The Wall Street Journal recently reported that Apple is working on a new video delivery technology.
“Apple is working on new technology to deliver video to televisions, and has been discussing whether to try to launch a subscription TV service, according to people familiar with the matter.”
There’s been lots of speculation about what this means. Some folks think it means we’ll see an actual Apple branded HDTV. We’ve already speculated on what we think an Apple TV (with a screen) would look like. But just like the iPhone was successful because of great hardware and software as well as a complementary App store, an Apple-branded TV would need more than great hardware to succeed.
Instead of a TV app store, what if Apple develops a new model for the delivery of TV shows? Up to this point, we’ve lived in a world with two models for paid streaming content: a la carte and all-you-can-watch. What if Apple (or someone else) offered a third model?
There are problems with the two existing models. If you bought all of your shows a la carte, it would be too expensive (unless you hardly watched TV). The all-you-can-watch model has aggregators like Netflix paying for content their customers may never watch. It feels like a pretty inefficient way to get the best value from your monthly subscription dollars.
The other problem with both models is that they do not provide access to news or sports.
Just imagine if Apple offered a subscription service between $8 and $10 a month that offered access to first-run TV shows. Here’s the twist: It would not be all you can watch. You could only watch a limited number of shows per month. Let’s pick a round number like 20 or 30. For most of us, this would be more than enough. Heavy users would pay more. Every time a show was watched, the content provider would take a cut of subscription revenue. In another words, Gilligan’s Island reruns would probably not yield the same revenue for the content owners that Mad Men and Sons of Anarchy would.
What if the package also offered access to local programming such as news? It would create a new revenue stream for those local stations. Just like Apple changed the distribution for mobile software and music, they could do it for TV.
It seems like the stars are aligned for an announcement like this. Netflix just raised prices for existing customers on September 1. Apple has already rolled out their cloud service to distribute purchased TV shows to any iDevice (but not movies). TV shows are no longer available for rental. Apple recently started highlighting on iTunes that first-run shows are available to watch the next day. Something’s Cooking.