Is Apple Planning to Pair 99-Cent TV Show Rentals With Its $99 iTV?Tuesday, August 24, 2010, 10:26 PM ET|Posted by Will RichmondBloomberg is reporting that Apple is in "advanced talks" with CBS, Disney and Fox about making available TV programs for 99-cent rental. The programs would be offered within 24 hours of when they aired and once rented, the viewing window would be just 48 hours. It's not clear whether the iTunes rental model would be targeted only to Apple's "i" devices, or if it would be more widely available. If the program deals happen, could it be that Apple is planning to pair availability of 99-cent rentals with the unveiling of its $99 iTV device at its rumored Sept. 7th keynote event?
In my earlier post, "Pondering the (Potential) Impact of Apple's New iTV Device," I speculated that the iTV device would have little impact on the pay-TV ecosystem, since major cable TV networks and pay-TV providers will resist Apple's attempts to reinvent their business models. However, I suggested that Steve Jobs could have a trick or two up his sleeve for the iTV's launch. Sure enough, 99-cent broadcast TV rentals, announced just weeks prior to the Fall TV season kickoff, would be a very good trick indeed.
By pairing 99-cent rentals with the $99 iTV device, Jobs would not only be giving the iTV compelling content access right away in addition to existing apps, he would be helping shine a bright light on the high perceived cost of today's pay-TV services (a nice follow-on to yesterday's Kagan research showing Q2 as the first-ever down quarter for pay-TV providers, due to the recession's impact).
While next-day, 99-cent broadcast rentals aren't close to being an equivalent service to more expensive first-run, pay-TV subscription services, can't you easily imagine Jobs articulating the benefits of a low-cost, a-la-carte model and suggesting that this is what consumers truly want, not bloated, overpriced multichannel subscriptions? He would use the success of 99-cent iTunes music downloads to draw a parallel: what Apple did in music, it's now going to try doing in TV (though to be accurate, in music those 99-cent transactions are for purchases, not 48-hour rentals).
Aside from whatever spin Jobs uses, the question is, will consumers bite on the 99-cent offer? I think they may very well. Here's why: network sites and Hulu have long been about catch-up viewing of missed episodes. Part of these sites' appeal has been easy, convenient and free access. The downsides have been limited ability to watch on TV, inability to skip ads and inconsistent availability of recent episodes, due to windowing policies. If Apple could get these programs for 99-cent rentals - still a huge if - it would neatly address all these shortcomings. Via iTV, programs would be easily viewable on TV, commercial-free and possibly with all the current season's episodes. It would be like a nominally-priced, attractive VOD service. It wouldn't be a cable-killer or cord-cutting stimulant. But it would help Apple gets its nose further into Hollywood's tent.
For the networks, they would open yet another window, albeit a narrow one, to further monetize their programs. With a massive potential user base (remember all the millions of existing "i" devices in addition to the new iTV), the revenue potential could be huge. The flipside is what the 99-cent rental plan would mean to the new Hulu Plus subscription service, which offers both current and past season for $10/mo? It seems like lighter Hulu Plus users would almost certainly be cannibalized by Apple's 99-cent rentals. And commercial-free 99-cent rentals would undermine the ads currently included in Hulu Plus programs, which I've argued is a foolish tactic anyway.
Of course all of this is pure speculation upon speculation. But it's all plausible. And with Steve Jobs in the middle of the action, it's all the more possible. Let's see what happens.
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Categories: Broadcasters, Devices
Topics: Apple, CBS, Disney, FOX