Apple's streaming TV service delayed as negotiations with programmers sputter

By Shawn Knight
Aug 14, 2015
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  1. Apple seemingly had every intention of launching its rumored streaming television service this fall but as is becoming the norm with Apple and television-related rumors, it has been delayed until at least 2016.

    Sources familiar with the matter tell Bloomberg that talks to license programming from major television networks is progressing rather slowly. Specifically, Apple wants to charge around $40 per month for a bundle of channels which is roughly half the price of the average cable bill in the US.

    Television programming executives aren’t buying into Apple’s pitch. It’s their belief that they should earn more money from Internet-based services since they are new to the market and they want to gain market share. Apple famously managed to get music industry executives to charge 99 cents per track, a decision that was key to its industry dominance during the previous decade.

    Another issue is that Apple doesn’t have the infrastructure in place to ensure a quality viewing experience, a rumor that coincides with earlier reports suggesting Apple wanted TV networks to handle the backend.

    The two setbacks have reportedly forced the Cupertino-based company to scrap plans to announce the service at a September 9 media event in San Francisco. The timing of the event would have coincided with the beginning of the fall network TV season. Apple is still planning to refresh its Apple TV hardware at the event, however, in addition to a pair of new iPhones and the next wave of iPads.

    If and when Apple is able to hammer out a comprehensive deal with TV programmers, it’ll serve as yet another revenue stream for the company.

    There’s still substantial demand for the iPhone and while its Mac business is holding steady, sales of the iPad continue to slide. The iPod is barely a blip on the company’s radar at this point and it’s too early to know for sure whether or not the Apple Watch will be a hit (my vote is no).

    Apple is smart enough to know that it can’t ride the iPhone cash train forever. Daniel Ives, an analyst at FBR Capital Markets, believes a streaming TV service could generate as much as $3 billion in revenue by 2018. That’s not a lot compared to the $233 billion in sales the company is estimated to take in this year but it could be an important cog in further building a massive media empire.

    Apple’s interest in revolutionizing the television industry dates back many years. Before his death in late 2011, Jobs told biographer Walter Isaacson that he wanted to create a simplified television set with an interface that would take the complexity out of operating modern entertainment equipment.

    Most believe that Apple has since given up on the low-margin idea of creating a physical television set, instead focusing on delivering traditional content over the Internet. That’s far from an original idea these days as there are now multiple providers offering such services for cord cutters.

    An attractive price point could certainly help the company gain market share and having a massive following certainly won’t hurt matters either. But without a really groundbreaking feature or two, dominating the industry as Apple has done time and time again won’t be easy. A la carte still seems like the best bet as a consumer but that looks less likely as each day passes.

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  2. wiyosaya

    wiyosaya TS Maniac Posts: 931   +238

    As I see it, $40/mo is more money than I want to pay. That is almost half-way to what I was paying before I cut the cord.
  3. ibgarrett

    ibgarrett TS Rookie

    Totally agree - $40 is more than I'm willing to spend monthly on a service. That being said, what really drove Apple to win the music industry as the fact that they were being pirated like crazy with services like Napster and the music industry was desperate to find a resolution.

    The flip side here is the TV industry has locked down their content to a point where it's not easy to get the material unless you go over into the darker corners of the internet - which not a lot of people are willing to do. Ultimately it will be their undoing as fewer and fewer people will be willing to either skip the shows all together or find them from another less-reliable source.

    I cut the cord a few months ago and my projected cost savings will be upwards of $1200 over the next year. That's a significant dollar value to me.
  4. wiyosaya

    wiyosaya TS Maniac Posts: 931   +238

    Yes - my savings are about $70/mo in total. I made a fairly large upfront investment in equipment including a new HTPC, but I have to say that I do not miss DishNetwork at all. My wife and I are also foreign and independent film fans. We find Netflix like having our own art-house movie theater in our living room.

    As to the TV shows, if one is willing to wait rather than seeing them first-run, usually some reasonably priced service will pick them up such as Netflix or Amazon. As far as I am concerned, waiting is worth the $70/mo savings. I agree that content providers locking down content will be their downfall. I don't think they understand market forces at this point.

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