“Apps are The Future of TV”? Not so Fast!Reading Time: 3 minutes
When Apple previewed the new Apple TV, Tim Cook declared, “We believe the future of television is apps.” He went on to extoll how “when you experience TV through an app, you realize how much better (TV) can be. You can search for what you want and watch it when and where you want. And you can interact with it in powerful new ways.”
This reminded me of something CBS CEO Les Moonves said back in 2012. He recounted how Steve Jobs pitched him hard for CBS to provide its shows to a proposed Apple subscription service. Moonves declined, telling Jobs, “You know more than me about 99 percent of things but I know more about the television business.”
In other words, it doesn’t matter how satisfying the viewing experience is if it can’t supply the television industry with the steady revenues needed to drive a business where the majority of shows are already expected to fail.
So it was significant this week when Apple announced that CBS and NBC were joining the Apple TV lineup just a week before the new hardware goes on sale. Apple TV now includes the top four broadcast networks plus PBS — a pretty attractive package for wannabe cord cutters.
Does this mean the networks have seen the error of their ways? Does Tim Cook’s Apple know more about television than Les Moonves and CBS? Not hardly. For one thing, the most popular content on leading apps most often comes from traditional television networks.
Though it’s true streaming services, mobile devices and DVRs have taken a toll on same-day viewing and related ad revenue, that predictable decline has been slow enough for the networks to experiment with other revenue streams. Today, they all have lucrative deals in place with some combination of Netflix, Amazon and Hulu (which is owned outright by NBC Universal, Disney ABC and Fox.) In fact, according to Morgan Stanley, Netflix spends nearly twice as much licensing shows from the broadcast networks as they do on all their original programs combined.
And no wonder. Like most video apps, Netflix resembles a stamp album of graphics and logos. The familiar ones are mostly likely the ones you recognize from traditional TV. Because TV networks build in time and space for promotion, their new shows enjoy a huge advantage over original series on streaming services. Long before digital analytics, networks cross-promoted new shows to viewers of similar or compatible series. House of Cards may be a hit for Netflix, but it may not be profitable since it carries huge cash promotional costs. Then again, it may not be a hit by conventional measures. Netflix refuses to reveal actual viewer numbers.
Broadcast networks enjoy another huge promotional advantage: their local affiliates. Never underestimate the appeal of local news and the promotional power of local promos. Even Oprah Winfrey’s eponymous OWN network floundered for years after she gave up her syndicated talk show and the thousands of local promos that supported it. It’s no accident the broadcast giants withheld their Apple TV apps until they could confidently include live streaming of their local affiliates. (ABC and NBC lets “authenticated” cable or satellite subscribers stream the local affiliate through the Apple TV. CBS charges $5.99 monthly for their All Access service, which also includes hundreds of episodes of such classic CBS and Paramount fare as Twilight Zone, Mission: Impossible and all the Star Trek series.)
My guess is Tim Cook knows very well apps themselves are merely a temporary gateway to the real future of TV and the Apple TV. If the rumors are true and Apple plans a comprehensive subscription streaming service, then the distinctive advantage may well be Siri — but only if her smart search proves smart enough. In the September demo, Siri was asked to “show me some comedies” and the Apple TV quickly displayed some popular current titles. That’s not much different from the data-driven suggestions within Netflix.
But what if you can say “Show me that comedy show with the guy from Saturday Night Live” and Siri comes up with Will Forte’s “Last Man on Earth,” Fred Armison’s “Portlandia” and Bill Hadar’s mockumentary, “Documentary Now.” And what if you can tell your iPhone or Apple Watch to “Record the Channel 4 News at Six” and feel confident you’ll find it on your Apple TV? Now you’ve really got something useful. It’s convenience for viewers and, for the TV industry, finally a tangible way to squeeze solid promotional value from all those talk show appearances and social media publicity. As if to support this theory, Apple just announced all tvOS apps must support Siri remote in their “core functionality” in order to be accepted in the forthcoming Apple TV App Store.
As a result, something else Tim Cook said earlier this week may prove prophetic. He told the Wall Street Journal Digital conference he’s “never been so confident” that Apple TV “is the foundation of the future of TV.”
There’s another reason I think Apple will succeed. Unlike other executives in the tech sector, Tim Cook and Eddie Cue almost never use the dismissive term “content.” Instead they talk about their love for music and “great TV shows.” Even in a business where only money talks, that message isn’t lost on the creative community.