Apple’s plan to destroy the fat cable bundle

“The cable bundle is misunderstood. While analysts and pundits focus on when the cable bundle will finally succumb to Netflix, HBO, and Hulu, the reality is the future of television will be built on the back of the video bundle,” Neil Cybart writes for Above Avalon. “Due to superior economics, video bundles are one of the best values in the media space and will remain the dominate way we receive premium video content. We are quickly approaching the point where Apple can capitalize on market dislocation to destroy the modern-day big cable bundle with a more lean bundle that is built to thrive in a mobile world. ”

“The cable bundle has been one of the best consumer deals in the modern era. By subsidizing the true cost of content, the bundle makes it possible for consumers to receive a vast amount of video content for an artificially low monthly price. The bundle works marvelously well as long as everyone pays into the system,” Cybart writes. “This has been the case for the last 20 years. Nielsen estimated there were 116 million homes in the U.S. with televisions, with approximately 100 million having some form of pay TV for the 2014-2015 TV season. ESPN is one of the most widely distributed cable networks, reaching 95 million homes. ESPN has a farther reach than Facebook, a testament of how much power the cable bundle represents.”

“The modern-day cable bundle is now vulnerable,” Cybart writes. “Apple’s strategy to destroy the large cable bundle would entail taking the best parts of the current bundle and creating an improved bundle. Essentially, Apple would be using a slimmer cable bundle to kill the large cable bundle. This may not seem too innovative, however it is one way of addressing the biggest issue people have with their large cable bundle: finding and watching content at a time of their choosing.”

Much more in the full article – recommendedhere.

MacDailyNews Take: Bundles are forever. Hopefully, they’ll just get skinnier and smarter.

Apple’s Internet TV service will certainly have to offer ESPN. It will also likely require the “Big Four” networks (ABC, CBS, Fox, NBC) – although it could launch with three out of four and eventually hammer out a deal with whichever one is being the most reticent.

Beyond the Big Four, if you go by ratings (total viewers), the top 20 cable networks are:

1. ESPN
2. USA
3. TNT
4. Disney
5. TBS
6. History
7. Fox News
8. FX
9. Discovery
10. AMC
11. HGTV
12. Adult Swim
13. Nick at Nite
14. A&E
15. ABC Family
16. Lifetime
17. Syfy
18. Food
19. TLC
20. Bravo

Source: Nielsen estimates, full year 2014

Of course, Apple TV will also need to continue providing access to Netflix, Hulu, Amazon Prime, etc. for subscribers of those services.

SEE ALSO:
5 major Apple TV leaks reveal radical overhaul – August 20, 2015
Apple’s next-gen Apple TV to cost $149? – August 19, 2015
Will Apple TV kill cable? – August 19, 2015
Apple’s Internet TV: How many TV networks will make the cut? – August 18, 2015
The next-gen Apple TV’s marquee feature – August 18, 2015
What September’s new iOS 9-based Apple TV is likely to deliver – August 17, 2015

33 Comments

  1. I don’t understand why Channels can’t be Apps. They all bill through iTunes, and charge their own monthly rate.
    I’m charged once a month.
    I have what I want, where I want, when I want it.

      1. I think Tom is right.

        And if Shan is right then it would weed out the crap channels, which gets me to the article: “The cable bundle has been one of the best consumer deals in the modern era.” Ha! What a laugh. Honestly, what is available in the cable bundle is a little bit of good and a whole lot of drivel. Before cable the big 3 (sometimes 4) broadcast companies would work really hard to put on quality programing that was better than the competitor. After cable bundles, no body really tries that hard and we get oodles and oodles of ridiculous reality programing and very poor quality drivel. We get better sports coverage since cable, but that is about it.

        The sooner that cable dies – the better, in my opinion. The junk channels are artificially being propped up, they need to die.

      2. It would only be too expensive if you actually buy subscriptions to every single channel you already have in your ridiculous bundle. But in reality I don’t give a shit about 99.9% of these channels. I would subscribe to CNN, AMC, and HBO. That’s it! Bam, even at a high $15 each (that’s what HBO solo goes for), still knocks $100 off my bill.

        1. Plus! Even if it ends up being the same price, but you only have the channels you actually want, it will destroy the garbage TV that nobody wants to watch that everyone keeps paying for anyway. This will force content providers to actually make decent content and channels like TLC with garbage trailer park shows will fall flat on their disgusting faces.

  2. No i do not think so. I think Apple should simply embrace and encourage more internet age companies like Netflix and Hulu and Instant Prime and Crackle, and just leap frog the old media. No begging cable stalwarts for content , Focus and encourage a new paradigm instead of strapping the baggage of the old system to a the new one. Allow for the democratic open space of the internet that a startup to thrive

  3. Channel apps would actually allow more diverse and democratic offerings as well as niche content. Much as iTunes has made it possible for music independents. The difficulty would be in having a big enough subscribed base to maintain content costs. Therein lies the rub.

    Why do I get the nagging feeling this will all cost us about the same and for less in several ways for all involved in creating and watching programs?

  4. I challenge Neil Cybart’s central hypothesis: “The cable bundle has been one of the best consumer deals in the modern era.” I think the cable bundle is a consumer’s worst nightmare. Consumers are forced to pay for crap they don’t want. It allows some nerd bureaucrat to determine what shows will be produced, like all the garbage reality shows, Kardashian shows, etc. It is sort of the TV equivalent of the all-you-can-eat-buffet. But a lot of people simply don’t eat this way. Anyway, I stopped watching TV years ago. Like Bruce Springsteen once sang: “300 channels and nothing’s on”. There is plenty of potential out there for targeted, rather than blanketed, viewership.

    1. I could not agree more with you re the bundle benefits. The bundle has only been helpful to grow the bundle and monthly charges for the consumer to the benefits of cable providers.

      The only benefits from consumer perspective is imaginary and cost effective to encourage opulence and for the imaginary person who watches every program on every channel and the preverbal couch potato that is flipping through channels all day and night.

      Everyone I know is not like that imaginary person and have programmed their favorite channels (mostly less than 15) and simply do not even see all the channel they have no choice but to subsidize.

  5. I completely disagree with MDN on the point of bundled services. People don’t want bundles, they actually want content when they want it. No one wants an artificial schedule set by some moron at a cable company. We want content that is easily accessible when we want it.

    1. Bundles force consumers to subsidize programming that they do not want. Who cares if someone pays $100 a month for 200 programs if only 5 are watched regularly. I would rather pay $70 a month for a select select few program that I can watch whenever I choose.

  6. I think the future is to buy shows instead of networks. This is the way it is with music. We follow our favorite artists, not the labels they are signed to.

    Look what happened to Late Night with David Letterman when he moved from one network to another. His audience followed him.

    1. TRUE and all we need is to have a way to create virtual channels from the shows we want to see, when we have time and on the device we have available at the time; ah yes and screw the border licensing restrictions so I can watch my shows no matter where I am in the globe.

    2. Dusty, you are absolutely correct. People today want shows, NOT networks. I don’t want SciFi but I want a show or two off it. I also don’t want ESPN, but instead I want to see games for the one or two teams I follow. That is the direction we are heading, not fat or slim bundles, but à la carte.

    3. You can *already* buy shows. They’re $1-$2 apiece.

      *That’s* why people have bundles. While I too would love to pick and choose specific channels (or shows, IF each show/season was cheap enough), I agree with the main sentiment.. I think what you get for a cell phone bill is FAR more of a ripoff than a cable bill.. I get TONS of commercial free (due to DVR) entertainment..

  7. I went to Time Warner cable way back in 1992 or 93 when they were starting to become bigger and were trying to sell me some huge package of channels I didn’t want. I asked them point blank, managers, sales people even the technicians can’t you guys put together a package where I can pick say 20 channels that I want and charge me a monthly price for that? And they all said no but the tech guy said it was probably possibly tech wise but they’d never go for that. So I told them as soon as you can offer something like you’ll have a customer but until then no deal. In the meantime I used my antenna for local channels + VHS then eventually went to DVD, streaming & Blu-ray to get my content. I am still perplexed that in 2015 these companies cannot give the consumer what he wants. I’ve been asking for this for almost 25yrs, maybe Apple can finally get this to come about.

    1. Agree. It is like Bruce Springsteen once sang: “300 channels and nothing’s on”. Or 20 channels. It doesn’t matter, as long as the vendor is picking for you. We stopped watching TV 23 years ago. Never looked back.

      I did think it was cool to download and watch the “Lost” TV series via iTunes — without commercials — which we did as a family. It was fun for a while, anyway.

      Anyway: agree! Let consumers choose.

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