The ambition out of Cupertino is audacious, if the rumors have it right: Apple Inc. (Nasdaq: AAPL) wants to do for television what it did for music, says Mike Henry, CEO of Outrigger Media, and this will apparently take the form of selling time-limited access to TV episode downloads at 99 cents each.
Bloomberg broke this news last week with the headline: “Apple Said to Prepare 99-Cent TV Shows to Fend Off Netflix, Hulu” -- and Hollywood watchers immediately were aflutter about what Apple will announce at a September 1 event in San Francisco.
True to form, Apple has distributed invites but kept the agenda secret.
Rumors are buzzing that Apple will announce deals -- to rent current TV episodes for 48 hours at 99 cents via iTunes -- with Disney (Steve Jobs sits on Disney's board and is the largest stockholder) and Fox (owned by News Corp., where Rupert Murdoch is an avowed iPad enthusiast).
The other Hollywood bigs -- CBS, NBC, and the rest -- are said to be keeping tabs on all this for fear of being left out.
“This is real and it has Hollywood talking,” says Bryan Gonzalez, a project specialist with the Entertainment Technology Center at the University of Southern California. “Apple has learned a lot in its dealings with record labels, and it is taking its approach to television.”
Potentially, the still nascent TV rental market could become huge. Cable and other pay TV is in 90 percent of US households, but a recent Yankee Group study says that before the year is out, one in eight consumers will cut or significantly scale back paid TV subscriptions. The idea is that these early cord-cutters will switch much of their viewing to Internet-capable devices (from iPads to laptops) and will be willing to buy premium content à la carte.
That puts big money in play: Is it Apple’s to grab?
Not so fast.
For one thing, despite the flurry of recent stories about Apple’s 99-cent TV gambit, in a sense there is nothing new here. “Apple has been courting TV content forever,” says Outrigger’s Henry. “There have long been rumors about Apple partnering with Disney, with CBS, with Fox.” And not much has resulted.
There is a good reason for that: “Giving Apple the same position in television as it has in music is scary to the studios,” says Richard Bullwinkle, chief evangelist at Rovi Corp. , a developer of digital entertainment technologies.
And do note: Many in the music business blame Apple for destroying their onetime money machine and forcing them to eke out revenues one 99-cent cut at a time. Even if TV studios decide to do business with Apple, says Bullwinkle, “They won’t want to give it a monopoly; they will want to keep the business open.”
The large cable companies, or so-called "multiple system operators" (MSOs), also are adamantly opposed to this, says Henry, who suspects that shows that make early deals with Apple would be punished by getting kicked out of the cable lineup.
“There definitely is hesitation and push-back on the part of the studios,” says Bullwinkle.
But don’t think all this means that Apple is speeding down a deadend street to nowhere. At USC’s Entertainment Technology Center, Gonzalez has a prime perch overlooking the TV industry’s thinking, and, he says, between the Apple 99-cent rumors and continued chatter about Google’s television ambitions, “This has opened the eyes of a lot of people in the industry to the possibilities of digital distribution.” Up until very recently, "digital" in Hollywood meant piracy, period, end of discussion.
“Now “Internet TV is beginning to look real to studio executives,” says Gonzalez.
Is this Apple’s business to own? Literally dozens of competitors, from Google to Hulu Plus to MSOs tinkering with the possibilities of one-off rentals of TV shows are hot for this market.
“It’s too early to see Apple winning this,” says Bullwinkle.
Remember that when the headlines pour out of Apple’s September 1 San Francisco event. There’s a lot of TV yet to be watched before changing our dials.
— Robert McGarvey is a widely published author and expert on social media.
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