Bloomberg: Apple preps new 99-cent TV show rentals; abandons subscription TV service effort

Apple Online Store“Apple Inc. is in advanced talks with News Corp. to let iTunes users rent TV shows for 99 cents and is in discussions with other media companies about similar deals, said three people familiar with the plan,” Peter Burrows, Sarah Rabil and Adam Satariano report for Bloomberg.

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“Viewers would be able to rent programs from News Corp.’s Fox for 48 hours, said the people, who declined to be identified because the discussions aren’t public,” Burrows, Rabil and Satariano report. “CBS Corp. and Walt Disney Co. — where Apple Chief Executive Officer Steve Jobs is a board member and the largest shareholder — also are in talks about joining the effort, the people say.”

“Apple also plans to introduce a new version of the Touch with a higher-resolution screen — similar to the display featured on the iPhone 4 — and a $99 version of its three-year- old Apple TV set-top box, one person said,” Burrows, Rabil and Satariano report. “The new Apple TV, which will have a smaller hard drive than the earlier version, is aimed at letting people stream content from iTunes, the person said.”

Burrows, Rabil and Satariano report, “The a la carte rental plan follows an abandoned effort to create a subscription television service, said two of the people. Media companies didn’t want to endanger revenue from cable providers such as Comcast Corp. and Time Warner Cable Inc., the people said.”

Read more in the full article here.

MacDailyNews Take: If this report is true, it sounds like Apple got screwed – and by extension, Apple’s future TV show customers – by the content providers yet again. We would’ve loved Apple’s proposed $30 subscription television service much more than the 99-cent TV show rentals for which it sounds like we’ll have to settle. Two shows per night is $56-$62 per month, 3 shows per night is $84-$93 per month vs. about the same amount* to cable/satellite per month for thousands of shows on hundreds of channels, not to mention live sports and news, etc. 99-cent TV show rentals are just not very competitive with cable/satellite.

Imagine building your own a a carte channel lineup and paying for that and only for that, not all of the bundled crap that’s currently forced onto cable/satellite consumers? Go ahead, imagine, because that’s about as close as you’ll ever come to seeing it.

So what if the dreck channels that nobody watches go dark? If they can’t get enough people to pay for it, then they’re obviously not worth the effort and they deserve to die. And, you know what, technically a channel is a bundle. The program is the basic unit of TV, not the channel. Just like a song is the basic (salable) unit of music, not the album (which is an artificial construct; a bundle of forced purchases). In fact, the television channel is an anachronism. But 99-cents per show is just too much vs. cable/satellite. For individual TV show rentals to be truly competitive, they’d have to be far less than 99-cents per show and Apple would still also have to offer live streaming news, sports, etc. Talk about a bag of hurt…

Let’s hope that Apple keeps trying and considers this an incremental step towards letting the consumer decide. Apple killed bundling in the music business and put the power in the hands of the consumers – where it belongs since, after all, it is the consumers’ money – may they someday do the same in the TV business. Talented television producers, writers, directors, actors, and crew members need not fear an audience with the ability to choose.

*The average digital cable customer already pays almost $75 a month, according to research firm Centris. And many subscribers pay more than $100 per month.

50 Comments

  1. “The a la carte rental plan follows an abandoned effort to create a subscription television service, said two of the people. Media companies didn’t want to endanger revenue from cable providers such as Comcast Corp. and Time Warner Cable Inc., the people said.”

    So, instead they endanger revenue from end users who are sick and tired of paying for 97 channels they never watch, and are being driven in ever-larger numbers to “alternative” sources that better fit their schedules, pocketbook, and desires. Yeah, that makes sense.

    Hey, media company dumb dumbs… Take a look at the music industry if you want to see where you’ll be in five years if you keep this up. Look, you can either offer people the product they want, in the format they want and be paid for it, or people will find a way to get what they want without you.

    Oh, and Comcast, Time Warner and the rest of you guys… Your days are numbered. Soon, you’ll be nothing more than “dumb pipe” providers. Get used to the idea.

  2. Looks like it’s torrents still for me (technically not illegal in Canada)…especially since the latest Mad Men episodes aren’t even available in HD here…

  3. I haven’t had cable TV for over 15 years. Its just too expensive for the few channels that are worth watching. Give me a choice to get the channels I want for a reasonable price and I will be interested. As it is, I’ll find better ways to spend my money.

  4. I think last year I bought the entire season 3 of Mad Men for about $2 per episode, i.e. $2 for 40 minutes of content that I got to keep, and watch at my leisure.

    A 20 minute TV episode that I don’t get to keep, but is streamed with a narrow time window in which to watch it, for $1, is not an improvement but rather a step backward.

    But I can see how the studios love this deal: The new iTV will have a hard drive too small to store anything on it (the new server farm replaces the drive) so since you don’t actually have a digital copy, you can’t share it, legally or illegally. If you ever want to watch an episode again or show somebody, you pay for it again!

  5. Ottawa Mark:

    You can get a US iTunes account. Use a US gift card to set it up. After that, you can top it off with your cdn credit card and no VPN required. It’s a great loophole.

    Or use torrents, whatever.

  6. How will this fly when there are plenty of free sources (Hulu, etc.) for streaming current shows, cheap sources for streaming older shows (Netflix and Hulu+, etc.) — not to mention brain-dead simple tools for torrents — for those who don’t want cable, and it’s no cheaper than paying for service and a DVR box from your cable company for the same convenience?

    MDN is right; if this is correct, Apple got screwed.

  7. I could get all the TV I could ever want with less than ten channels, including what the kids watch.

    I am currently paying AT&T about $180/ mo for U-Verse TV and Internet.

  8. One thing to keep in mind: Current cable TV is not solely paid for by subscription. In fact, I think that the money made by subscribers is a rather small part of revenue for the studios.

    Cable TV makes most of its money from advertisers. The current danger is that this revenue stream will break down, since people paying a premium subscription or rental rate, or even want to buy the content as with current iTunes purchases, categorically do not want to be bothered by commercials.

  9. For my viewing habits $1 is too not much. I usually watch 10-15 programs per month. I think that with this pricing I could go ahead and cancel my cable tv and save money, keeping only the internet service. How many others have viewing habits like me? Probably not enough for the cable companies to feel the pain. But it would be great if they lost at least 10% of their subscribers to a wiz-bang new iTV.

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