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  • Apple and Cord-Cutting

    May 1st, 2015

    So we have broad hints from Apple CEO Tim Cook about some future media-related venture of which Apple is to play a huge part. We have Time Warner CEO Jeffrey Bewkes saying he’s “pretty confident” that Apple plans to launch a subscription TV venture soon. The HBO division of Time Warner already has a subscription TV product, HBO NOW, which launched exclusively on Apple gear, although it will spread to other platforms after the initial three-month rollout period.

    So if nothing else, it would seem HBO would be a part of that service, and the same is true for Disney and other services. Although it was originally reported that talks with NBC, owned by Comcast, broke down, it so happens that NBC Sports Live Extra recently debuted on Apple TV. That development comes after Comcast, who owns NBC, denied having talks with Apple.

    Regardless, it does appear someone at NBC has been talking with Apple, so it stands to reason that other services from the network will turn up should this subscription service become a reality. But who takes denials seriously anyway?

    In any case, even if there is an Apple TV subscription service, how will it differentiate itself from the competition? What will it offer that Sony and Dish network’s Sling TV aren’t offering that will set the pace for the market? What advantages can Apple offer?

    One, I suppose, is the ability to save your selected shows in the cloud with on-demand viewing, so you don’t need a DVR. You just watch them when you want, but will you be able to watch traditional network TV as you do now, when it’s broadcast over live TV? What about skipping through ads, which can be a hit/miss process with other services? Questions! Questions!

    It does seem that the traditional cable and satellite services are reacting. Sling TV has different levels of content, so you can pick and choose, but it seems that Verizon’s new offerings are less credible. I saw one estimate that a supposedly cheaper service, when fattened up to offer a broader range of content, ended up little cheaper than the existing services, at least according to one report from a tech journalist.

    But that ends up being the major question about cord cutting. When you try to duplicate what you get from traditional services, the price suddenly doesn’t seem so cheap. Take, for example, Netflix, Amazon Instant Video and Hulu Plus. Buy a DVR and an antenna for your set, and add one of the no-frills subscription services along with HBO. Is it really much cheaper for a broad range of content? If you pick and choose and don’t need much to provide the TV entertainment you need, I can see where it makes sense, particularly if broadcast TV and the need for time-shifting that content are low on your list of priorities.

    For people used to the range of TV content you get now, cord cutting may not make so much sense, though more granular selections of channels would be real nice. Yes, 400 channels and nothing to watch!

    For millennials and others who can’t or don’t want to pay $100-150 for traditional cable and satellite TV, the options may make sense. If the Apple alternative cuts through the multi-service dilemma with an affordable alternative, that may be the breakthrough.

    Still, how does the broadband bandwidth cap impact all this online content? As a practical matter, if you are judicious about how many hours a day you watch your TV using online streaming, and perhaps you rely on a regular antenna for some of it, it may not be so important.

    Those who spend several hours a day in front of the tube, and who have more than one set, cannot possibly deal with the existing broadband Internet structure. Yes, I know some services advertise “unlimited” that remains “unlimited” unless you somehow exceed a hidden threshold. Otherwise, the normal way of watching TV can’t be done online unless you view content at a really low bit rate. For high definition, you’d hit the limit in days. For 4K video, maybe hours?

    I’m still concerned over the fact that most of the stories I read about Apple’s subscription TV service don’t mention the Achilles heel of that scheme — bandwidth. It’s the dirty little secret that will somehow have to be addressed if Apple hopes to provide a workable alternative to the masses still subscribing to traditional cable and satellite TV.

    Now I suppose Apple could make a deal with those companies, perhaps by installing their own servers in their datacenters. It wouldn’t technically violate any net neutrality prohibition since Apple wouldn’t be paying for a fast lane. All their content would come through within the same constraints as other content, only bandwidth wouldn’t be counted. But I’m only shooting from the hip here. Clearly there is a problem, and clearly Apple must know about it. How they choose to resolve that problem can only be speculated upon.

    As to bandwidth limits: I can see the value on a wireless network, where the pipes can become saturated at a cell tower. That may also, in part, be true for traditional broadband when millions have Netflix running to binge a new show. Or maybe the ISP will just require more money for unlimited, and you’ll have to see if what you expect to save from cutting the cord isn’t eaten up by your higher Internet bill.



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