee. People would pay just to be able to get archives. You could get every Simpsons, Seinfeld, whatever episode going back years. There has to be a way to do global distribution of TV separate from the localized broadband networks - if the networks produce their own content then any impact to them will be less because they can scale their content up too.

    The monthly subscribed channel seems like the best route. It allows poorer shows to get an audience so they don't get cancelled before getting enough interest but allows people to curate their preferred channels with their preferred shows. It allows content providers to go global without relying on local network providers and scale up their revenue. It should really be free to watch for a period of time to stop there being a barrier to entry. The networks have their monopoly because of the infrastructure but they're probably thinking further down the line when wireless carriers become fast enough and properly unlimited that the wired service doesn't matter. People will pay a wireless carrier for all devices and content separately. This will be why Netflix and Amazon are making exclusive content rather than just being a provider because it's what sets them apart.
  • Reply 69 of 78
    I nominate Marvin to write new articles for AI!

    Seriously, you have some great points and very well stated. You deserve a column of your own!
  • Reply 70 of 78
    palomine wrote: »
    I nominate Marvin to write new articles for AI!

    Seriously, you have some great points and very well stated. You deserve a column of your own!

    That's actually a solid suggestion. Instead of responding to others with your typically very detailed replies Marvin have you thought of authoring some stories? I'm certain you could easily publish one or two (if not more) well researched stories here each week.
  • Reply 71 of 78
    MarvinMarvin Posts: 15,326moderator
    palomine wrote: »
    I nominate Marvin to write new articles for AI!

    Seriously, you have some great points and very well stated. You deserve a column of your own!

    I wouldn't like to present my comments in a way that becomes the focal point of a discussion, I prefer them to be on equal ground to everyone else's comments. It gets more honest replies for one thing. Starting with accurate comments is also not the best way to drive interest in a thread because if people agree with the statements then they don't have to add their own opinions. If you think of leading stories on newspapers, they are usually something that makes you react emotionally. The style of my comments works better inside the discussion thread. I'll leave the click-bait to the professionals.
  • Reply 72 of 78
    Well you could do something Different and write up your comments without the emotional drama. Honestly I'd be curious to see what kind of response you would get. I think you would get a very positive response. Who says you have to write emotional stories?
  • Reply 73 of 78
    MarvinMarvin Posts: 15,326moderator
    palomine wrote: »
    Well you could do something Different and write up your comments without the emotional drama. Honestly I'd be curious to see what kind of response you would get. I think you would get a very positive response. Who says you have to write emotional stories?

    If you look at the front page articles vs the amount of comments, you'll find that ones that are about topics that polarize people are the ones that get the most comments because people like to share their own feelings on the matter. The other thing is coming up with interesting topics in the first place. That's entirely different from making comments about an interesting topic that's already been established. I wouldn't be good at coming up with interesting topics to discuss.
  • Reply 74 of 78
    Quote:

    Originally Posted by Rogifan View Post



    How about Apple just updated the hardware and UI that is incredibly out of date? It sure sounds like a grand solution isn't happening anytime soon.

     

    i never really understand this popular rant. my ATV works perfectly. in fact i only recently upgraded from the 720p version to the 1080p version in order to get youtube rentals. I'm not really sure what people want the UI to do....stream my music? check. stream my movies & tv shows? check. stream third-party content providers? check. 

     

    sure an app store would be great, but still not getting the UI beef.

  • Reply 75 of 78
    An over-the-top TV service?

    Seems OTT to me.
  • Reply 76 of 78
    rob53 wrote: »


    You said what I said before I could reply to you. The problem with a la carte programming is the good channels I want to watch, History, Science, Discovery, etc., would cost a fortune each because of the lower viewer audience. These channels are paid for, along with the garbage shopping network channels and other trash TV, by the highly watched channel income. I'd still like to see if Apple could pull this off by charging for each channel and see if there's enough volume to get the lower watched channels to bite.

    Tell me why I should subsidize your viewing habits?

    Because it's good for people who watch trash (not necessarily you) to subsidise people who watch quality.
  • Reply 77 of 78
    dasanman69 wrote: »
    How do you find shows you want? Many of the shows I like to watch I found by channel surfing.

    I have no idea... I was merely addressing this common complaint:

    "I'm paying for 200 channels that I don't want"

    It sounds like a value for money situation. So naturally... people think a la carte channels are the solution.

    But even if you could choose certain channels a la carte... you'd still be paying for those channels even when you're asleep and at work. That might be a little better... but you're still paying for stuff you cannot possibly watch... which goes back to the original problem.

    So I suggested... stop paying for "channels" that you cannot possibly watch 24/7... and just pay for the "shows" you want.

    If people don't want to pay for channels they don't want... why would they pay for an entire channel that contains shows they don't want?

    You can't like EVERY show on Discovery Channel... can ya? :)

    And even if you did... there aren't enough hours in the day to watch them all.

    Rogifan said he doesn't want to pay for MTV or VH1. That's understandable. But even his favorite channels have stuff that he won't watch... yet he will still be paying for.

    Which... again... goes back to the original problem of paying for stuff you don't want.

    .

    The fact is, most tv is rubbish and most of the people employed should be on the street or working in a call centre. There needs to be a great implosion of content, leaving the few remaining nuggets behind.

    Too much quantity; not enough quality.
  • Reply 78 of 78
    I'd buy now if it did two things:
    1. Interfaced with my TIVO Roamio. I bought lifetime service from TIVO just 6 months ago, so I don't plan to get rid of it.
    2. Provided a few news-related services, notably CNN, Fox News, and (the tough one to do) the three CSPAN TV channels. CSPAN is operated by the cable networks, so getting it will be tricky, but it's available via the web, so that should be doable.
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