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“Unveiling a new Apple TV product Wednesday, Steve Jobs said he had hopes for ‘other studios to see the light.’ But sources at other content companies believe Disney and Fox are moving like moths to a flame,” Wallenstein reports.
“At issue is the 99-cent price tag that represents a steep discount from the TV episodes already offered on iTunes. Multiple executives described it as an unacceptable devaluation of the content that puts in jeopardy the so-called ‘downstream’ windows crucial to generating profit including DVD and syndication,” Wallenstein reports. “One studio chief drew a comparison between the new arrangement and the damage done to the music industry when Apple disaggregated the traditional album-oriented business model in favor of a singles-centric approach.”
MacDailyNews Take: Apple gave choice back to consumers. In general, an “album” is a forced bundle masquerading as “art.” The smallest salable unit of music is the song. Consumer should have the ability to purchase music in such a way. Albums continue to exist for consumers who want them. Most don’t. The smallest salable unit in TV is the episode. Plus, as opposed to songs, TV shows almost always are watched only once. 99-cents seems to be the high-end for what an average consumer would consider acceptable. Even that price makes it dicey as to whether the average consumer would make it a habit. It’s still more of a catch up price (your DVR missed it, you weren’t home that night, etc.) What does the above studio chief want, exactly? TV shows sold only by the season? Some of these luddites cling to old models (DVD boxed seasons in Wal-Mart) as desperately as the most myopic music labels. Successful businesses adapt to change, not try to ignore it or stifle it. Let’s put it this way: It’s no surprise that Jeff “Spell it with a capital F” Zucker is currently on the wrong side. Note to other execs: If your standing next to Jeffie, it won’t bode well for your business in the long run.
Wallenstein continues, “While few were surprised that Disney again joined forces with Apple, the emergence of News Corp. as a willing partner this week raised eyebrows. The deal reportedly was made at the behest of Rupert Murdoch, who overruled the objections of News Corp. executives because he is trying to advance his company’s interests in the digital news business. Noting the lockstep in which Disney CEO Bob Iger has moved with Jobs, the company’s largest shareholder, one exec cracked, ‘If Steve Jobs jumped off a cliff, Iger would hold his ankles on the way down.'”
MacDailyNews Take: We don’t see Steve doing much cliff diving. About all he seems to do is make tons of money for Apple and their partners. Steve Jobs is all about moving into the future. On a road paved with gold, no less. Iger is smart to follow. Those who don’t will be left in the dust.
Wallenstein continues, “Cable and satellite operators could be particularly steamed as TV networks are perennially embroiled in tough negotiations with them over retransmission fees for the same content they are making available to the competition. ABC is now engaged in such a standoff with Time Warner Cable, which likely will count Apple TV as a threat to its upcoming TV Everywhere initiative. “
MacDailyNews Note: ABC and TimeWarner announced the end of their standoff and a new multi-year agreement this morning.
Wallenstein continues, “Although Apple is touting the inclusion of Disney and News Corp., the holdouts are hoping their absence from iTunes rentals will weaken it. Already they’re taking pride in having successfully prevented some of Apple’s previous efforts, including a 99-cent download (as opposed to rental streaming) and a bundled monthly offering.”
MacDailyNews Take: Viacom, CBS, NBCU, Warner Bros., etc. are “proud” of not offering potential customers the choice that ABC, ABC Family, Fox, Disney Channel and BBC America offer. Remember that.
Wallenstein continues, “Disney strategy in particular was described by one rival exec as ‘schizophrenic,’ considering its series pop up on ABC.com, Hulu, Hulu’s iPad offering and now Apple TV.”
MacDailyNews Take: That’s simply moronic. Disney’s strategy is the proper one: Make your content available in as many places as you can at reasonable prices. That’s not “schizophrenic,” it’s just smart business.
Full article here.
MacDailyNews Take: These fat cat holdouts seem to have completely forgotten the value of a dollar. There are only so many entertainment dollars to go around for the average consumer. How many subscriptions and plans and crap are people supposed to be able to afford? The ISP, SiriusXM, TiVo, Cable TV, Hulu Plus, $15 3D movie tickets, and on and on and on. The holdouts just don’t get it. Make your content easily available at a reasonable price, don’t throw up artificial roadblocks and make it difficult/expensive. BitTorrenting TV shows is not that hard and it’s free.
Isn’t Fox also a partner in Hulu?
Like Disney, Fox is embracing technology to be everywhere at once.
All that the cable companies need to do is jack the data rates up about 75 more bucks a month and they will gladly allow this to be a success. They will get the bucks regardless of whether the TV networks sign on or not. The TV networks could go without being on cable and people could buy the episode for a night. The network may not care as long as they make their money, however, other folks who do not buy into Apple TV will still want over the air programming. I see the networks going with the program because it will be an easy implementation and most of the work will be done by Apple.
Regardless, I do not see the anybody paying more money other than the consumer. It will be an interesting experiment. At 99 bucks it will be easier to sell. The device really is nothing more than a wireless access point to your TV. Albeit one with a conduit to the iTunes store. I do wonder about the 720p limitation, however, many folks are happy with that, and many will not notice any difference.
An interesting hobby indeed.
I gave up my Sky HD subscription around 6 months ago. Why? It felt like I was paying to watch adverts. Now I have a Freesat HDR box and an EyeTV Sat on my 27″ iMac. No subscription fees.
I buy 4 or 5 HD TV shows (seasons) from iTunes and watch them through Apple TV.
I was paying @£60 a month for the full HD package. £720 a year. I only ever watched maybe 4 or 5 shows on various (paid) channels, the rest of the shows were on the free channels.
The shows I buy on iTunes are @£40 each. Total cost £200.
Freesat + Apple TV saves me over £500 a year!
The content providers have to realise their customers are the viewers sitting at home, not the networks broadcasting the material on offer. If I want to watch say Lost, for example, I should be able to watch it when I want, not when the network decides to broadcast it.
No wonder TV viewing is on the decline.
They can get with the times and join the media revolution or continue their vanishing act and face extinction.
Time flies.
The only one who’s schizophrenic is Wallenstein. If rentals take off for the ones that have joined Apple, it will only be a matter of time for the rest of them to see they’re losing money and want to join with Apple.
I’m sure the latter will be the case as with iTunes music.
Wow, is Network TV still around?
Can’t remember when the last time was that I watched a program, off the schedule, complete with commercials… Never, it’s a waste of 16 minutes of my time.
You can’t take it with you when you’re gone.
There is such an abundance of movies and content, that hoarding it, rather than making it available exclusively at a premium will result in passing on it.
It’s now or never- Do or Die, don’t cut your nose to spite your face idiot studios!
Your comments and spelling I might add is ridiculous sometimes. Can we get some unbiased news please? Are you trying to date Steve Jobs or something? Everything they do you LOVE. I love apple products too but I don’t diss EVERY single thought or disagreement with apple. Get your nose out of their crack. It’s turning toasted almond with a few corn kernels.
“The smallest salable unit in TV is the episode.”
According to YouTube, it’s just the intro.
Intended to say:
You can’t take it with you when you’re gone.
There is such an abundance of movies and content, that hoarding exclusively for a premium, rather than making it available at affordable albeit cheaper pricing, everywhere, will result in everyone passing on it.
It’s now or never- Do or Die, don’t cut your nose to spite your face idiot studios!
It seems that the studio execs are still incapable of understanding what has happened and is happening to the music business. They fail to see the link between piracy and Apple store. For them, the Apple model is killing the music business just as much as piracy is, because of the demise of the bundling model. The problem is, bundling model was destroyed by file sharing. Had labels been successful early on in resisting Apple and killing the iTunes Store in the very beginning, the album model would still be dead, killed by the rampant piracy, and CD sales would have continued to slide at the same pace as before, if not even faster. The only difference would be, instead of buying single tracks from Apple, people would be downloading single tracks for free. And no amount of legal muscle would have slowed that down as much as iTunes Store has.
Studio’s main concern is the “downstream windowing”. The ability to sell their content at scheduled intervals after the original broadcast (DVD, syndication). They fail to understand that consumers have only so much money. Rather than paying $70 per month for a bundle of channels nobody watches (Discovery Military, Logo, The Church Channel, Animal Planet…), they would likely spend the same $70 for commercial-free shows they actually DO watch. Ironically, the big studios would end up getting much larger piece of that money pie under such an arrangement, with those obscure channels disappearing due to lack of revenue.
I wonder how long will it take for them to come around… I could see CBS (and CW) joining rather soon, but NBC/Universal will likely hold out as long as they possibly can, judging by their prior stubbornness and fear of Apple.
An album is not a forced bundle. No one expects Stephen King to break up his short story collections into little 99 cent pamphlets of individual stories.
“Damage done to the music business'” ???!!
Does nobody remember Apple SAVED the music business? Not only did piracy drastically diminish, people like me started spending much more on music. In return, I got much much more music for my money, and more diversity. But the bottom line for the music business is: I spend more on music now than I was spending pre-iTunes. I am not alone.
An “album” is a forced bundle masquerading as “art.”
Love the MacDailyNews, but this comment is just plain ignorant. It really depends on the type of music. If you’re talking about the pop album du jour, then maybe yeah. But there are plenty of artists that intend for an album to be taken as a whole.
MDN, don’t make sweeping statements like this just to reinforce your point. You can do better than that.
We have been trained to expect TV to be free, supported by commercials. We have been trained to channel surf through a zillion channels of junk to try to randomly find some program with a bit of interest.
The Apple model will fail because many of us will not pay $.99 to experiment and see if we like a program, and networks have little clue what programs will “succeed” so programing is constantly changing. Last night I opened the ABC app and realized I have never seen an episode of most of the shows so I did some “program surfing” only to discover there were few shows of interest. When I was done I realized that little 20 minute experiment would have cost me over $10. That is when I decided that the current Apple model can not succeed in a big way without some modification that will allow free sampling.
Even then I would prefer a model supported by fewer ads, ads targeted at my personal interests. Quality informative ads can be valuable tools to keep me informed about products I use. Apple TV with interactive iAds would be of great interest to me, and may generate far more income.
@stmix
My thoughts exactly
“Apple disaggregated the traditional album-oriented business model in favor of a singles-centric approach.”
No, your lousy “talent” did that when they pumped out pure crap mingled with 1 or 2 good songs.
If you think about it, having a direct-to-consumer based system like the rumored “iTunes subscription plan” or 99¢ TV purchases would have yielded the studios more money in the long run.
Think of how many TV shows are produced that fail after several seasons of re-timing, re-working etc. – all of that money thrown down the toilet trying to save a show that viewers reject. Using a system like iTunes the studios could see how popular shows actually are and understand better what makes a great show. Instead now they use an archaic Neilson system (where 1 box is supposed to represent x-number of viewers) and the studios continue to hide behind a wall of ignorance while they continue to pump out crappy programming.
Can I not go on line an watch these hold outs for free with an add in front of it with my Mac? So, I will get a Mac mini for my main home HDTV and a few of the new AppleTV modules for each HDTV in my house. If they don’t show it I will find something else to watch or pick it up some other way at no extra charge. So, they get $0.00 not $.99. I can live with that! Can they?
to all you “albums are art” people:
For every album that is genuinely art, there are a thousand that are artificial bundles.
MDN’s take is right. Remember, the exception proves the rule.
The entire business strategy of these Hollywood giants can be summed up in two words: price gouging. that’s all they know how to do. that is how they live their lives. the inevitable mirror image consequence of that is file sharing – just steal their stuff instead of paying ridiculous prices for it.
the smart strategy instead would be to maximize total annual household expenditures on their products with a high volume, low price model that is very convenient. Netflix has shown one way that can work. Apple is offering another.
but these guys are blinded by their greed – and egos.
TV worth watching is worth buying. Between iTunes season passes and EyeTV I’m good.
Cabe and broadcast nets get a couple of bucks a month per sub via cable TV and satellite yet they are reluctant to rent a show for $.99 an episode. Do the math.
Most broadcast net programs feature 24 original episodes a year, many cable series 12. On cable and satellite they get, a $2/month per subscriber, $24/year for their entire broadcast schedule. Via iTunes rental at $.99/episode they would be getting that much PER SERIES. Via iTunes purchase they are already getting about a dollar an episode for an SD season pass.
That tells me that this is all about greed- not fear of theft. Maybe they have been talking to MiddleBronfman. We all know how that worked out.
Wait until you can air share your hulu plus wirelessly to the Apple TV, then when others start joining that.
I have to get all cable channels because the few channels I watch cost more than packages.
Netflix + Handbrake = F You Wallenstein