Big Cable has just been given a lot more to worry about in a landscape that is already rapidly changing under its feet. All Things D is saying that Apple has been shopping around a subscription-based model for video content to TV networks recently, and it looks to be a fairly attractive deal from a consumer standpoint. It probably doesn’t look too shabby to networks, either, since it will help them stay relevant as more users turn away from their cable and satellite boxes and towards their computers.
According to “multiple sources” speaking to All Things Digital’s Peter Kafka, Apple is trying to gather support for a monthly subscription service that would see TV programs made available via iTunes in an on-demand basis. Luckily for most, Apple is keeping the proposed service open to all platforms, instead of trying to use it to bolster lackluster Apple TV sales figures, as one might reasonable expect.
Interestingly enough, Gene Munster actually predicted Apple might do something like this, though he predicted 2011 as the launch year. Apple’s proposed launch timeframe for the new service is early 2010, but that’ll be a tall order given the current state of buy-in from content providers. Networks are happy to provide shows for purchase on the iTunes service, but a move to a subscription model would represent a complete change in the relationship between Apple and the programmers.
Giving that much power over distribution to Cupertino could result in a relationship similar to the one that exists between Apple and record labels, in which the computer maker holds an uneven balance of power because of its ability to reach the consumer. Networks are probably also not very eager to damage the existing arrangements between themselves and cable/satellite providers, which still represents significant revenue from subscription fees, despite the recent consumer turn towards web-based content.
Apple’s proposal comes close on the heals of Hulu’s announced plans to begin charging for some of its service, and I don’t think the timing is coincidental. The time is coming when digital distribution becomes the default method for content provision, and Apple clearly means to spearhead the movement.
Success now will depend on offering a good enough revenue sharing deal to the networks to make it worth their while to sign on. It’s a question of finding the right tipping point to convince programmers that the potential gain outweighs the considerable risks. The key will be convincing multiple big name networks to join in, since this will only succeed if we as consumers think Apple is providing enough variety to justify ditching our cable subscription.