Michael Grotticelli /
11.09.2009 12:06 PM
Apple looks to upset pay television industry

Apple — the powerhouse computer maker that transformed the music distribution industry with its iTunes store — is plotting a plan to do the same to pay television, several news reports said last week. Apple refused to comment publicly on the reports.

Apple is recruiting television networks to join an iTunes TV subscription offering, reported MediaMemo. For $30-$40 per month starting “early next year,” users would be able to watch television via Apple’s iTunes online media player. The company already sells individual episodes of television shows from the online store, and a subscription model wouldn’t be a huge leap.

Such an arrangement could allow Apple to undercut the prices of pay television providers like cable, telco and satellite. A $30-a-month fee could lure customers away from soaring $85-plus per monthly cable bills. Apple could leverage its deep library of content with many network and cable channel content owners to provide unlimited access to a sub-library of its TV shows for a standard monthly fee. Such a product would effectively offer access to current and older episodes of select shows on select channels.

On-demand video streaming is a fast growing method for watching television and movies, especially as distributors are now delivering HD video and adaptive bit rate streaming to the home. Several distributions, such as Netflix, now allow online streaming of thousands of programs. However, no major player has a viable online subscription model that can compete with cable companies.

Many are predicting that the Walt Disney Company, owner of the ABC and ESPN network franchises, would be the first to sign on to Apple’s effort. Apple and Disney have traditionally had a close relationship. However, Apple would need all the major networks onboard the effort to sustain a solid subscription television model.

Hulu, a joint venture of NBC Universal, News Corp., Disney-ABC and Providence Equity Partners, is currently an ad-supported Web site for television programming. However, Hulu has hinted it is making plans for its own subscription service. Many, however, are questioning whether Hulu’s viewers, who have received the content for free, will begin paying for it.

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