
Apple Said to Suspend Effort to Develop Live TV Service - coloneltcb
http://www.bloomberg.com/news/articles/2015-12-08/apple-said-to-suspend-effort-to-develop-live-tv-service
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exelius
Good. This is a bad market for Apple; the content rights owners have all the
power and the device manufacturers and distributors have next to none. That's
why everyone is trying to get into the content creation game: it's the only
way to keep users on your distribution service.

I'm guessing that Apple balked once the strategy evolved to producing its own
content. I think they were imagining a market evolving that was a natural
extension of the iTunes/App Store, but what they found was that they would
need to structure like a media company to make that play effective.

This is ultimately a mixed bag for consumers; because it means that content
ownership has won out. That means prices are likely to rise, and another round
of media consolidation is in the cards in the near future. But on the plus
side, the amount of quality content being produced under this model is
amazing: I have probably two dozen TV series on my "to watch" list when I have
time.

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sithadmin
>This is a bad market for Apple; the content rights owners have all the power

Isn't that what people said when the iTunes Store rolled out?

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ergothus
It never makes me popular with the Apple fanpeople deigners at work, but I've
long maintained that the genius move of Apple wasn't the design of the iPod,
but rather than they finally gave people what they were demanding: One place
to get (almost) all their music at reasonable prices.

I'm not sure WHY that offends them - that what people wanted was known doesn't
mean it was easy to achieve. Frankly, I have more respect when someone solves
a known but hard problem than when they come across something that happens to
be popular. Given that intelligent design doesn't mean it will be popular, I
see one as requiring hard work and the other requiring luck.

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adamesque
Well, the iPod came out in 2001, and was already a huge phenomenon when the
iTunes Music Store launched in (I believe) 2005.

So you can't give all the credit for why the iPod succeeded to something that
didn't exist for those crucial first 4 years.

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TazeTSchnitzel
2 years. The iTunes Store opened in 2003.

Initial models didn't even have USB or Windows support, remember.
Incidentally, that came around the same time.

The iPod didn't sell all that well until 2004. It's no coincidence that was
after Windows support and the iTunes Store.

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Osiris
The core problem is the idea of "channels" and schedules. We should just have
companies that produce media content and license that content to services that
provide access to it.

It's like how Netflix, Amazon, and Hulu each produce their own content. In the
future I'd envision something like NBC Productions just producing shows and
licensing them. With each show generating it's revenue stream, we'll have a
lot more variety of content because a show doesn't have to reach the widest
audience, only an audience large enough to bring in enough revenue to cover
the cost of production.

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exelius
But then how do you find that content? You mention licensing it to services;
so how do you differentiate yourself as a service? Right now, the answer is to
create your own exclusive content.

There's a risk pooling problem at play here too: if I'm paying $10/mo for
Netflix, how do you allocate the money between the content on Netflix? Spotify
faces the same problem: top artists demand higher payouts in return for
listing their music on the service. The top artists are what bring the
listeners in, but as a result it's almost impossible for someone who's not an
international star to make any money from Spotify. Video faces the same issue.

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isomorphic
> Media executives have said they expect new TV distributors like Apple and
> Amazon to pay more for their channels than existing distributors.

Meanwhile, most people under a certain age are not ever bothering with cable
TV. Why would they pay more just to see it via the Internet?

I'm trying to understand the nameless "media executives'" mindset, but all the
news I read shows their current business model being dead and buried in 10-20
years.

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ghaff
"Most" is an overstatement. The numbers I've seen suggest that ~25% of 25-34
year olds don't have cable although the number is rising.

I was hoping Apple would be able to pull it off because I certainly don't get
my money's worth out of my cable TV subscription. Unfortunately, I can get
nothing over the air so it's more or less all or nothing and I haven't quite
gotten myself to the point where I cut live TV off 100%.

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joezydeco
I wonder what would happen if Apple bought Dish Network and used that as a
wedge to stream local OTA channels to AppleTV subscribers.

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orky56
SlingTV (offered by Dish Network) isn't able to offer local OTA channels via
streaming though. The method of delivery (stream/coax) is enough to
renegotiate licensing deals. This article provides a good perspective in the
areas you're thinking about: [http://www.wsj.com/articles/local-tv-creates-
hurdle-to-strea...](http://www.wsj.com/articles/local-tv-creates-hurdle-to-
streaming-1441325369)

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stcredzero
Why not just build digital antenna into SlingBoxen? It could even produce a
map with a diagram showing you how to aim the antenna, and what length to
configure it to. The app could even display a real-time signal strength
display.

This would give fairly good coverage in most of the larger metropolitan areas
in the US.

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callmeed
Somewhat unsurprising. ESPN alone is getting north of $6 per subscriber from
the Cable networks.

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exelius
And ESPN's subscriber numbers are way, way down as a result. I would say a
full 50% of the market places zero value on ESPN, and the other 50% is more
likely to use ESPN's web site (no subscription required) than the cable
channel.

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Gorbzel
ESPN's premium video offerings require a subscription (whether it's
traditional cable or something new, like Sling), so at least 50% of what you
said is just wrong.

As for the other half, it seems as if you are implying ESPN has done something
wrong aggressively pricing their content and live programming
offerings...which is also wrong. For some reason cord cutters believe that
disparaging content providers they don't personally enjoy is productive, but
these are the parties with both a) the leverage and b) the most to lose by
challenging cable companies and other traditional media gatekeepers. They
deserve consumer recognition for their efforts, and despite having problems
like any other monolith, I support the Worldwide Leader.

~~~
exelius
I dunno, I think ESPN's business model falls apart if they can't force ESPN
down everyone's throats. ESPN would cost ~$12/mo if they weren't able to
force-bundle it with the cable bundle, and I don't know how many of their
viewers would pay that. Certainly some would pay more, but for hardcore sports
nerds, ESPN is almost too pedestrian. I think we'll see ESPN fall hard in the
next few years -- the gap between hardcore sports fans and casual sports fans
is growing rapidly (this is more a function of daily fantasy than anything
else; so it's a trend largely independent of media diversification).

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mitchty
ESPN has huge issues lately. They've lost over 4 million subscribers and are
cutting jobs.

[http://www.foxsports.com/college-football/outkick-the-
covera...](http://www.foxsports.com/college-football/outkick-the-coverage/is-
espn-a-giant-bubble-about-to-burst-071215)

If only everyone realized that if you subscribe to cable, you're paying for
about $6.61/mo for espn to be on your bundle. This is for everyone, not just
the sports fans.

I read somewhere that espn alone if only paid by fans would come out to about
$34/mo Which if true really throws a wrench into the sports world. If they
keep losing viewers there will be an interesting situation regarding
advertisements.

Honestly I can only hope, the only reason I have cable tv is so that comcast
can still count me as a viewer with their "your bill will be cheaper if you
just get a basic package" bs.

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exelius
> Honestly I can only hope, the only reason I have cable tv is so that comcast
> can still count me as a viewer with their "your bill will be cheaper if you
> just get a basic package" bs.

Look for that to disappear in the next few years. Cable companies have
traditionally been ruled by the video business unit, but they're starting to
realize that of the $120/mo triple play, consumers only value the video
service at about $30-40/mo. That's more than it costs in licensing fees - so
it would be a better profit move to charge $70-80/mo for straight Internet
access. They're increasingly willing to sacrifice low-margin (with relatively
high marginal cost) video revenue for high-margin broadband revenue.

I've always wondered why the cable companies haven't partnered with Netflix to
sell subscriptions. Give the cable companies a cut in exchange for
interconnects and cross-promotion. If Comcast were to offer a $100/mo Internet
+ Netflix + HBO bundle, it would sell like hotcakes.

Also, remember that the target customer for a cable company is a 50-year-old
head of household. While "cord nevers" will be a drain on revenue in the
future, big cable is still making a good profit targeting people who are far
behind the technology curve.

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goodcjw2
IMHO, simply live streaming the content through Internet is naive and far from
enough to make traditional content creators to hand over their content to
Apple. To reinvent TV, people need to think out of the box.

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orky56
Recapturing lost revenue from cord cutters is apparently not enough of a value
proposition. It would be interesting to give discounts on purchasing the
season/series if the user is a customer of the streaming service. Business
models will need to change significantly to see fundamental shifts from the
industry and the overall services offered.

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ksec
Apple needs to make a TV that combine TV tuner with tvOS, and just let the App
/ Channel do the work, not trying to start their own TV services.

