Last month we reported on a leak from top executives in the television industry that Apple was working on its own television service to rival the likes of Sling TV. Today, the Wall Street Journal reported further details on Apple’s rumored service according to sources “in-the-know.” The service is intended to be a “slimmed-down” version of cable that is accessible via the internet on Apple devices such as iPhones, iPads, Apple TVs, etc… The question remains whether the price of the service and its channel offerings will be sufficient to entice customers to make the switch.
According to the Wall Street Journal:
Apple has been talking to Walt Disney Co., CBS Corp., and 21st Century FoxInc., among other media companies. The idea is to offer consumers a “skinny” bundle with well-known channels like CBS, ESPN and FX, while leaving out the many smaller networks in the standard cable TV package.
Apparently this “skinny” bundle will reportedly offer around 25 total channels. Offering significantly less channels than traditional cable, Apple would is reported to offer the service at a cheaper rate. According to the WSJ’s same sources, the service should be priced between $30 and $40 dollars. Additionally, the service is said to be announced this June with a target launch date of September. Apple has a lot of work to do to get this service into our hands.
How does the price compare?
According to a report put out by the FCC mid last year, consumers pay an average of around $64 dollars for “expanded basic cable service.” This would put Apple’s service between 53% and 37% cheaper based on final pricing. However, the channel offering is significantly less. Nielson.com reported last year that the average U.S. home received 189 channels into their home. This would put Apple’s service at only 13% of the average channel volume offered by tradition cable. However, Nielson also reported that “consumers have [only] consistently tuned in to an average of just 17 channels. ”
Nielson’s report is evidence that consumers are paying for far more than they are actually using when subscribing for cable/satellite. As such, Apple may be onto a viable television model that provides consumers with the channels that they need without all the “fluff.” What needs further analysis is whether those 17 channels are relatively consistent across the consumers, or whether their preferences are sporatic across the board. The results to that question will dictate whether or not Apple’s TV service offering will be viable to the masses.
Additionally, something else to consider is that often times consumers are buying both internet and cable in bundles; making the price of each service significantly cheaper. For example, Comcast offers the XFINITY Starter Double Play service for $79.99. This service includes 140 channels and internet speeds of 50 MBPS. Comparatively, you can purchase solely the XFINITY internet at the same speeds for $34.99. If Apple’s TV service releases on the higher end at $40 per month, then combined with internet, the consumer is paying $5.00 less at the expense of 115 (82% less) channels. Using this comparison, Apple’s television service may not be as initially impressions.
What else might set the service apart?
Considering that this service isn’t likely to be substantially cheaper than the alternative, it is highly likely that Apple has another card up its sleeve regarding how they plan to revolutionize the television industry. One thing is certain, consumers are moving in the direction of consuming the majority of their media content via online streaming. A study put out last year by Frank N. Magid found that a whopping 83% percent of US television watchers stream online content; up 9 percentage points from last year’s reported 74% percent. With streaming on the rise, if Apple can re-invent the way we stream with betters ways to discover and consume content, the company could be onto something.
There has always existed a delineation between live TV and internet streamed media. Often, if you want to watch a new episode of your favorite seasons’ episodes as soon as they release, it’s required that you watch on traditional live television. The online streamed alternative is typically available the next day. There are a few exceptions to that rule, but most of them require that you have a cable or satellite subscription to gain online streaming access any earlier.
While I couldn’t find any large-scale data to support my theory, the primary reasons that I have heard from people regarding why they stick with cable is to watch sports. While local channels cover some of the games, to get access to the majority of each season’s competition, you’re going to need a cable or satellite subscription.
I would also argue that one of the key elements that is missing from online streaming services is an improved way to discover new media. While there are plenty of algorithms to recommend new content to you, it just isn’t the same as scanning through channels and finding shows that catch your eye. The cover art and description of a show is only so enticing. If Apple can solve for both of these problems AND bring the benefit of streaming content on-demand, they will have a very competitive product offering.
What do you think Apple needs to bring to their TV service to be competitive? What would entice you to cut the cord? Let us know in the comments below.