Rumors have been circulating that Apple’s highly anticipated iTV is currently being tested by Canadian cable service providers Rogers Communications and Bell Canada. While this news might be exciting for some, it’s a bitter pill to swallow for those who had been hoping that Apple would revolutionize the cable television industry.
A Partnership with Cable Companies
The fact that Apple is partnering with cable companies suggests that the company was unable or unwilling to secure content deals directly with networks and studios. This means that Apple will have to rely on the preexisting deals of these cable companies, which is a far cry from the disruption that many had been hoping for.
A Financially Pragmatic Decision
Partnering with cable companies makes financial sense for Apple. These companies already have established partnerships with networks and studios, built-in customers, and a distribution network in place to deliver content. By partnering with them, Apple can piggyback on this infrastructure, inserting itself at the last stage of the process and impacting the user experience.
A Half-Baked Solution
This partnership also means that Apple is only settling for half of its original dream: changing the way we interact with content and experience it. The iTV will undoubtedly bring new levels of engagement to the table, with features like game shows, workouts, and video-conferencing. However, it won’t address the underlying issues with the cable industry, such as the high cost of monthly subscriptions and the lack of choice in channels.
The Old School Way of Doing Business
There’s a reason why Apple is taking this approach: there’s more money to be made from the old school way of doing business. The networks, studios, and cable distributors are content with maintaining their current business model, which relies on subscribers paying for a bundle of channels they may not even want.
The Case of Netflix
Netflix is a prime example of this phenomenon. In its early days, Netflix secured content deals with studios and networks at bargain-basement prices. However, once the service gained popularity, contracts were renegotiated, and prices skyrocketed. The original deal for Starz content on Netflix was $30 million in 2008, but by 2011, CEO Reed Hastings was willing to pay over $200 million for the same deal.
The Profit Margins
Netflix’s profit margins for its streaming business are a paltry 11%, compared to 52% for DVD rentals. This highlights the reality of the content industry: once creators move to an on-demand model, there’s no going back.
Appointment Viewing and Subscription-Based Content
The partnership with cable companies will also maintain the notion of appointment viewing, where shows air according to the network’s schedule. iTunes offers a range of content for purchase or rental, but it’s not subscription-based, and the DVR is still dependent on the networks’ schedules.
A Disappointing Reality Check
While Apple’s iTV will undoubtedly bring new levels of engagement to the table, it’s a far cry from the revolutionary product that many had been hoping for. It’s time to lower our expectations and hope that this half-baked solution will at least bring some much-needed change to the cable industry.
Related Topics
- Apple
- Cable TV
- iTV
