The Apple TV Conundrum

December 10th, 2015

So it was widely expected that the fourth generation Apple TV, which arrived months later than some originally expected, would represent Apple’s major foray into conquering the living room. At least that was the expectation, but what you expect and what you get are often very different.

Before the Apple TV was launched in September, some expected that Apple would be announcing a new subscription TV plan. It was supposed to include the four major broadcast networks — CBS, NBC, ABC and Fox (no mention of the CW) — a smattering of cable TV channels, possibly some premium networks such as HBO and Showtime, and even your local stations.

Supposedly Apple was trying to persuade the networks to negotiate on behalf of their local affiliates, and that’s not so easy, since most are owned by independent businesses. But at the end of the day, all this slimmed down joy would come at a price ranging from $20 to $40. But it never showed up during the rollout of the Apple TV amid predictions it was put off until 2016. Indeed, some felt the new set-top box was a disappointment, since it lacked 4K (Ultra HD) support and had new features that weren’t daringly different from such major competitors as the latest Amazon Fire TV and the Roku 4.

So what went wrong? We do know that Tim Cook has asserted on several occasions that Apple was keenly interested in the living room, and that he was disappointed with the current setup, which took him back in time.

How so? Well, unfortunately journalists who are blessed with an Apple interview are evidently too intimated to ask probing questions. So it’s mostly the basics, and when the Apple executives repeat a corporate meme, they aren’t challenged, or asked for a more nuanced answer. All right, they are routinely asked about new products, and Apple tells them they don’t comment on new products.

So what was the end game with Apple TV, and was it a glimmer of the future, a product that would be updated over time? What?

While Apple hasn’t been specific about future plans, they can’t stop a prominent TV executive from spilling a few tidbits. So CBS CEO Leslie Moonves claimed that they had been contacted by Apple about the subscription TV venture, and seemed to feel it wouldn’t be long before it happened. That was then.

This is now: Moonves reportedly disclosed, during a December 8th speech at the Business Insider Ignition conference that plans for such a service have been put “on hold.” The reasons appear to be expected, that the networks wouldn’t budge on Apple’s demands to license a subset of the hundreds of channels they offer to the cable and satellite networks. In addition to wanting Apple to take it all, they supposedly wouldn’t cut prices to allow for a cheaper service.

One possibility suggested in the reports about Moonves’ speech is that Apple wanted to give customers more of a choice of which channels they wanted. They wouldn’t be forced to take a full bundle. That raises the possibility that it would be a la carte, the dream of many cable customers today, and perhaps one reason why more and more people are cutting the cable cord. It’s not just the price, but the phrase “300 channels and nothing to watch” holds meaning for tens of millions of frustrated customers.

This doesn’t mean the deal won’t get done. Evidently Moonves believes it will, eventually, adding that “it has four major networks and 10 cable networks, let’s say, and the price point will be in the $30s, $30-35, $40 maybe.”

Well, that’s encouraging, sort of. But Apple is facing serious headwinds in dealing with the content providers. This is no doubt true with Comcast, which owns all the NBC networks that include, in addition to the broadcast network, such popular watering holes as USA and Syfy. There’s a bunch, and I won’t bother to list them all. Suffice it to say that Comcast might not appreciate accepting a lower carriage fee, or even unbundling, so not all channels are included. Add to that other networks taking similar approaches, and there may have been a huge resistance to Apple’s scheme.

You see, Apple got off real lucky in the original contracts with the music companies that led to the iTunes store. It was felt, at the time, that they caved in too easily not seeing the potential, and being stung by rampant piracy. The movie and TV networks are taking harder lines.

In saying that, most of you know that some TV networks and cable premium channels are already offering online subscription services of their own. You can find them on your Apple TV already. So I suppose, if enough apps are available, Apple could provide some sort of way to access them all within a unified app as the first step towards establishing such a service. Surely it would be more beneficial to everyone to make a single payment per month rather than a dozen.

Regardless, it’s clear from what the CBS executive says, and there’s no reason not to believe him, that hopes for a new TV service from Apple will remain, for the time being, hopes.

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2 Responses to “The Apple TV Conundrum”

  1. BDK says:

    When I cancelled my AT&T TV service, they tried their damnedest to get me to keep it. When they asked why, I told them I’m tired of paying $100 a month for the 3 channels I watch. Hell, they charge $20 for a package of 13 local stations.

    The networks can stay in denial but the end of packages that have 75% of stations people don’t need will end.

    • @BDK, Apple is in it for the long haul. So if they want to set up this service, it may well be that it will take time for the entertainment and cable companies to realize they have to do something.


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