Apple Looking To Slice Up Cable 99 Cents At A Time
techcrunch.com
techcrunch.com
Contrary to popular belief, not all of that $150 you give to Comcast each month (ouch) goes to buying yachts for Comcast's CEO. Some of it goes to building and maintaining a network. Some of it even goes to pay for the production of those movies and television shows you're watching. The costs of producing entertainment and running large-scale networks is probably not going to drop by 90% any time soon.
The more likely scenario is this:
Comcast: May I help you?
Me: Yes, I'd like to cancel my $150/month TV+internet package and just get an internet-only package because I can get all the content I want over the internet now much more affordably.
Comcast: OK, no problem. Our internet-only packages run $145/month.
I still think this is a huge improvement, mind you. Having everything on demand is much better than worrying about TV networks' schedules. And those who watch less can now pay less (i.e. those who watch more can pay more...). I just don't see everyone's bill going from $1,500 a year to $100 a year, like the article suggests.
Will the pricing go from $150/month to $10/month? Almost certainly not. Will pricing go from $150/month to $70/month? It seems quite possible - because internet access is a commodity, unlike cable tv.
Whereas $62.50 comcast internet stays connected a little more reliably and maxes out between 200kb/s and 1mb/s depending on their whims.
Its ridiculous that aside from moving or paying multiple hundreds of dollars per month I can't get quality internet service
I have never had cable or satellite TV in my adult life. And I've never had to pay extra for Internet access.
If people actually want Internet-only TV subscriptions, the market will force Comcast to lower their prices. But I think most people want an endless stream of crap so even when they're bored, they can do something that requires minimal energy expenditure. So Comcast should be fine.
But anyway, I'm pretty sure that paying 99 cents an episode for shows that are already broadcast into your house for free (courtesy of "the networks") is a good deal for Apple and not such a good deal for you.
Perhaps yes, eventually, but it could be years. The market for high-speed internet connections in most locations is, at best, a duopoly, due to the high fixed cost of installing infrastructure.
By analogy, think of what unreasonableness the electrical company could get away with if they weren't regulated. The market for high-speed internet connectivity isn't that bad, but it's certainly not a free market in the same sense that pizza delivery is.
The cable business model is dead. I'm sorry, but it does not cost $billions to produce these TV shows. I only watch about 3 TV shows regularly and spend maybe 2.5 hours a week doing that, so I'm not going to pay more than a few bucks a month. Also, I'm sorry, but if I pay for content, I am not going to let you get paid to show me unskippable ads. Not going to do it. The market has spoken. Technology is catching up to the cable companies and they are going to be relegated to bandwidth provider status.
I don't spend enough time watching it on my iPad, and there's far too many shows that are still restricted to the last x (5 normally) episodes.
If you're caught up on the shows you watch, there's no need to subscribe unless you want it on other devices as well. But if you want to watch the whole series of a show, $10 is much cheaper than buying or renting elsewhere.
This will probably improve over time, but I don't anticipate keeping it much longer.
720p is nice on the shows that have it though. I have a laptop connected to a 55" LED-backlit LCD TV via HDMI and it seems to work pretty well for me.
Hulu doesn't exist here though.
Poor Americans are so isolated in their MSM cocoon they have no idea how they are ripped off! One would think that since they spend 40+ hours a week or whatever it is watching telly they would at least understand the true costs (i.e. how much they are being exploited).
Most people don't understand how networks make money. The networks make money by one of 2 methods.
1. Ads. 2. Carriage Fees. Carriage fees are a portion of your cable bill that goes to the networks. These fees are MASSIVE. ESPN makes $3-$4 per subscriber (all subscribers - not just ones who watch ESPN) They make a billion dollars a year this way. Most networks make under a buck but still multiply $.50 (what Food Network gets on Cablevision - as an example [1] ) * 80,000,000 (estimated cable households in the US * 12 (months). And you end up with $480,000,000
So can you deliver content via the internet in a better way then over cable - maybe. But you also need to replace the revenues they're paying to the networks and nobody has figured that out. The cable companies and networks are tied together so tightly in this model that an OTT model doesn't make sense.
There's no way that $10 (per viewer) a month split between each of the shows comes anywhere near what the big networks are making in carriage fees. The bigger Hulu gets the more dangerous it gets to existing models and the less likely that it will get top tier shows.
As the producer of Modern Family said "Some estimate Hulu IPO could bring in $2Bil. What will the content providers get? Zero. What is Hulu without content? An empty jukebox."
If you're only watching 2.5 hours of TV regularly then you should cut the cord. But most people are watching that much a day [2]. Thats 17 hours a week (or close to 1.5 seasons of a one hour show a week). Even if seasons were $12 you end up paying over $60 a month. (and you need to know what you're watching).
[1] http://www.businessinsider.com/scripps-wins-in-fight-against...
Let's do some napkin math, shall we?
Let's say Modern Family has 20 million regular viewers. Let's say it costs them $5 million to make one episode in production costs, actor salaries, etc. They can charge Hulu or Apple $0.50 to show an episode to a viewer, and then Hulu can either choose to sell 4 30 second ad slots for $0.25 each, or Apple can choose to charge $0.99 per episode. The producers made $10 million revenue for 50% profit, Hulu/Apple also made $20 million revenue for 50% profit, everybody wins.
The problem is that the cable companies and networks are used to being able to double and triple dip at the well of consumer spending. Charging for content and ads is double dipping. Bundling channels I don't want with the few channels I do want is triple-dipping. Why should they be allowed to do that?
There is plenty of profit to go around, but the cable companies might not like having their piece of the pie made smaller.
Programming costs alone are going up about 10% per year while the average provider rate increase is only about 5% per year. Over the next 2-3 years we're going to hit the point where selling linear video service is unprofitable for cable providers. The ESPN 360 model of IP services being bundled with access is probably the future. I could see Hulu, Netflix, etc partnering with providers on this. Apple is probably at a disadvantage because you know they won't be interested in offering iTunes Store access on some cruddy Motorola or Cisco set top box. This makes me wonder if the new iTV could perhaps be something Apple sells through partnerships with cable / telco video providers. They got into bed with AT&T so it's not unthinkable they would do the same with Comcast or TWC.
I got my Roku box for $99 (it's even cheaper now), and at the time it only did SD streaming from Netflix, but they have done several software updates since then, and it not only does HD from Netflix (and works beautifully), but it also streams from Amazon's VoD service, which is where I get most of my content when I can't get it through Netflix.
They've also added "channels" which allows any streaming video provider to hook into their API and stream to the Roku box, including the handling of paid subscriptions. Every day it seems like there's more. You can even get live baseball games and UFC fights.
I dropped my cable after the Roku. And to the above poster that said internet would barely be cheaper without TV, I have ATT U-verse, and it's $65 a month for internet-only 24mbps, but if you want an inexpensive option, I believe it goes all the way down to something like $25 a month.
I used to use torrents for some TV, but now that it's so easy to just stream stuff from Netflix, Amazon, etc, and watch it on my TV the same way I'd watch something on a Tivo, it's just not worth the hassle anymore.
The cable company's days are numbered here if they don't adapt to this new business model. I could never imagine paying $100+ a month for TV ever again.
That's the kicker right there. At $1/episode they're practically charging the cost of buying a DVD, except for all you're getting is streaming or crippled DRM'd 640x480 video - really just a rental.
$15/season ain't happening, and the formats they're offering aren't a reasonable value proposition for the buyers.
There are lots of people who miss a few episodes. There are lots of people who don't want to own tv shows? (what is the point?). There are lots of people who don't watch as much tv.
That was short lived, however. They jacked up the prices when the new season started.
At 99¢ per episode or, say, $20 for a season I would jump right in and probably cancel my cable.
I am one of the few that actually want to pay for the things I like, as it will ensure that more of those things will be available.
Hey, maybe that is a good business model, get a two month subscription service where you can access all the music and train the system to understand what you like so you can pay as little as possible for DRM free music. Best of both world.
Or we can all just enjoy Justin Beiber and the Youtube way of picking music.
It might have a very, very small chance of working in the US, but outside its borders it faces an even bigger problem: most tv shows that can be seen here are several seasons behind, how can Apple compete with that handicap against free downloads for anything other than the "I am too scared of computers to even go near them crowd?"
Simplicity. No need to deal with format issues, or un-seeded torrents, or corrupt files, or varying quality.
No thanks. It'd mean I'd end up paying $0. Quite frankly, no show is worth $1 for a single watch. Except maybe Nova (and PBS is OTA). If their non-prime-time dropped to $0.10, possibly all the way up to $0.10, then I might go through upwards of $50-$100 per year.
Which is $50-$100 more than they're getting from me now. You'd think they'd be interested in a market they've previously had totally untapped, but they don't seem to be.
Not that I think you're wrong :) I'm definitely in the minority in this. But I do doubt these sentiments / desires / tendencies are in the minority.