Thursday, February 5, 2015

Will Apple Get into The Subscription Video Business?

Just Monday, I mentioned Sony's plan to create an OTT video subscription service through their Playstation platform called Vue.  We also heard about Dish's plan as well with their service, Sling TV.  And of course there is Amazon Prime, Hulu, Netflix, and others with either linear or on demand streams of TV and movie content.  Now, it may be Apple's turn.

According to re/code, "Industry executives say Apple is in talks with TV programmers about deals that would allow Apple to offer an “over the top” pay-TV service".  Given their purchase last year of Beats and its music subscription service, the idea of video subscription is not far-fetched.  Apple has been thinking about such a move for quite a while.  And Apple already does quite well with video rental and purchase through its itune store.  Why not a subscription OTT service, too.

The decision to move in such a direction may lead to two possibilities, build from scratch or purchase another existing business.  Verizon tried with Redbox Instant and failed miserably.  They are trying again with the purchase of Intel's OnCue service last year.  One doubts if that acquisition will follow the same path as Redbox Instant.  It doesn't look good.    Maybe Apple sees an opportunity buying Dish and not only getting Sling TV but access to all that spectrum.  With so much cash in reserve, Apple could perhaps even buy Netflix.  A hostile bid perhaps, but who knows.

Building from scratch and negotiating license fees with today's cable and broadcast networks is a more difficult and circuitous path.  The timing might finally be right to try again but the ROI might take some time to grow.  But regardless of which path Apple chooses, the timing to add a subscription video business to its mix seems timely and right to do. 

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