THE CABLE PIPELINE

Apple TV is in the news again, this time with a proposed subscription service that takes aim directly at the Cable Industry, see (Apple Pitching Subscription TV to Content Owners). Apple TV would work directly with Apple iTunes to bring consumers the highly regarded brand of Apple along with a TV Subscription Service for about $30.00 per month, a substantial discount on what Cable Operators are charging for their Digital bundled services which start around $60.00.

Significantly, if Apple is hoping to target their service as one that provides individual channels to consumers without the mass bundling that cable offers, their hurdle will begin with securing the programming rights from a content industry which has largely been successful due to its relationship with Cable Industry giants like Comcast and Time Warner Cable.

This is a tricky proposition for Apple since programmers have lucrative contracts with operators that support both subscription and advertising revenue allowing for all that great content to be produced and distributed over the pipelines. Comcast and Time Warner Cable have huge infrastructures that require packaged bundles, which offer overall cheaper rates for customers, while supporting the enormous costs of the pipelines. Also many programmers have contracts with cable that stipulate carriage of multi-channels which they do not want to jeopardize.

On the other side, just look at iTunes and what has been accomplished with music when Apple began charging for downloads on iPods and now iPhones, which turned out to be wildly successful when the Music Industry failed to realize that consumers were willing to pay for their favorite tunes, of their choosing. This is a key statement that may be behind Apple’s foray into a cable’s multi-billion dollar industry built on broad sweeping content packages.

If consumers are willing to pay $30.00 per month for securing content of their choosing, channel by channel, the aim may be popular, via A La-Carte. But does Apple see a significant market here, quite obviously they do? However the hurdles of securing those key contracts with programmers will be a (make or break scenario), which brings me to the point, that it will be difficult in my opinion, to change the current market in any meaningful way, at least in the short-term.