Apple’s upcoming Internet TV service: 8 key questions

“Apple is reportedly planning to launch a streaming-video TV service, with 25 channels in all, anchored by major broadcasters, including Disney’s ABC, Viacom’s CBS and New Corp.’s Fox,” Tim Mullaney writes for CNBC. “The move is a huge shot across the bow of cable TV operators, since the service would be a big boost to a fast-growing but poorly understood industry phenomenon—cord-cutting.”

“Cord-cutting is when a household decides to get its video, including TV, over the Internet rather than from traditional cable or satellite TV providers,” Mullaney writes. “As it becomes more common, it stands to reshuffle household video budgets and viewing patterns and remake the power relationships between companies that make programming and those that distribute it. And with the power goes the money, in the form of fees paid by consumers or the money that distributors pay to programmers.”

“What will all this mean? Will consumers save money? And why is the change accelerating now?” Mullaney writes. “Here are… 8 key questions.”

1. How much do people pay for cable?
2. How many people are cutting the cord?
3. Who else is pushing cord-cutting?
4. What are cable companies doing about it?
5. Does cord-cutting save consumers money?
6. How many more people are likely to cut the cord soon?
7. What’s the future of my TV?
8. How would this service impact profits in the technology and media business?

The answers are in the full article here.

Related articles:
Will upcoming Apple Internet TV service be cord cutting’s tipping point? – March 17, 2015
NBC plans Apple TV app that requires cable subscription later this year – March 17, 2015
Apple Internet TV service would awaken a sleeping Apple TV giant – March 17, 2015
The future of Apple TV – March 17, 2015
Apple in talks to unveil 25-channel online TV service in June, launch in fall – March 16, 2015

29 Comments

  1. In the end it may be a toss-up, depending on which and how many streaming services are subscribed, and the cost of Internet service.

    Best outcome: the threat of losing customers lowers pricing structure. 😀

  2. Cost is the big key here. If the WSJ report of $30-40 is accurate for 25 channels, then that’s simply not going to cut it. I pay $40/month more for cable with Internet with 72 hd channels and a dvr box than I would for the same speed just Internet plan. So I get twice the channels for the same price or slightly more. Yes the cable box UI sucks but not enough for me to pay more than I’m paying now for fewer channels. I desperately want to cut the cord but until true a la carte is available for an appropriate cost. I’ll stick with cable. So far the only thing I can say is that there is finally movement in that direction.

    1. Sometimes to get in the game at all you have to aim a little short of where the puck is going to be to prevent a block and take it in a slightly different direction to get around it. Not ideal but as long as it gets to the place you want to be in the long run well worth while.

      1. That’s sort of my question too … it doesn’t really do a whole lot of good to have a competing “TV Service” from Apple if one is still locked into an expensive broadband ISP contract.

        The game that the Duopoly plays is “bundling” and breaking that up (such as by cutting just the TV cord) makes the remaining indivdiual services become more expensive.

        ——————

        In any event, I do find the timing of this Apple TV stuff to be quite interesting … that the FCC just has moved off of top dead center with the Title II stuff sounds like too much of a coincidence: I suspect that Apple has been strategically waiting for that regulation change to occur.

  3. Cable TV is dollar for dollar a far better value for me, especially considering Comcast owns NBC.

    If your family watches less than 30 hours per week, an over the top subscription might make sense though.

    I spend $200/month on cable and broadband. But because I watch a great deal of TV my cost per hour is about $0.25.

      1. Yes, its 24/7: $200/30 days = $6.67/day … divided by 24 hours = 27 cents per hour.

        If we alternatively assume that the household is getting 8 hours/night of sleep and that the breadwinner has a nominal 40hr/week day job, this cuts out 106 hours of the 168 hour week, which is 63%. This means that only (1-.63) = 38% of the average day’s hours are available, which is 9.12 hours, so $6.67 divided by 9.12 hours/day = 73 cents per hour.

        However, this also assumes that basically 100% of one’s at-home waking hours are being spent watching TV, not eating meals, taking a shower, shaving before going to work, doing chores, washing dishes, mowing the lawn, playing with the kids, helping with their homework, etc, etc … its probably fairly realistic to assume that in reality, very few people are actually going to crack 50% utilization during their waking hours … and at a 50% utilization point, the aformentioned 73 cents per hour jumps to $1.46/hour

        -hh

        1. You have made a number of assumptions which are incorrect:

          First, you assume there is only one viewer per household (but let’s accept that).

          Second, you aren’t splitting out the cost of the broadband as a stand alone service that you would need for OTT internet based subscription services.

          I also subscribe to HBO which will soon be a similar cost per month whether I have cable TV or not.

          You are also assuming you could get 150 mbps for the $35 rate my cable company adds for broadband (It goes up to $90/month if I don’t take phone or cable package).

          Then, for comparison, you would have to add the subscription price to the 150 mbps service if you wish to watch at home on your TV.

          1. @Shock Me:
            “You have made a number of assumptions which are incorrect:”

            But of course I have, because your initial comment was very terse.

            Nevertheless, the question that @davemchine asked still holds, namely that your claimed “cost per hour” was based on very oversimplistic division (and no sleep or job, etc).

            Insofar as the rest – – including with all of the additional information that you’ve now added – – it doesn’t really matter, because you’re the one paying the bill. So if you’re happy with paying that bill, that’s all that matters to you.

            And what’s right/wrong is a YMMV, for someone else might prefer to do with less prepaid entertainment so as to have an extra $1800/year in their pocket from which they can go buy a new Macbook every year.

            -hh

            1. And we’re back to what I said the first time. Assuming the shows you want to see are available, a streaming VOD subscription might be cheaper for people who watch less than 30 hours a week. But when combined with broadband costs it won’t be that much cheaper.

              I have friends who only watch Netflix streaming and for the few hours they watch a week it is an excellent value.

              By the way it wasn’t an overly simplistic division. I actually watch about 40 hours of TV in the course of 7 days. I seldom watch anything live because I have a backlog of programming saved to my 6-tuner DVR.

              Since the price isn’t likely to go down, I like to get value for my money. I don’t really need a new laptop every year, but I suppose there are other things I could spend it on, or perhaps even save the money. But hey I enjoy it.

            2. “And we’re back to what I said the first time.”

              …which is merely that you believe that what you have works for you. Got it.

              However, for anything more than that, about the only thing we can really say is that from the little we currently know about this rumored service, at not-insignificant variable is the cost of bandwidth – if it does turn out to actually be an additional cost. That’s about all that can be said at this stage.

              If we wish to tangent off into various assumed use cases (such as someone who doesn’t watch “a lot”), there’s also more factors to consider. For example, if they’re near an urban center, they may have the option of OTA – and said channel selection may or may not be good enough for their interests (same assumption you mentioned). And since OTA is basically free, it can be a much better ‘deal’.

              ——————

              “BTW…I actually watch about 40 hours of TV in the course of 7 days…”

              –> okay, but that works out to $1.15/hr, which is ~4.6x more than the $0.25/hr that you initially claimed.

              —————–

              “…Since the price isn’t likely to go down,…”

              True, because of the business interests. However, it is one of the general exceptions to technology’s trend over the past 50 years, which has been that performance & capability go up while the price also comes down…and that should give us pause before we blithely claim that is represents a wonderful “value” for consumers.

              —————

              “…I don’t really need a new laptop every year,…”

              Nor do I, but the point being made was that our priorities are all different:

              I can just as easily look at your CATV bill and observe that it can buy me a pair of tickets for a vacation to Europe every year instead of the Jersey shore.

              Someone else can look at it and realize that at ~15 months, its enough change to buy a new Canon EF 100-400mm IS “L” telephoto lens.

              Or someone else can look at it and say that its enough to pay for a weekend of scuba diving every month.

              Or someone else can look at it and point out that its enough to pay for 3-6 pairs of Broadway tickets (or other live performances) every Season.

              And so on.

            3. There are always opportunity costs to anything that you purchase.

              The $0.25 figure comes from the programming costs portion of the total figure. Which is $35 to $40 per month (i.e. not counting taxes, broadband, and HBO which would be the same assuming your cable TV company doesn’t have a monopoly on internet service in your area.)

              Someone in an urban setting receiving OTA, doesn’t get the cable/satellite only channels, and unless they have a PVR, they will miss shows that compete with something they watch live. Cheaper certainly but not comparable.

              The real issue is that even watching as much as you possibly can and capturing all you wish to see in your DVR. You simply don’t have enough time to see it all even if you were an unemployed insominiac.

              So cable tv is the prettiest horse in the glue factory or the least dirty shirt at the laundry. It’s the worst deal possible except when compared to all the others.

              As far as the broadway tickets go, I think the show better be memorable since I’d have to fly there and stay at least the night see a few of the sights to make the trip worthwile. So then I’d be out the same amount of money for far less time passed. Not a horrible trade since live performances by skilled actors are generally superior, its just not very likely.

              I might want to spend the money on the camera before I travel there though so now we are talking at least two years of cable to do the evening right.

              But hey whatever works for you.

            4. The way that you’re doing your math now, it appears that you’re slicing $40 off your $200/month bill, which at your claimed $0.25/hour, that’s 160 hours/month (=37hrs/week) for basic TV entertainment, with the remaining $160/month balance has not been similarly accounted for.

              With only (168 – (7*8+40) – 37) = 35 remaining waking hours left in your week to utilize these other services (HBO+Broadband+etc), their rate works out to an average cost to you of $160/35 = $4.57/hour. Again, its a YMMV for if that’s personally worthwhile to you or not.

              In any case, I’d suspect that you probably roll in your HBO consumption into your generic “TV” hours watched, which means that the suggested $40/mo rate is actually higher.

              That’s fine, but it would subsequently require even more viewing hours to hold to your $0.25/hr claim…simplistically, if HBO is +$15/mo, then 51 hours (vs 37hrs) are required, which also means that 51/(168-7*8-40) = 71% of your non-working waking hours are allegedly being spent in front of the TV, which leaves you all of 3 hour/day for the sum of: personal hygene, meals, commuting to/from work, household chores, internet surfing, etc.

              -hh

            5. Wow. Where to start. We subtract HBO since it will cost $15-$20 no matter the transmission medium and I only subscribe for Game of Thrones $180 We subtract the broadband cost for 150 Mbps service without TV $90. We subtract taxes even though they are likely higher for individual episode scenarios 2.99 to 3.99 per episode. We subtract Enhanced DVR charge although we can make some savings there by purchasing the OTT equipment outright down to $50 now. We subtract $10 or not for the program guide since a VOD service or subscription service would likely roll in the cost of their interface down to $40 for programming.

              Spend 4:30 pm to 11:30 pm watching TV and surfing on iPad fast forwarding through most commercials. Watch from 1pm to midnight on Saturday mixing in Laundry Meal prep. Watch 10am to 9pm on Sunday.

              I commute 2.7 miles to work and sometimes drop home for lunch and watch a sit-com while I eat.

              $0.25/hour but only when you can treat it like a full-time job.

              Why are you making the math so involved?

            6. @Shock Me:

              My point is merely that our personal spending choices are whatever we want (which is fine) – – but when we choose to make them public by posting them, we are inviting them to be critiqued by disinterested third parties…and that’s all that this is. This “disinterested third party” is of the opinion that you’ve spent a lot of effort to try to rationalize your level spending, and in a fashion where youve clearly under-stated its real, true cost.

              To use an analogy, its like trying to say that a new car didn’t actually cost you $30K because one could have alternatively spend nothing by choosing to walk to work. But the ground truth is that there’s that car in our driveway so we did indeed spend the money.

            7. You don’t strike me as particularly dispassionate about a simple spending choice made by someone else.

              Your latest illustration of your point made absolutely no sense. Saving money by walking versus driving is really more your argument this whole time isn’t it?

              I’m saying something more like I paid a bit more upfront for a plugin hybrid because my commute is short and can be done totally on cheaper electricity instead of gasoline. And then you are saying just walk it and save the money for Broadway tickets and airfare.

            8. Oh, and on the car analogy, it reminds me of a guy who paid an extra $8K for a diesel without first calculating that it only required 350,000 miles to be driven to reach br break-even.

      1. Australian then Brit then American all to buy US media to propagandize the American people via special circumstances so he could basically walk in and claim American citizenship.

        Fox News is a brand- not a statement of fact.

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