Rumored Apple TV Service Hits Another Snag

Here's a new one. Apple TV wants to introduce a new video service, but it's delaying the launch because of content licensing hurdles.

Stop me if you've heard this before.

Bloomberg is reporting that Apple Inc. (Nasdaq: AAPL) has postponed plans for a $40-per-month TV service that was due to launch this fall. In theory, the new service would have been timed to go live with the announcement of a new Apple TV box on September 9. However, Apple has reportedly had trouble making deals with broadcasters and will now hold off on the launch until 2016. (See also Is Apple Pursuing OTT Again?)

Apple TV rumors are a dime a dozen, but each time a new report leaks out of Cupertino, it's worth noting how the video landscape has shifted while Apple continues to make its plans. A year ago there was no Sling TV, no custom video packages from Verizon Communications Inc. (NYSE: VZ), no HBO Now. The skinny bundle was a dream, not a reality, and broadcasters were still reveling in the promise of ever-escalating payouts from retransmission agreements.

Things have changed. Not only are skinny bundles on the rise, but the market has started to punish media companies for losing audiences to new modes of TV viewing. If programmers were skittish in the past about content licensing, they're likely even more so now that the financial impact of changing consumer behavior is starting to hit home. (See What DirecTV's Big Sub Loss Means and Dish's Losses Are Sling TV's Gains.)

Want to know more about the impact of web services on the pay-TV sector? Check out our dedicated OTT services content channel here on Light Reading.

According to Bloomberg, Apple is also delaying its launch because it wants to have more "computer network capacity in place to ensure a good viewing experience." That's an odd one. There are plenty of content delivery network options available, and if Apple eventually wanted to take the Netflix Inc. (Nasdaq: NFLX) route and develop its own CDN, it would make sense to spread that investment out over time.

The bottom line is that delivering a compelling TV service at a compelling price is hard, and the rules of the game are shifting rapidly. There's every reason for Apple to wait cautiously on the sideline.

But then again, the longer it waits, the more new challenges seem to be cropping up.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

nasimson 8/20/2015 | 7:50:04 PM
reasons to wait? @Mari: I don't think Apple is waiting for the market dynamics to settle down. Apple is not that kind of company. Instead market dynamics are also subject to Apple instead of other way round.
Kruz 8/20/2015 | 12:13:46 PM
Re: Cost & Locals I agree; content is now accessible on the go, and  people watching the traditional TV with ads are on the decrease as it doesnt fit the modern lifestyle.

Time to watch tv is becoming limited, while on demand tv presents an appealing and faster to consume alternative.
KBode 8/14/2015 | 3:45:56 PM
Re: Cost & Locals Yeah, like Sling, I just don't think there's a huge market for non-time shifted content anymore. Do 20-35 year olds even watch traditional live television with ads on a set schedule? I'm not entirely sure this pursuit of live TV is all that worth it.
msilbey 8/14/2015 | 3:29:56 PM
Re: Cost & Locals I think $40 works if Apple brings something unique to the table. Who knew we'd be willing to pay hundreds of dollars for an iPad on top of our phones and PCs? But whether Apple can deliver even a baseline of content plus that something unique on top is another question altogether.
DaveZNF 8/14/2015 | 3:12:03 PM
Cost & Locals Do we think the rumored $40/mo target will fly with consumers? Sling TV is $20 and platform agnostic, whereas Sony's offering is $60 and locked down in a way Apple's service would be as well. Unless they bring "DVR" or something else interesting or unique to the table, I'm thinking $40/mo is too much - even with the locals.

Speaking of the locals, the way I'm reading the Bloomberg article is one of the primary sticking points is working out retransmission fees to get those locals integrated (like Sony, unlike Sling). One thing's for sure... video licensing is way more complex than music was. Like Karl wonders, wonder how much the final product will look like their vision.
mendyk 8/14/2015 | 1:01:52 PM
Re: Steamroller Blues The local broadcast business is breaking up, and local stations really don't have a whole lot of original content. This is more about having to negotiate content rights with lots of different entities, most of which have deep experience in such things and aren't as scared or strung out as their counterparts in the music business.
msilbey 8/14/2015 | 12:54:40 PM
Re: Steamroller Blues I certainly hope not since Apple's original vision is probably 5 years old or more at this point. 

The whole regional market issue eventually has to get solved- not just for Apple.
KBode 8/14/2015 | 12:41:51 PM
Re: Steamroller Blues Seems like the real hangup is getting the rights for regional local market broadcast streams.

I'm guessing the end product looks nothing like Apple's original vision.
mendyk 8/14/2015 | 12:02:29 PM
Steamroller Blues Can Apple be surprised that the video business is harder to steamroll than the artist formerly known as the music industry?
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