Apple’s iTunes Pitch: TV for $30 a Month
That’s the pitch Apple has been making to TV networks in recent weeks. The company is trying to round up support for a monthly subscription service that would deliver TV programs via its multimedia software, multiple sources tell me.
Apple (AAPL) isn’t tying the proposed service to a specific piece of hardware, like its underwhelming Apple TV box or its long-rumored tablet/slate device. Instead, the company is presenting the offer as an extension of its iTunes software and store, which already has 100 million customers.
A so-called “over the top” service could theoretically rival the ones most consumers already buy from cable TV operators–if Apple is able to get enough buy-in from broadcast and cable TV programmers.
That’s a big if: Apple has told industry executives it wants to launch the service early next year, but I have yet to hear of a single programmer that has made a firm commitment to the company, which has tasked iTunes boss Eddy Cue with promoting the idea.
Industry executives believe that if anyone jumps first, it will be Disney (DIS), since CEO Bob Iger has shown a willingness to experiment with Apple and iTunes in the past: In 2005, Disney was the first player to sell its programming on iTunes, via a-la-carte downloads. And Apple CEO Steve Jobs is Disney’s largest single shareholder, a result of Disney’s 2006 acquisition of Jobs’s Pixar animation studio. Apple didn’t respond to requests for comment.
Network executives I’ve talked to are intrigued by the idea–they are eager to find new revenue streams–but are also wary, for several reasons.
Cable networks, for instance, don’t want to threaten existing relationships and subscription fees from cable providers like Comcast (CMCSA). And programmers are also worried about the effect a subscription service would have on advertising revenue: Even if the service didn’t distribute TV programs until after their initial air date, that could cut into ratings, which now measure viewership over the course of several days.
But the move to deliver TV and movies over the Web is already well under way. Netflix (NFLX), for instance, already bundles free streaming movie and television along with its disc-by-mail subscription service. iTunes and Amazon (AMZN) rent movies on a one-off basis, and Google’s (GOOG) YouTube is trying out the same thing. Meanwhile, Hulu, the joint venture between GE’s (GE) NBC, News Corp.’s (NWS) Fox, and ABC, is figuring out how to launch a paid service that may include rentals, paid downloads or subscriptions.
So Apple’s proposed subscription service, which the company has floated in the past, is no longer a huge stretch. Says one executive briefed on the company’s plans: “I think they might get it right this time.”