Apple iTunes TV Pitch: Another Nail in Cable's Coffin

It's going to happen, the only question is when. The cable TV industry's monopolistic, anti-consumer practice of offering bloated, overpriced programming packages is coming mercifully to an end, brought down by a slew of more affordable options made possible by broadband Internet.

The most recent example: Today's report from All Things Digital's Peter Kafka, who says that Apple is pitching a monthly subscription service to the TV networks, an iTunes-based alternative to cable packages that would cost about $30 per month. Apple wants to launch the service early next year, provided it can get broadcast and cable TV programmers to sign up, Kafka reports.

It's unclear if Apple's iTunes TV will ever see the light of day, but I'm guessing there's a very good chance it will. Apple's strong consumer brand, the company's proven success in delivering digital content (iTunes/iPod) to the masses, and the TV networks' quest to find new revenue streams, all add up to a solid business plan.

And let's not forget the average customer's dissatisfaction with pricey cable TV plans, nearly all of which force subscribers to receive dozens of channels they don't want and seldom (if ever) watch. If the rumored iTunes TV would allow users to create their own programming bundles — and if the price seriously undercut cable — it could prove wildly popular.

Of course, Apple isn't the only player in broadband TV. Consumers already have other options, with more choices on the way. The $80 Roku Player streams Netflix movies and TV shows to the living room, and Netflix recently announced plans to stream content to PlayStation 3 consoles in the U.S. Internet-ready HDTVs and Blu-ray players are becoming commonplace too. And then there's Apple TV, which has gotten a tepid response from both consumers and Steve Jobs, who called the media-playback device "a hobby," thus far. Maybe it's more than a hobby after all.

Perhaps the biggest question is how the TV industry really feels about the opportunity — or potential threat — of broadband delivery. Kafka sums up its concerns nicely:

"Cable networks, for instance, don't want to threaten existing relationships and subscription fees from cable providers like Comcast (CMCSA). And programmers are also worried about the effect a subscription service would have on advertising revenue: Even if the service didn't distribute TV programs until after their initial air date, that could cut into ratings, which now measure viewership over the course of several days."

Are consumers ready for broadband TV? Wireless media streaming still seems a bit flaky — and the concept may be too geeky for mainstream consumers used to having the cable guy come up and hook up everything. And there's the question of whether today's broadband connections are wide enough for 10801/1080p content. But if the price is right, I'll think they'll bite and give the cable guys the heave-ho. We'll find out soon enough.

Contact Jeff Bertolucci via Twitter (@jbertolucci) or at jbertolucci.blogspot.com.

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