Apple finds TV content owners not as easy to convince as publishers have proved to be
Comcast, meanwhile, looks to launch its own video platform, to rival YouTube and Facebook, negotiating with publishers such as Vox Media and BuzzFeed, BusinessInsider says
So Apple won’t be able to launch its subscription TV service this fall… at least according to Bloomberg, and then reported again by other outlets. The stumbling block is apparently the money Apple wants to pay content providers to stream their programming, with broadcasters demanding more, not less, for the new service, while Apple likely believes their service will be so superior that the content owners should happily jump on board.
My guess is that it is not the cable channels like HBO, which already has channels on the Apple TV, but the traditional networks that are balking. Who can blame them, they have a good deal with the cable companies, one that is negotiated very contentiously every few years. They drive a hard bargain with the cable companies that have to pay more and more each few years, driving up the price of cable for consumers. That rinse-and-repeat cycle is preciously while Apple thinks their slimmed down system will be better, and why so many consumers are cutting the cord with the cable companies. But still, in the end, it is about the content and who is selling it.
It is interesting to compare what is going on with broadcast, where the content owners are driving a hard bargain, with what is going on in the publishing part of the media world, where publishers are willing to jump into any new distribution scheme free of charge in order to gain a little extra audience.
With broadcast, the content providers do not control their distribution, they must have a deal with the cable companies. But it is the cable companies in the middle, who are out of business without content, as they need to have something to sell to consumers. Publishers would seem to be in the same position except their middle men – newsstand distributors, the tech platforms, social media platforms – have an infinite supply of content available to them, and distribute more than just the news. You take away all newspaper and magazine sales from Apple and you barely create a 1 percent drop in their revenue. You decrease sales going the other way, however, and you see what the impact in when you read those audit reports.
So why doesn’t Apple simply buy its way into the market? Surely it can afford to do so. One would guess that it just isn’t worth it. The sales of new Apple TVs remains minuscule compared to the iPhone, and while there may be millions willing to pay Apple $40 a month for a TV streaming subscription, the margins would be small or even nonexistent.
I also think Apple CEO Tim Cook also knows that there is real risk in a streaming service that consumers might depend on exclusively. Far too many consumers still don’t have very speedy broadband, and Apple, it has been rumored, doesn’t want to be blamed for buffering TV shows. My own broadband from Comcast is faster than most US consumers have, yet their recent promise to make it even faster turned out to be mere marketing lies. (I do now have a very slightly faster speed for uploads, but that’s it.)
We may still see a refresh for the Apple TV in September – it is long over due. The question is whether the refresh will actually introduce a radically different device, one with more storage and more computing power. The old Apple TV is like a dial-up modem, a wonder in its time, but badly outdated today. The remote, which is likely also to be replace, is a good example of Apple’s desire for simplicity – but simplicity over function. It, too, will likely be replaced.
The question I have, though, is will Apple launch an App Store for the Apple TV? Ever since the launch of the iPad App Store, rumors have swirled that Apple would pick the TV next for an app store. It made sense, but yet it never appeared.
Owners of the Roku know what to expect: a few good live streaming channels mixed in with a lot of bad video channels. Several publishers already are on the Roku such as TIME magazine and Saveur, that use their channels as yet another home for their online video. I doubt those kinds of channels gain much viewership, but a similar channel on the Apple TV just might.
This recalls something I offered up back in 2010 when the iPad was launched: publishers need to be thinking about video for their tablet editions, just as they had started to do for the web. But that didn’t really happen, most tablet editions remain either replicas, or simply reformatted versions of print. Now, assuming they are interested in creating a channel for the Apple TV, they will need more video content. Where will it come from? Many will seek out third party providers, but getting fresh, original video from their own writers and contributors will create a more original, enticing offering.
One reason the networks may not be so eager to give in to Apple may be that Apple doesn’t already have the eyes lined up. One company that does is Comcast, and they look ready to launch a new video platform called Watchable, BusinessInsider reports.
Comcast is partnering with publishers such as Vox, Buzzfeed, AwesomenessTV, Refinery29 and The Onion on the project, who would upload their videos to the platform and provide YouTube and Facebook with some competition by allowing Tv watchers to view the videos directly on their TVs, as well as online.
What makes the effort a little more interesting, and likely to succeed than Apple’s solution, is that it is tied directly to video advertising, and therefore has a revenue and revenue-share dimension to it.
Further, Comcast is itself the owner of content, through its ownership of NBCUniversal, The Weather Channel, NBC Sports… you get the idea. If you want to start a new distribution service, it is nice to first negotiate with yourself, you’ll likely to get a “Yes”. (Remember, NBCUniversal has invested in Vox Media, and soon BuzzFeed, so they are natural partners.)
I suppose it should pointed out just how low consumers rate Comcast in customer service. But advertising is certainly a different thing altogether. With the company reaching millions of households in the US, the company has a tremendous advantage in the ad world. But then again, we are talking the US, something that actually puts it at a disadvantage against both YouTube and Facebook, which have worldwide reach.