Apple's streaming TV talks fell apart on push for 'skinny' channel bundle priced under $30/month

Posted:
in iPod + iTunes + AppleTV edited December 2015
Apple's vision for the future of television is a basic streaming bundle with just a handful of channels for a low price -- something content owners couldn't agree to, according to a new report.



Dishing inside information on the failed negotiations between Apple and content owners, Peter Kafka of Re/code reported on Wednesday that the main issue between the two sides was Apple's push for a "skinny" bundle of channels priced at less than $30 per month. According to Kafka, Apple was interested in a base package with about a dozen channels, but content owners didn't want their networks to be left out. Apple reportedly wants a "skinny" bundle of streaming channels for under $30 per month, but can't work out a deal with content owners. With existing cable packages, content owners bundle multiple channels -- ABC, for example, also owns its family of ESPN networks, as well as Disney Channel, ABC Family and others.

Apple's proposal would offer consumers a base package without those extra channels. Customers who would be interested in larger channel lineups would be able to opt in to tiered offerings.

According to media sources who spoke with Kafka, Apple content chief Eddy Cue has been heading the negotiations, and remains insistent on achieving a low entry-level price point. That appears to be the main sticking point between the two sides, and has apparently led Apple to walk away from the negotiating table.

Interestingly, Apple is said to have stopped negotiating months ago. News didn't leak, however, until this week, when CBS Chief Executive Les Moonves said Apple's "over-the-top" television service had been placed on hold.

Comments made by Moonves suggest that he agrees somewhat with Cue, as he said in an interview on Tuesday that he does not believe consumers will spend money on channels they don't want to watch. In his view, a streaming service would have a base price between $30 and $40, and will feature the four major U.S. broadcast networks and 10 biggest cable channels -- numbers essentially in line with what Cue is said to have been pushing.

For now, Apple is said to be focusing on building out the newly launched tvOS App Store as a platform on which media companies can sell directly to consumers. The new living room-focused App Store is exclusive the fourth-generation Apple TV set-top box.

This week's revelations make it highly unlikely that Apple will debut a streaming television service in 2016, as some rumors had claimed.
«13

Comments

  • Reply 1 of 51
    Agree. Let me buy what I want to watch. And I don't want to pay for ESPN. I think they are wise to stand apart from the rush to create platforms based on streaming. What I mean is, bundles of content from various sources as a package.
    edited December 2015 radarthekatnolamacguy
  • Reply 2 of 51
    That's okay. I find myself watching less TV as time goes on. I've been focusing on cheaper and more productive activities such as work, exercising, meditating, friends, family, pets, home improvement, cooking, etc. It's a wonder many of us have any time at all for television! :)
    shameermuljicalipmzdaven
  • Reply 3 of 51
    I wonder whether and how Eddy Cue's history with the whole iBooks negotiations plays into this, if at all.

    Even though the court -- that idiot judge and her lackey -- was completely unfair to him and Apple, I imagine that played some role in his ability and leeway to negotiate.

    (Add: The negative market reaction today might be in response to this news).
    edited December 2015
  • Reply 4 of 51
    Couldn't agree more.
  • Reply 5 of 51
    Agree. Let me buy what I want to watch. And I don't want to pay for ESPN. I think they are wise to stand apart from the rush to create platforms based on streaming. What I mean is, bundles of content from various sources as a package.
    Based on this report I don't know if we'll ever see a streaming service from Apple. The realities of the situation and what Apple wants are very far apart. HBO alone is charging $15 yet Apple thinks it could get a dozen channels for under $30? And what would those dozen channels include? I rarely watch the 4 major networks unless it's sports or local news. I'm sure a lot of people have zero interest in ESPN.

    All of this seems like not worth Apple's time. Offer a platform where content providers can create apps and let Apple provide the hardware, UI and search integration.
    radarthekat
  • Reply 6 of 51
    technotechno Posts: 670member
    Most people under 40 watch tv differently than previous generations. To them, content should be on demand. One finds the content they want online and that is it. The thought of paying for content they don't want is silly. The only way to lure them away from Kodi (and the likes) to a revenue stream is by offering them concise options that are priced reasonably. The perfect example is how Apple selling .99 cent songs when Napster was in its heyday. There were a lot of people that would be willing to pay for a song if the price was fair and they were not forced to buy the whole CD when most of the songs sucked. In other words, why the F#@k would I want to pay $60+ for Disney and CSPAN? I want to pay for the channels I watch.
    edited December 2015 trumptmanradarthekat
  • Reply 7 of 51
    calicali Posts: 3,495member
    "Me me me" is all I hear from people.

    Content providers have a legit reason to not allow the cherry picking of channels. How are consumers to KNOW if they like a channel if it's not included?
    Yes today's generation has an idea of what they want through decades of watching every channel in existence but all your favorite channels were "discovered" at one point. Imagine removing this and what can happen 10 years from now? If you thought the MTV generation was bad, in 10-20 years you'll have something way worse and a ton of good channels will close because there's no exposure to them.

    I believe Apple needs to find a way to give ALL channels exposure in order to reach a deal. I'm thinking a free TV app that shows various content (for free)from different channels would work.

    Imagine scrolling through tons of free limited-time content that is updated daily by providers. you click on an interesting real-life crime scene investigation show. At the end of the show it says "Watch more Deadly Women on ID". They can even show the first part of two part shows or cliffhangers to urge consumers to purchase the channel.
    edited December 2015 mike1gatorguy
  • Reply 8 of 51
    I wonder whether and how Eddy Cue's history with the whole iBooks negotiations plays into this, if at all.

    Even though the court -- that idiot judge and her lackey -- was completely unfair to him and Apple, I imagine that played some role in his ability and leeway to negotiate.

    (Add: The negative market reaction today might be in response to this news).
    I suppose it's possible that Steve was the closer Apple doesn't have a closer anymore. Plus this isn't like music back in days of Napster where people were downloading content for nothing. They have no reason to play ball with Apple. Why should they when they can offer their own "skinny bundle" and pay nothing to Apple other than a commission to Apple if they choose IAP.
  • Reply 9 of 51
    fugg the tv networks.
  • Reply 10 of 51
    cali said:
    Content providers have a legit reason to not allow the cherry picking of channels.

    Yeah; they get paid less.

    How are consumers to KNOW if they like a channel if it's not included?

    Maybe we don’t care?

    This isn’t even a matter of supporting hegelian dialectic; I know what I want and I refuse to pay for something I don’t.
    hodarpmznolamacguy
  • Reply 11 of 51
    cpsrocpsro Posts: 2,370member
    Consumers have a legit reason to cherry pick the channels they want to pay for: current technology makes it eminently possible and practical.

    Until this transpires, the majors are getting bupkis from me. Nothing on TV is worth paying much for. I get my biggest kicks from doing, not watching. There's plenty of free stuff to waste time watching on the Internet anyway, and free Over The Air HD broadcasts cover the rest.
  • Reply 12 of 51
    radarthekatradarthekat Posts: 2,528moderator
    I think the commenters here have it correct.  The content providers don't like the pittance they get as part of a bundle, they would probably prefer having their own app, but they also worry about critical mass distribution and discoverability.  Well, those are solvable problems, even in an app-only model.  Each content provider offers up select content for free to gain eyeballs, holding back the rest behind their subscription.  then consumers can discover and buy, and the audience will size itself to the quality and popularity of the content provided.  Economic principals of price discovery will determine the cost of various content.  It can all work, and Apple is probably okay with things panning out this way.  The content producers will be happy, consumers will be happy, and Apple participates in the middle.
  • Reply 13 of 51
    sog35 said:
    I suppose it's possible that Steve was the closer Apple doesn't have a closer anymore. Plus this isn't like music back in days of Napster where people were downloading content for nothing. They have no reason to play ball with Apple. Why should they when they can offer their own "skinny bundle" and pay nothing to Apple other than a commission to Apple if they choose IAP.

    Apple doesn't have a closer?

    So I guess Steve Jobs closed the China Mobile, AppleMusic, and DoCoMo deals from his grave?  
    They don't have a closer for the really hard things.
  • Reply 14 of 51
    sog35 said:
    I wonder whether and how Eddy Cue's history with the whole iBooks negotiations plays into this, if at all.

    Even though the court -- that idiot judge and her lackey -- was completely unfair to him and Apple, I imagine that played some role in his ability and leeway to negotiate.

    (Add: The negative market reaction today might be in response to this news).
    I suppose it's possible that Steve was the closer Apple doesn't have a closer anymore. Plus this isn't like music back in days of Napster where people were downloading content for nothing. They have no reason to play ball with Apple. Why should they when they can offer their own "skinny bundle" and pay nothing to Apple other than a commission to Apple if they choose IAP.

    People can watch shows on Youtube or even more clandestine sites.  So yes its just like Napster.
    Not even close. And stuff gets taken off YouTube as fast as it goes up.
  • Reply 15 of 51
    cali said:
    "Me me me" is all I hear from people.

    Content providers have a legit reason to not allow the cherry picking of channels. How are consumers to KNOW if they like a channel if it's not included?
    Yes today's generation has an idea of what they want through decades of watching every channel in existence but all your favorite channels were "discovered" at one point. Imagine removing this and what can happen 10 years from now? If you thought the MTV generation was bad, in 10-20 years you'll have something way worse and a ton of good channels will close because there's no exposure to them.

    I believe Apple needs to find a way to give ALL channels exposure in order to reach a deal. I'm thinking a free TV app that shows various content (for free)from different channels would work.

    Imagine scrolling through tons of free limited-time content that is updated daily by providers. you click on an interesting real-life crime scene investigation show. At the end of the show it says "Watch more Deadly Women on ID". They can even show the first part of two part shows or cliffhangers to urge consumers to purchase the channel.
    You raise interesting points. The implication for the long haul, it'll be like a "winner-take-all" (or a few winners take all) market. Sort of like how Google and Facebook dominate ad revenue markets; Taylor Swift and Adele the market for pop music; Apple in hardware (profits-wise); Airbnb/Uber in their respective sharing markets; etc.

    Newer entrants will find harder and harder to break into the bundle, and will either be acquired by the winners, or disappear.

    I think that's what the future will look like in a lot of markets. A few huge players dominate, and there's less diversity, fewer choices.
    edited December 2015
  • Reply 16 of 51
    Agree. Let me buy what I want to watch. And I don't want to pay for ESPN. I think they are wise to stand apart from the rush to create platforms based on streaming. What I mean is, bundles of content from various sources as a package.
    Based on this report I don't know if we'll ever see a streaming service from Apple. The realities of the situation and what Apple wants are very far apart. HBO alone is charging $15 yet Apple thinks it could get a dozen channels for under $30? And what would those dozen channels include? I rarely watch the 4 major networks unless it's sports or local news. I'm sure a lot of people have zero interest in ESPN.

    All of this seems like not worth Apple's time. Offer a platform where content providers can create apps and let Apple provide the hardware, UI and search integration.

    In the Cathedral vs the bazaar argument, if Apple could build base bundles they will. The bundling ("Buy 10 get 5 free!") is a big deal.  (looking at Amazon Prime Video and Netflix).    

    The question will be if the 'streaming content' market place will ever get consumer bulk discounts.   

    The problem is, part of the purchase is a 'sale'  I buy your channel, and you sell my eyeballs (to advertisers).  Old school people want both the up front revenue, and the 'we have 50 million households subscribed... you find a great show, and you'll get eyeballs!!"

    As soon as the networks are disintermediated, the better.   
  • Reply 17 of 51
    maestro64maestro64 Posts: 4,233member
    This is the same issue the Music industry had. They knew that 90% of what they were forcing onto the public was garbage but you had to buy 9 bad songs to get the one you wanted and had to pay $15 for the whole CD. They did not want to sell just one song for $0.99 because they could no longer force artist to turn out crap to get their small royalty check. The whole media industry is messed up, this is why we have 100's of check with lots of stuff no one is interested in watching. If consumer could only pay for what they wanted the content owners would not make as much and they would have to focus on quality not quantity. They will fight this to the bitter end. They have not interest in making content affordable.
    nolamacguy
  • Reply 18 of 51
    cpsrocpsro Posts: 2,370member
    sog35 said:

    cpsro said:
    Consumers have a legit reason to cherry pick the channels they want to pay for: current technology makes it eminently possible and practical.

    Until this transpires, the majors are getting bupkis from me. Nothing on TV is worth paying much for. I get my biggest kicks from doing, not watching. There's plenty of free stuff to waste time watching on the Internet anyway, and free Over The Air HD broadcasts cover the rest.
    I agree with you with one exception:  Live sports.
    Without any choice in the matter, many people already get on-line access to a vast array of live sporting events (and replays) via espn3.com, included with their Internet service--no need for TV service.

    Regardless, the technology is such that people can and should be able to pay to see just the sporting events they want. For instance, why pay a small fortune for MLB access to all ballgames (EXCEPT those of your home team, when playing both home and away!), when you're only interested in your home team?

    A possible problem here is that the content owners have already entered into lucrative, multi-year contracts that lock them into antiquated sales and distribution methods while technology races ahead. People really need to vote with their wallets, to get these contracts mutually terminated by the parties involved and force the content owners to update their practices. Will it really hurt not to watch guys bludgeon themselves into dementia for a while?
    edited December 2015 radarthekat
  • Reply 19 of 51
    maestro64maestro64 Posts: 4,233member
    I wonder whether and how Eddy Cue's history with the whole iBooks negotiations plays into this, if at all.

    Even though the court -- that idiot judge and her lackey -- was completely unfair to him and Apple, I imagine that played some role in his ability and leeway to negotiate.

    (Add: The negative market reaction today might be in response to this news).
    I suppose it's possible that Steve was the closer Apple doesn't have a closer anymore. Plus this isn't like music back in days of Napster where people were downloading content for nothing. They have no reason to play ball with Apple. Why should they when they can offer their own "skinny bundle" and pay nothing to Apple other than a commission to Apple if they choose IAP.
    You do not understand how this whole industry works, today content owner license content to the cable operators, then operators make you pay as well as advertisers. Content owners for the most part get a flat fee for their content. Many times they do not even get a cut of the advertising dollars. The only way content owners get a cut of the advertising $ is by product placement in there content and may time this does not work since the Cable operators will not allow this. Content owes do not want any sort of skinny bundles because the get more $ selling the whole bunder to cable operators. The operators have to pay and they get the good with bad no matter what and hope to make it up on ad $ on both the good and bad content channels. Content owners know if they do a la carte, the licensing fees will drop and the cable operators will get upset and want the same deal. Content owners see this as lose lose deal. As you pointed out the Music industry saw an upside since they were sliding down. Video media is not seeing this issue they profits continue to grow, why would they want to cut the top line.
  • Reply 20 of 51
    pmcdpmcd Posts: 393member
    The whole video content world is a mess. Too much money involved to except anything to change rapidly. The content owners won't lose money so at best you are talking shifting around who gets what. In the end the consumer isn't going to save money but might find the process more enjoyable.
Sign In or Register to comment.