Thursday, December 10, 2015

Skinny Bundle Not In Apple's Future

While Amazon Prime has announced discounted subscription services to Showtime, Starz and others when you are an Amazon Prime customer, Apple has decided to stop pursing a skinny Over The Top streaming bundle of live video services.  According to CBS CEO Les Moonves, Apple "has suspended plans to offer a live Internet-based television service and is instead focusing on being a platform for media companies to sell directly to customers through its App Store". 

Given existing contracts with cable operators, networks would be unable to offer financial terms for Apple to create a cost effective package of interest for consumers.  While consumers like the simplicity of buying certain channels without also buying cable service, in the long run, a la carte pricing means access to a smaller number of services.  You pay less but you also get less, too.  The all you can eat buffet of 100's of channels at one price is no longer appealing as the price of the buffet has gotten so expensive.  Cable has hit the price elasticity limit and the band is breaking.

We are also willing to settle for less as consumers are now more show centric than when they were network channel brand centric.  As for Apple, their desire to build a package makes some sense for their Apple TV model.  But perhaps they should look more closely at owning a content company and then having full control on how to distribute it.  Viacom and CBS might just be options given all the news around Sumner Redstone's health.  Scripps, Discovery, AMC might also be worth kicking the tires.  If Apple wants to make an impact, that might just be in their future. 

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