Apple’s iTunes Pitch: TV for $30 a Month
by Peter Kafka
Posted on November 2, 2009 at 8:34 AM PT
Would you pay $30 a month to watch TV via iTunes?
That’s the pitch Apple has been making to TV networks in recent weeks. The company is trying to round up support for a monthly subscription service that would deliver TV programs via its multimedia software, multiple sources tell me.
Apple (AAPL) isn’t tying the proposed service to a specific piece of hardware, like its underwhelming Apple TV box or its long-rumored tablet/slate device. Instead, the company is presenting the offer as an extension of its iTunes software and store, which already has 100 million customers.
A so-called “over the top” service could theoretically rival the ones most consumers already buy from cable TV operators–if Apple is able to get enough buy-in from broadcast and cable TV programmers.
That’s a big if: Apple has told industry executives it wants to launch the service early next year, but I have yet to hear of a single programmer that has made a firm commitment to the company, which has tasked iTunes boss Eddy Cue with promoting the idea.
Industry executives believe that if anyone jumps first, it will be Disney (DIS), since CEO Bob Iger has shown a willingness to experiment with Apple and iTunes in the past: In 2005, Disney was the first player to sell its programming on iTunes, via a-la-carte downloads. And Apple CEO Steve Jobs is Disney’s largest single shareholder, a result of Disney’s 2006 acquisition of Jobs’s Pixar animation studio. Apple didn’t respond to requests for comment.
Network executives I’ve talked to are intrigued by the idea–they are eager to find new revenue streams–but are also wary, for several reasons.
Cable networks, for instance, don’t want to threaten existing relationships and subscription fees from cable providers like Comcast (CMCSA). And programmers are also worried about the effect a subscription service would have on advertising revenue: Even if the service didn’t distribute TV programs until after their initial air date, that could cut into ratings, which now measure viewership over the course of several days.
But the move to deliver TV and movies over the Web is already well under way. Netflix (NFLX), for instance, already bundles free streaming movie and television along with its disc-by-mail subscription service. iTunes and Amazon (AMZN) rent movies on a one-off basis, and Google’s (GOOG) YouTube is trying out the same thing. Meanwhile, Hulu, the joint venture between GE’s (GE) NBC, News Corp.’s (NWS) Fox, and ABC, is figuring out how to launch a paid service that may include rentals, paid downloads or subscriptions.
So Apple’s proposed subscription service, which the company has floated in the past, is no longer a huge stretch. Says one executive briefed on the company’s plans: “I think they might get it right this time.”
Comments
Screw Apple! The last thing content providers need is to be saddled with proprietary garbage like iTunes. Hopefully the networks will have a backbone & tell Steve Jobs to pound sand.
Posted by Theodore Maschas at November 2nd, 2009 at 8:55 amI’d sign up in a heartbeat. If I could carry my TV network with me when I travel. This would be an awesome solution vs. buying Cable TV for each location I rotate among.
Posted by Dave Hanks at November 2nd, 2009 at 9:16 am$30 per month for commercial free TV is great! Where do I sign if its 1080i or 1080p? If its anything less…don’t bother. $8 per month gets 720p Netflix streaming now.
Posted by Bob Forsberg at November 2nd, 2009 at 9:51 am“…underwhelming Apple TV box…”?
I was an early adopter of the Apple TV, primarily using the $229 device to replace a $2,000 whole-home audio server. For a fraction of the price, I got a solution that was far easier to use with some great additional benefits.
Seeing our HD pictures and home movies on the big screen was the first such “Wow!”. Putting the kids’ DVDs on the box, the ease of movie rentals, YouTube with a group of friends trying to outdo each other, etc. all are game changers.
Now we have internet radio and Genius Playlists as well as a better interface with the 3.0 update.
At $229, it is easily the best value in home entertainment and it keeps getting better (for free). Just ask the 30-or-so people who, after seeing my Apple TV in action, ran out and bought one of their own.
Hardly underwhelming. More misunderstood.
Posted by Joe Lamkin at November 2nd, 2009 at 9:55 amI’m with Joe Lamkin, Apple TV is a great device and I’m sure Jobs’ comment about it being a “hobby” has nothing to do with how well it’s selling, I’m sure it’s selling quite well for them. I think the “hobby” comment has more to do with that fact that they still haven’t been able to fulfil it’s full potential and this is just another step along the way to doing just that.
For me, I would jump on this in a minute.
Posted by Gino Cerullo at November 2nd, 2009 at 11:01 amI’d seriously consider this, especially if they could get HBO on board (I know, not likely). I’ve eschewed the ridiculously priced cable and satellite packages because I don’t want to pay for the 95 percent of content that I’m not watching.
Posted by Michael Bazeley at November 2nd, 2009 at 11:25 amIf 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.
As others have pointed out, though, is 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
Posted by Mark Sigal at November 2nd, 2009 at 11:36 amI would definitely buy this! Beats paying $30 or more for each tv series’ season…
Suzanne
Posted by Suzanne Lanoue at November 2nd, 2009 at 12:00 pmIf you folks are looking for Tv to the mobile device, check out this mobile url http://www.vuivision.com. These guy’s have a mobile site testing the booadcasting of the major networks. It is very good… no need to download an app. It is plug & play.The best part is it seem to work on most mobile devices Except the iPhone…go figure.
Posted by Tom Kennedy at November 2nd, 2009 at 12:12 pmThis could alter the playing field substantially. Would like to see more information on the reaction from cable internet service subscribers
Posted by Mani Agrawal at November 2nd, 2009 at 12:36 pmWhen are people going to understand that cheap/free content means MORE ADS? There’s a reason that the cable model has worked all this time and that it’s produced what it has. Even if the pendulum swings to the side of crap for a while, it’ll swing back towards high quality. Maybe where it lands will be more reasonably priced content…but good content costs money to make. There’s no way around whether — whether it’s paid for directly, or with ads.
Posted by alex schmidt at November 2nd, 2009 at 12:41 pmKind a depends on content. How many “channels”? Lots of new movies? Or lots of old junk?
Currently the networks each are web-casting a significant portion of their shows, and Hulu provides a lot of material from these sites as well as older shows too.
And broadcast TV will remain free or a long time .. so 360 a month (before the price starts going up) might not be such a good deal or people who aren’t big TV fans.
Posted by Wayne Martin at November 2nd, 2009 at 12:43 pmIt must have 1080p HD or it’s a none starter. 720p won’t cut it.
Also, must be able to kill off at least $30 worth of monthly Comcast cable bill to make it a push. Let me kill off $50 or more worth of monthly cable bill without losing any content that I want and it’s a done deal.
What I hate most about Comcast, Time Warner, and the other cable providers is bundling and high prices. They force you to purchase a bunch of channels that you’ll never ever watch and really don’t want. In my case I mostly watch about a dozen of the HD channels from time to time and could easily do without about 90% of all the channels. My monthly cable bill is much too high and I’m paying for a ton of content that I’ll never watch.
Posted by Dave Small at November 2nd, 2009 at 2:05 pmInstead of a monthly subscription, I’d like to see what a pure pay-per-view model looks like, or an ala carte pay for channel. The current cable scheme seems to be designed for people who can never get enough TV. As Dave Small said above, many of never even look at 90% of the channels the cable providers force us to take. If anybody can figure out a way to rationalize this stone-age service and package it in an attractive way, it’s Apple.
Posted by Mitch Stone at November 2nd, 2009 at 3:29 pmAppleTV . . . In a nanosecond! If I could only sever the relationship with TimeWarnerCable –worst of the worst.
Posted by aj stahiti at November 2nd, 2009 at 4:36 pmSign me up. AppleTV is almost all we watch anymore, we only have basic cable and with HD over the air and the added channels we may cancel it.
Unlike cable — AppleTV give my the choices to watch my selection of programs, not some 1000 channels forced on me by cable TV companies bundling channels.
AppleTV is simple, elegant, and works! No feature bloat and bonus, I can distribute music through the whole house easily.
Posted by Perry Cadman at November 2nd, 2009 at 6:46 pmIt could be great. Apple has a habit of correcting the errors large, powerful companies that have lost touch with their customers, making those companies more money than they would have had on their own. Look at the music companies, who forced every music service before iTunes to be unusable. And look at the telco’s, who refused to allow truly great phones until Apple forced the iPhone through over their objections. And now, perhaps, Apple can do the same thing with video, producing a better deal for the consumer than the cable companies can produce on their own.
The bandwidth implications are pretty stunning, however. If every home in the US watched a few hours of HD video a day, that would consume more bandwidth than the entire internet delivered last year. Let’s hope they optimize routing.
Posted by Laird Popkin at November 2nd, 2009 at 8:17 pmI’ve been a mostly-satisfied customer of DirecTV for many years, but iTunes could be a viable alternative if it carries live programming.
One channel I especially want to get is BBC World News. The iTunes Store actually has an app for watching that channel, but it is not available to U.S. customers. I hope the responsible parties get that fixed as soon as possible.
Posted by Douglas Ward at November 2nd, 2009 at 9:26 pmThe Disney connection definitely look relevant in this initiative. As Wayne Martin says, a subscription plan is only appealing if enough good content is available (that’s not free elsewhere).
Posted by Phoebe Spanier at November 3rd, 2009 at 2:17 amI agree Srew Apple. When they stop with the elitest atitude I will reconsider
Posted by Bill Grant at November 3rd, 2009 at 5:24 am