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.