Blog Post

Why an iTunes TV Subscription Service Makes Sense

Is Apple building a monthly television subscription service, like Piper Jaffray analyst Gene Munster claims? Maybe! Munster also thinks the Mac maker is going to launch a television that wirelessly syncs with your other Apple devices, and predicts an Apple set-top box with TV input and DVR capabilities. Both Chris Albrecht and I think most of that stuff is bunk, but I’m going to have to disagree with my colleague on this TV subscription deal. A lot of the pieces fit together too nicely to just ignore the possibility.

Television content producers have an ongoing need to find more eyeballs to showcase their wares. Sure, people are still watching television for 13 hours per week, but the amount of time spent online is skyrocketing, especially¬†watching full TV episodes. Hulu had its best month ever in July; TV Everywhere is going to bring massive amounts of video online; Netflix is pushing streaming content hard; and is making its own online video play. And then there’s Apple’s current strategy of selling episodes piecemeal through iTunes.

It’s clear that content makers are open to new ideas. Hulu is doing very well and will be profitable “soon” (if you believe NBC Universal chief Jeff Zucker), even with limited release windows and delays posting content. There’s clearly a strong market for online television. A Hulu subscription model has been bandied about for a while, so the concept of charging users for admission to the fun is certainly not a new one — and consumers are already used to paying for their video content through cable and satellite providers.

A subscription service from Apple consisting of a $35 or so monthly fee for access to a large and complete library of current-season television episodes via iTunes would fit well into the TV networks’ overall content strategy — Hulu has proven there is a demand for streaming full episodes, and the cable companies have long shown that consumers are willing to pay for access. In the past, Apple has succeeded in getting media partners to the negotiating table, bringing all the major movie studios onboard to rent and sell movies through iTunes. Oh yeah, and Apple has a massive pre-built market in the millions of people who own iPhones and iPod touches.

Cable and satellite providers would obviously be livid, and TV Everywhere proponents would feel like the rug was pulled from underneath them — but there’s nothing like a little healthy competition to shake things up, no?¬†So, is Apple building — or should it build — a subscription-based television streaming service, or is it all just a bunch of wishful thinking?

6 Responses to “Why an iTunes TV Subscription Service Makes Sense”

  1. OhhJohnny

    I agree with the logic of this post, but I think it’s not taking the licensing deals into account. I don’t think the tv makers give Apple carte blanch with the content – I’m sure there are specifics about how and what can be sold. I don’t know if the content creators would allow this because it could undercut their own offerings.

  2. Good analysis. There will definitely be an Apple TV. However, TV networks are concerned about giving Apple too much power / leverage. They watched Apple take control of Music industry; TV networks won’t make the same mistake.

  3. hello,
    the major factor of the future popularity of an itunes tv is really a massive pre-built market in the millions of people, like it was mention in the post. we already know the superb quality of apple products, that’t why it is very easy to believe that itunes will be something outstanding as well.

  4. HmmConvenient

    $35 would be a significant cost for this service. Consider, $30 for broadband + $35 for this service would end up being “about” the same cost as a digital cable package. More likely iTunes would resemble Netflix in terms of pricing and content library.