Skip to comments.Cable & Content Companies Can't Be Disrupted by Apple
Posted on 08/16/2012 10:00:23 AM PDT by Swordmaker
It looks like Apples mysterious AppleTV project may not be so revolutionary or disruptive after all.
After months of speculation that Apple will upend the TV business, allowing consumers to cut the cord and buy TV channels a la carte, the latest word is that Apple will not threaten cable operators and their media giant partners. (Related Link: Ready for Apple TV?)
The Wall Street Journal reports the tech giant is in talks with cable operators to use its device as a set top box. If this is true, cable and media moguls must be breathing a huge sigh of relief. (Related Link: Apple in Talks With Cable TV Networks - Report.)
The Journal says that talks are about using an Apple device as a set-top box for live television and other content. Though nothing has been settled, Apple would offer a service from the cable operators, likely charging them a fee it takes 30 percent of much of the content it sells. Ultimately Apple would offer a cool interface to seamlessly navigate TV and web content.
(If this is true) Bottom line: Apple is focusing on the box and not the delivery system because the content creation and delivery companies are just far too entrenched to be disrupted. The largest media company and the largest distribution company Comcast struck a ten year distribution deal earlier this year. That means its going to be virtually impossible for Apple to offer channels a la carte. These two giants (and their rivals) are committed to maintaining the status quo selling huge bundles of channels. Even if Apple offered a huge amount of money for, say, just Disney Channel, or ESPN, they would be unlikely to break the model. Selling individual channels would mean a huge hit to both companies bottom lines.
The media giants and distribution companies say its not just in their best interest its also in customers best interest to maintain bundles. By paying for channels they dont watch customers are subsidizing the smaller channels that not everyone would select. Disney CEO Bob Iger has explained to me, if everyone only paid for the 10 channels they thought they wanted, smaller channels wouldnt have the financial support survive, and no one would get all the channels they wanted. Both Iger and Time Warner [TWX 42.60 -0.09 (-0.21%) ] CEO Jeff Bewkes have stressed to me that customers really want the choice of dozens or hundreds of channels and dont realize just how narrow choices would become without bundles supporting the system.
Yes, an Apple TV could eat into cable carriers business people could buy more video-on-demand through Apple, and perhaps less VOD from Comcast, DirecTV or Time Warner Cable. But media companies are wary of giving too much control to Apple look at the disaster that befell the music industry when Steve Jobs controlled all transactions.
So we can expect media companies to drive a hard bargain with Apple, to prevent it from securing a monopoly on video on demand, and to protect their lucrative relationship with cable carriers.
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Thanks to GortKlattu for the heads up...
You mean the channels nobody watches anyways...
Well worth the trade.
The only way I'll ever come back to any kind of subscription TV service is on an ala carte basis, but we're in no hurry.
It still baffles me why Apple hasn’t bought out Disney/ABC and their huge media empire. Lord knows, they have the cash on hand to do it. They could put a lot of pressure on the rest of the market to go with them by using one of the four main networks (and its valuable cable networks like ESPN and Disney channel) to set the standard.
I got a jailbroken apple tv2 and I can watch basically ANYTHING I want for free (After spending 170$ for atv2)I see they are getting more pricey as people catch on. Only the apple 2 has been jailbroken so far. I suggest FReepers check into it. I LOVE MINE!!(link for search on ebay.)
A la carte content will be the death of some cable channels. I can’t wait. If MSNBC weren’t a part of a “package” it wouldn’t be on my TV, ever. Same with CNN, Headline News, Bravo and TLC. Oh, and MTV and BET (I must be racist). Bundled programming is like the Eurozone, where some companies work hard and make money to support other companies who do little or nothing for the actual bottom line.
Really, a lot of cable programming is crap. The best channels are rerun channels. Hallmark has Little House on the Prairie and the Waltons, and is mosly wholesome, family-oriented and not outwardly anti-Christian. Comedy Central has a bunch of idiots who make a living by making fun of Republicans, Conservatives, TEA Party followers and people from the South. Cartoon Network has original cartoons, but they are all horribly drawn and show nothing of the quality that Warner Brothers and Hanna Barbera cartoons had. We are cheating our children with the cartoon crap of today.
The Sci-Fi channel is half commercials. And they changed the name to SyFy. I have always been a fan of the science fiction genre, abbreviated to sci-fi. I must be a fuddy-duddy because I don’t think that the new name is all that creatve. It reads like see fee to me. If they have any good programs, I will wait until the next year and get them on Netflix.
In fact, most cable channels are nearly half commercials. They take a one-and-a-half-hour theater movie and pad it with enough commercials to fill a three-hour time slot. I watched Jurassic Park on the DVR and I was frikkin po’d at how many commercials I had to skip past to see the movie. In one part, 11 thirty-second spots.
I got suckered into signing a year contract with my cable company for the new channel lineup of HD channels and a free DVR, but I tell you what, when that contract ends, I am canceling cable and giving my money to Hulu and Netflix.
It takes a little getting used to but it is very liberating, isn’t it?!
The Disney market cap is 90 billion dollars, which in theory Apple could afford in March when they had 100 billion on hand but you generally don’t buy a company for just their market cap. If they wanted to do that sort of thing much better to go for Viacom (26B) or to have beaten Comcast to the NBC/ Universal deal (13B). The fact that they didn’t shows they don’t actually want to be in that end of the business, they’re gunning for Netflix’s end of the business, cheaper entry, less hassles with government entities.
That’s why a la carte will never happen. The cable networks sell bundles to the cable companies which force them to sell bundles to us. The networks will NEVER sell channels a la carte, so the companies can’t.
Apple TV and fire core =129 dollars and taxes.
That was Apple’s US cash on hand. They’ve got a ton more earned offshore that they don’t bring back in due to the tax laws.
It’s not just ABC/ESPN/Disney. That group owns or has significant interest in a lot other networks, plus radio, movie and music distribution, and publishing. If Apple wants to control the media market, they could hardly ask for a better place to start.
Plus, Apple (and specifically Jobs) has long had a good relationship with Disney, so that makes a merger/buyout idea make more sense for them rather than another media group.
Still... trying to figure out Apple’s strategies has been the bane of many a pundit, so if I’m way off base, at least I’ve got a lot of company. ;)
The Apple 2??? Dude, I had one of those in 1980!
I see, but it does requires unit to be jailbroken first. I also don`t see NAVI-X in the software which is key to my ability to access the sites for movies and other content.
Actually it`s NAVI-X with XBMC software together.
Here`s a link for the NAVI-X home page also...
I’m not saying they wouldn’t get their money’s worth, just that it’s a very expensive company to buy even with Apple’s cash on hand, and if they really wanted to get into that end of the business they could get into it for a lot cheaper and with a lot less complications. It’s a rough business to get into because now you have to deal with FCC requirements, the whole affiliate structure, the cable company deals, and of course 2 dozen “different” movie companies. It would be paying a lot of money to suddenly enter a lot of different business worlds you have no experience in, and enter them in a big way. If they wanted to go that route a smaller company to buy involves not only dramatically smaller cash out lay but a lot fewer headaches, and if they proved to be good at it THEN they buy Disney.
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