Analyst: Big media may be forced to team with Apple in order to monetize the small screen

“Ben A. Reitzes with Barclays Capital said in a note to investors on Tuesday that the trend toward so-called ‘small screen’ viewing on portable devices beyond the living room HDTV is providing less advertising revenue to big media companies than traditional ‘big screen’ viewing through cable TV,” Neil Hughes reports for AppleInsider. “That issue may force media companies to align with Apple on a new set-top box the company is said to be pursuing.”

Hughes reports, “‘Apple may hold the cards in being the only company that can fully monetize the small screens for big media companies,’ Reitzes wrote. ‘The risk of not partnering with Apple is that as young people may ‘cut the cord’ given the cost of cable that a screen connected to an Apple TV with AirPlay can provide a substantial array of content.'”

Read more in the full article here.

13 Comments

  1. I agree with the “no easy answer” to this.

    Ideally though what I’d like to see is the app store remain as is with the sandboxing, and highlight those apps with a “secure icon”, while also allowing signed apps that are clearly labeled as not meeting the security requirements of Apple.

    I’m far less likely to buy apps outside of the app store, not because they aren’t sandboxed, but rather because I simply can’t stand all the different funky copy protections and issues with payments and serial numbers.

  2. Dinosaurs are disappearing…My godchildren don’t watch much TV and when they do it is often a DVD/Movie, without ads.

    But everyone of them pulls up their iPhones dozens of times a day.

    Figuring out how to “reach out via the small screen” is not going to happen with “just ads”. It is going to be tough, but winners will do it.

  3. I’m glad big media companies are scared. They should be. Maybe they’ll finally be willing to give people content the way they want to view it, instead of forcing people to view it their way.

  4. How big is “Big Media” compared to Apple the $600B gorilla with $117B in spare change? Couldn’t Apple start commissioning its own content with a few Billion Dollars, that’d get Hollywood’s attention? You don’t want to give us content, fine we’ll make our own.

    1. Jobs did set up and run Pixar, of course. But that was a small studio (however successful) that only produced a few titles.

      But that was Jobs’ side gig. Only in limited points did he cross Apple and Pixar together. I don’t think it is in Apple’s focus or skills to be content producers like that.

      I expect there will be enough erosion before too long that Apple won’t have to do much — the networks and cable operators will feel the squeeze (I’m a cable cutter going on 3 years, and there’s more of us everyday…)

  5. TV and movie production companies face a dilemma very comparable to the one that drove recording companies into Apple’s arms: technology was allowing consumers to copy or listen to recorded music at almost zero cost, so profits had disappeared from the business until Apple’s iTunes Store provided a way to monetize their product. What is different this time around is the existence of several Apple competitors who copy its every move, so the company will exercise less market power when negotiating for video content than it did when negotiating for audio content.

    In general, the market for repetitive viewing of TV shows and movies is far smaller than the market for recorded music, where consumers may listen to the same song dozens of times over the space of a few years. Therefore, rentals are probably more appropriate for TV/movies whereas purchases/ownership is more appropriate for most recorded music.

    Or perhaps the iTunes Store could develop a hybrid purchase/rental, as in the college textbook market. Customers would purchase TV shows or movies at regular price, and stream them from iCloud for viewing at any time. Alternatively, the customer could ‘sell back’ the movies to Apple for half price, and lose access to it forever. However, any movies that Apple buy back from consumers could be re-sold without any additional royalty or other payment to content providers.

  6. HBO was the killer content app for nascent cable industry. The question should not be how to get HBO onto the Apple TV but what content providers will become the killer app for wired viewing. Netflix and Hulu are just the beginning – they are like early HBO before HBO began producing its own content.

    It will be great when some hungry and visionary production company willing to to take a big risk makes AAA content for iPad / AppleTV viewing as its primary distribution. A hit series in the spirit of The Sopranos or LOST made for on-demand devices that can make greater profits by cutting out the greedy cable companies. Maybe these pioneering producers and directors are still in film school.

    1. Part of the problem, and I believe Steve Jobs said this himself, is that people want professional quality productions. While some directors can make movies on their own, a television series may be too much for one person to handle. However, a small production team on a lean budget could probably produce a hit comedy, paving the way for the big boys to get on board.

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