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Apple Frustrated by Inability to Reach Deals With TV Programmers for Television Service
ESPN president John Skipper spoke with The Wall Street Journal in an interview this morning, revealing some insider details on Apple's struggle to establish deals with content providers for a streaming television service.
According to Skipper, Apple is "frustrated" by its ongoing inability to find a mutually advantageous way to work with programmers. Though no deals have been established, ESPN "continues" trying to work with Apple on some kind of partnership.
Apple has been attempting to create some kind of television service since 2009, but the company has run into resistance from cable and content providers time and time again because of a reluctance to interrupt existing revenue streams and fundamentally shift the way cable is provided.
ESPN's deal with Sling TV, a service that offers streaming access to major cable channels, offers some insight into where Apple may be running into trouble establishing deals. There is an option in ESPN's contract with Sling TV that lets the deal be terminated should it cannibalize ESPN's core pay TV business, something Apple likely wouldn't have agreed to. Apple is also said to have run into trouble getting content providers to unbundle their channels.
While Skipper believes 2016 will see "further announcements" of different streaming packages from new companies, it is not likely Apple will be among them. The company's content struggles have caused it to put its streaming service on hold, with plans to instead focus on the tvOS App Store and its position as a platform that gives media companies tools to sell content directly to customers.
According to Skipper, Apple is "frustrated" by its ongoing inability to find a mutually advantageous way to work with programmers. Though no deals have been established, ESPN "continues" trying to work with Apple on some kind of partnership.
They are creating a significantly advantageous operating system and a great television experience and that television experience is fabulous for sports. We are big proponents of believing it would be a fabulous place to sell some subscriptions. We have ongoing conversations. They have been frustrated by their ability to construct something which works for them with programmers. We continue to try to work with them.Skipper's comments are in line with recent rumors made by CBS CEO Les Moonves, who said Apple "pressed the hold button" on its streaming television plans after it was unable to establish the necessary deals. Rumors throughout 2015 suggested Apple was aiming to create a web-based television product that would offer a small bundle of channels for $30 to $40 per month.
Apple has been attempting to create some kind of television service since 2009, but the company has run into resistance from cable and content providers time and time again because of a reluctance to interrupt existing revenue streams and fundamentally shift the way cable is provided.
ESPN's deal with Sling TV, a service that offers streaming access to major cable channels, offers some insight into where Apple may be running into trouble establishing deals. There is an option in ESPN's contract with Sling TV that lets the deal be terminated should it cannibalize ESPN's core pay TV business, something Apple likely wouldn't have agreed to. Apple is also said to have run into trouble getting content providers to unbundle their channels.
While Skipper believes 2016 will see "further announcements" of different streaming packages from new companies, it is not likely Apple will be among them. The company's content struggles have caused it to put its streaming service on hold, with plans to instead focus on the tvOS App Store and its position as a platform that gives media companies tools to sell content directly to customers.
Tag: ESPN
Buyer's Guide: Apple TV (Don't Buy)
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51 months ago
The cable providers are notoriously greedy and out of touch with what people want. They insist on garbage bundling. One good channel with 10 other crap ones. Apple is going to need to use some of that famous cash reserve and invent us something entirely new. Go straight to the content creators.
51 months ago
Wish apple would just do a service like apple music with their whole movie and tv catalog
51 months ago
I'm a "cord-never." I've never subscribed to cable and I never will, whether it's literally cable or whether it's fed through an internet pipe. I'm never paying $40/month for a bunch of channels I don't want.
51 months ago
The cable providers are notoriously greedy and out of touch with what people want. They insist on garbage bundling. One good channel with 10 other crap ones. Apple is going to need to use some of that famous cash reserve and invent us something entirely new. Go straight to the content creators.
Bundles are ok... sometimes.Hulu nails it. NBC, CW, Fox, ABC. (stills needs CBS for the new Colbert) Bundled in, basically the major over the air channels. But instead of being on their over the air schedule, I'm at the leisure of my own schedule.
Plus Hulu's home grown content.
Plus Comedy Central.
It's quite brilliant. They basically solved it if they would just get CBS. Ad-free for $12/mo. It's perfectly reasonable.
51 months ago
Dish has a cable broadband bypass into our homes. And that $50 month all-inclusive package with DVR is quite a bargain BTW. I actually anticipate that as a showdown vs. this Apple package: 190 channels with a HD DVR for $50/month vs. Apples 30-40 channels (and you know they're going to leave at least 1 or 2 important to you out of their choices) for $30-$40 per month. OR, "for $10 or $20 more dollars, I can get another 150 channels" (the value reverse of the "I don't want to pay for 200 channels I never watch" argument).
Cable doesn't have to pay Cable to use the pipe, nor is Cable pinched by Cable for using the pipe.
An Apple subscription service is entirely dependent on the very same pipe owned by the competitors from which they would take all this TV business. Furthermore Apples wants their 30% right off the top AND a low price which means that the providers of content have to take a big hit to further enrich Apple. And the video side of media doesn't want to end up like their music-side cousins.
Somewhere on this site there is quote from Les Moonves about this topic from 2 or 3 years ago in which he says something along these lines: "the problem with Apple's subscription service is that they want everything." If you do some some searches you can find links showing what Apple is trying to do:
* take the 30% right off the top, pinching the partners providing the content Apple wants to sell
* take a slice of the channels commercial revenues, pinching the partners providing the content Apple wants to sell
* trade consumer data for better deals (ala Google, FaceBook).
Do searches and you find all 3 of those in play.
Easy solution: let capitalism work. Launch the service and let each channel charge whatever it wants for it's channel. If they are "too greedy" they don't make money. Then we consumers can vote with our wallets. Everyone would want to be in on that offering and we can strike the actual balance of al-a-carte between sellers & buyers. If Apple insists on it's 30% right off the top, each channel just adds that onto their pricing.
Will it ever happen? Of course not. We already have great cuts at al-a-carte in the iTunes store. The problem with that? The masses don't want to pay those prices for the individual shows enough to bring that al-a-carte "future" to replace the "as is." Instead, we delude ourselves into
* thinking there is some (legal) way to get something towards Netflix pricing for all of the first-run productions from all of the networks AND
* give Apple their 30% AND
* have the broadband providers not make up for their losses in higher broadband-only rates or tiers AND...
Way too much real talk and common sense in this post.
I don't get where people think Apple is going to get into the game and they are going to spend less money and get what they want. The math doesn't work. The channels you get now are discounted because they are included as part of a bundle. (law of large numbers at work, just like insurance). If you pay for what the channels you want in a skinny bundle, it requires more money to make up for lost guaranteed subscriptions and ad revenue. Oh, and Apple wants their 30% as well. It's no surprise Apple is frustrated, the math doesn't work.
But way too many customers let their blind love for Apple and hatred of cable and satellite companies (who actually try to toe the line in reigning in network costs) make them believe in the unicorn vision of a $35 skinny bundle that's going to give them 'just the channels they watch'.
51 months ago
I don't understand. If Dish Network can provide a basic service with basic channels for only $50/month, why can't Apple? If my local cable provider can do the same for $35/mo with basic channels, why can't Apple? What is Apple doing differently than companies like Cox and Dish that is making this so difficult?
Taking 30%
51 months ago
I'm frustrated with the HBO go app not saving your location. Everytime I turn it on I have to navigate back to the show I was watching and remember the last episode I was on.
51 months ago
Don't understand the issue with people getting channels they don't want. Simple, don't watch those channels. People seem happy to subscribe to music services like Spotify even though it's almost certainly carrying a lot of music they don't like.
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