With a complete overhaul of the Apple TV imminent, there will continue to be fuel for the future of TV discussion. Set-top boxes that let you stream internet content have had moderate sales in the past but the question is, how or when will that change? This is a global point. Even in a market such as China, where regulations and contract rights are not an issue and consumers can have a broad and full range of access to live, VOD and broadcast content, streaming box sales would still classify as a niche market level of volume. Going from tens of millions of unit sales to hundreds of millions of unit sales annually is the broader goal and upside for streaming boxes. The question is when?
The Bundle
From a perspective of markets where broadcast and licensed network TV show content is bundled, I see a number of challenges. Yes, there is a contract rights issue. This issue stares you in the face when you believe for a second you can cut the cord and it won’t cost you money. When it comes to entertainment content, in this case TV, there will be a price. Cutting the cord is not free. Many can argue they can simply get away with only paying for a service like HULU and Netflix. This is certainly true even though each come with limits to access. One of the most interesting things out there is the innovation in original programming. HBO has set a trend in motion where it seems many networks are rising to the challenge with more quality original programming. A huge question will be how they believe they recoup these investments. Most major networks have apps now for iOS and Android. I have a page on my iPad dedicated to these apps.
The iPad serves a role as my personal television and it is largely due to these apps. I often use the iPad in bed while my wife watches one of “her” TV shows on the TV in our bedroom. I use my iPad when I travel instead of the TV in my hotel room. But again, these apps are not free. Or the content inside them is not free. Most of the apps on that page require you to be a subscriber of a Pay TV service to access the features you really care about, like TV or an archive of all their network shows. Here is the issue. If they are not free, how much would all these services cost added together if they even offered them? $30 a month? $40? $50? The answer is likely higher when you take into account the huge investments being made in higher budget original programming. So, if this experience is to cost me say, $75 or more, and thanks to certain contract rights I would still have to give up things like specific live sports, then why would I drop a pay TV service if it only costs $10 more? Perhaps another observation is why would pay TV providers sit by and let this happen? Their infrastructure with bundles is such that they could offer me pay TV bundles that could end up being cheaper than my effort to subscribe to every different network out there that has content I want to watch.
Which brings me to the heart of what I feel so many have an issue with regarding their TV service providers — the technology. The hardware they provide us with is downright terrible. The content is what we pay for but our experience suffers greatly with awful set-top boxes. My hope in all of this is there comes a time where a pay TV bundle is offered but I can choose my own hardware. Should companies like Dish, Comcast, Charter, DirecTV, etc., allow the access of their conditional access DRM broadcast content to run on the hardware of my choosing, we may be in for a much more interesting world.
This is, of course, the world they are all afraid of. In this world, they lose control of the customer and ultimately it is this viewpoint that leads them to do things that are far from consumer friendly. However, if they did not have to front the costs of the hardware they give for free to customers, they could potentially offer lower priced subscription costs to compete with a la carte offerings.
The main point remains. Cable operators won’t stand idly by. They have to get more creative and, ultimately, there is still value in a bundle of content. There is value in a broader guide too and perhaps this is why the new Apple TV is rumored to have universal search (Google TV has this as well).
It seems like the tech world and the cable companies are at odds when, in reality, it would be better for everyone if they worked together.
Another thing they have to contend with is a network’s relevancy as a whole. When I cut the cord a long time ago I did so realizing most of the shows we wanted to watch were on OTA network TV anyway, making it sort of ridiculous to _pay_ to see those channels on top of advertising. Few if any were on a cable network. So I only have to pay for particular TV shows, not network access. Sure, HGTV, CNN, or the Food Network are fun to have on as kind of background noise, but there are not enough shows on those networks that make me want to pay for 24/7 access to their network. I figured I could pay for up to about twelve or so shows a year from iTunes and still come out ahead of the cable bill (including the increase in internet access cost).
Joe
Also, in terms of live events like sports, is it a given that pretty much the only route broadcasters will take against threats like Periscope and MeerKat is legal? Or will they try to innovate with or around that?
Joe
Great post Thank you. I look forward to the continuation.
May I request that you elaborate on that? Your posts have been extremely helpful to me. Thank you!
Thank you for your articles. They are very helpful to me. May I ask you a question?
The articles you write help me a lot and I like the topic
Thanks for your help and for writing this post. It’s been great.