The most important detail in this Wall Street Journal story is that Apple has been attempting to put together a slimmed down streaming bundle for years. The proposal went nowhere because it was “considered radical and failed to bear fruit.” Now it looks as though it could happen as early as September after a June announcement.
Through Apple TV, the idea is to offer a streaming bundle of popular cable channels for $30 – $40 per month. This sounds similar to Dish Network’s $20 per month Sling TV; except there would be more channels. Apple is talking to all the major content providers in the hopes that the “skinny bundle” contains the three big networks, ESPN, FX, etc.
Other than the monthly fee, there are other consumer benefits. You would need no DVR. Everything you wanted saved would be done so in the Cloud. Apple is hoping to offer full seasons of current shows on demand (though existing agreements with Hulu could stall that). There is also the matter of no cable box rental. One of the great cable TV scams of the last five years was forcing customers to rent a box for every television. Once you purchase the Apple TV device, you are done paying for it.
If this catches on, the big losers here will be the dozens of channels no one watches. The whole idea behind Sling TV and this Apple venture is to bring down the cost. The more channels, the more expensive the package. Why add MTV and MSNBC when less than 1% of the population tunes in? Why add Discovery Channel 19 and HGTV 4?
The likely reason content providers are coming around is the simple reality of what’s happening to the bundled cable and satellite market. For the fifth month in a row, when compared to last year, cable ratings are down by double digits. This is obviously due to the fact that upwards of 40% of homes now subscribe to a Netflix, or some other streaming service. Moreover, unlike the population, the cable and satellite business has stopped growing. Young people stream and are unlikely to grow into cable customers.
Whether the “skinny bundle” is Sling TV or this Apple scheme, the idea is now attractive to content providers because the good is better than the awful. Bundled cable as we know it is the perfect. Hollywood billionaires are making even more billions off a scheme where more than a hundred million Americans subsidize dozens of channel they never watch.
A smaller bundler that streams is still a bundle — therefore it’s good. It won’t be as lucrative as the current racket, but it is still a way to muscle customers into subsidizing channels they don’t watch. And you can bet the house that the idea is to apply the same boiling frog theory to the “skinny bundle” as was applied to cable. In 5 years it won’t be so skinny or cheap. We’ll be right back to paying $150 for a bunch of channels we never watch.
Hopefully, the bundled business model crashes and burns in the streaming era.
John Nolte on Twitter @NolteNC