According to Fortune, Apple has a tough row to hoe in its effort to rescue us from TV awfulness. Why? Some wall-street guy spilled the beans on what senior VP Eddie Cue had to say on the matter:
[Apple] will enter markets where it feels it can create great customer experiences and address key problems. The key problems in the television market are the poor quality of the user interface and the forced bundling of pay TV content, in our view. While Apple could almost certainly create a better user interface, Mr. Cue’s commentary suggested that this would be an incomplete solution from Apple’s perspective unless it could deliver content in a way that is different from the current multichannel pay TV model.
Unfortunately for Apple and for consumers, acquiring rights for traditional broadcast and cable network content outside of the current bundled model is virtually impossible because the content is owned by a relatively small group of companies that have little interest in alternative models for their most valuable content.
So basically content companies are holding back the revolution. I wouldn’t bet on them holding it back forever. But it really could be a while. Sad.
Interesting. So Apple, a company that produces no creative content whatsoever, demands 30% of the revenue on sales of said content when purchased via one of Apple’s devices is now complaining that the people who actually do create content are not interested in distributing it at a financial loss through Apple’s devices.
They’re going to have to do a better job of explaining the logic on that one before they get any sympathy from me.
Financial loss? I’m not so sure. Cable operators get paid a good chunk of money to bring people content they didn’t create, too. And besides, if they don’t like that deal why don’t they find a different way to give me what I want? These industries have deep pockets. Why don’t they hire a few designers and make the cable TV experience less awful? And why don’t they offer me an a la carte menu of content? I will pay whatever it costs. But they will not offer it to me.
No, the people who I have no sympathy for are the ones who refuse to give customers what they want in order to protect their current business model.
The RIAA could have made iTunes, you know. They knew what people wanted. They saw people trying to do it illegally for years and fought the change instead of getting out in front of it. They resisted change until someone came along and ate their fucking lunch giving people what they wanted: a la carte songs, digital downloads, great experience.
The war for the living room is just starting to take shape. Amazon, Apple, Google and even Netflix are all spying out good high hills from which to wage war on one another. But the real victim will be the existing television entertainment industry. The internet is coming. And they’re either going to embrace it or it’s going to roll over them.
I’ll counter on a couple of points.
First, the comparison to the music industry is apples and oranges. People want their music mobile, where as TV watching is a stationary and much more attention directed task. The consumption experience of music is much different than it is for video (i.e. I can drive a car while listening to music, but not while watching Breaking Bad). Furthermore, music is less social than it used to be. It’s now personal and “narrowcast” (vs broadcast). These, and other factors such as file size, lead to the proliferation of illegal downloads while the industry was dragged kicking and screaming into the new revenue model. And it’s no wonder the music industry was resistant. The new model struck deeply into their profits. In 1996 I had to buy a CD of 10-15 songs for about $20. Now in 2012 I can pick 1-2 songs from a new album @$1/each. Yes, I spend less. But after Apple takes its cut, the record company has made way less money than they would have in 1996. For a good idea of how much different the world of music earnings are vs. ten years ago, read this article comparing the #1 songs from 2002 and 2012 – how the songs are consumed and how the artists earn their money. It’s pretty striking.
My second counterpoint is on your remark that you’d “pay whatever it costs” to get prime time TV content via the Internet (either “live” in it’s first broadcast or very soon thereafter a la DVR’ing). The reality is that you wouldn’t be able to afford it. The content creators would still have to move the video via aggregators just as they do now. You’d end up paying a new form of “cable bill” that would probably be almost as much as just subscribing to Time Warner anyway. Here is another article that explains why, using the whole failed “Take My Money, HBO” petition campaign where 15 million people begged to pay HBO directly for online subscriptions (HBO rejected them).
If you want show-by-show commercial-free a la carte you have that now – but you have to wait for DVD’s and online streaming – often much later than first broadcast. Even getting that stuff sooner doesn’t mean you’d pay less. I wanted to watch Season 4 of Breaking Bad this past June (which aired last summer). It was not yet on Netflix yet so I had to pay $20 to watch it on Amazon. Now multiply that by my favorite five or six shows and I may as well stick with my Verizon FiOS TV subscription and get all those shows right when they happen. Getting them a la carte via the Internet would cost me more money.
I wanted to watch Season 4 of Breaking Bad this past June (which aired last summer). It was not yet on Netflix yet so I had to pay $20 to watch it on Amazon. Now multiply that by my favorite five or six shows and I may as well stick with my Verizon FiOS TV subscription and get all those shows right when they happen.
I have a different experience. Between me and mine, we really only watch 5-6 shows religiously across the span of a calendar year. The rest of our video consumption is Netflix archived stuff and the occasional movie rental from iTunes. So between 5-6 season passes on iTunes, a Netflix streaming subscription and a weekly streaming movie rental I’m out, what, $45 a month? It’s true that I have a much narrower stream of content, but I actually like having to really choose what I’m going to spend my time watching. It prevents wasting one’s life channel surfing. Plus, most of my watching is commercial-free and I can watch whenever I want, as many times as I want and on whatever device I want.
I absolutely love what I’m doing right now without cable. I’d be in complete nirvana if only….if only I could arrange those one or two recalcitrant shows to get onboard. If I could get Game of Thrones and the BBC Sherlock in a more timely way through iTunes I’d be pretty happy.
Also, with regard to that article on HBO… I don’t want “HBO Go” unbundled from the cable channel subscription. I want single season of a single show unbundled from everything. Also, I don’t see where they’d have to “build its own streaming infrastructure. It would have to take over its own marketing. It would have to build a customer services team and a billing team.” Last time I checked, Apple (or Amazon or Hulu or whatever) does all of that. It’s what they do. Just like cable.
Yes, HBO is owned by Time-Warner and I recognize that this fact makes a lot of things pretty sticky in their case. But here’s the thing. If they don’t find a way to scratch my itch someone else is going to.