Rumored Deals Could Give New Meaning to 'Apple TV'

Apple (Nasdaq: AAPL) reportedly is eyeing a new service to be launched as part of its iTunes ecosystem: a TV subscription service with a fee of US$30 per month. While the site already has numerous TV series episodes and seasons for rent or purchase, this service would represent a different go-to-market strategy for Apple.

Apple did not return a call from MacNewsWorld by press time.

The service would be similar to cable TV offers, but in this case, it would be delivered through Apple's iTunes site. The company has been pitching the concept to TV networks in recent weeks, according to a post on All Things Digital by Peter Kafka.

In the absence of confirmation or details, assessing the impact of such a service on the company and the multimedia industry can only be speculative. For starters, it indicates there's demand building among consumers for content that can be consumed on multiple platforms.

An iTunes subscription-TV offer would leverage that trend, Greg Sterling, principal of Sterling Market Intelligence, told MacNewsWorld.

"Everyone -- from cable operators and content providers to manufacturers like Apple -- is developing a cross-platform strategy," he said.

If Apple should eventually fulfill another persistent rumor and produce a tablet computer or netbook, it would fit well with this strategy, Sterling noted.

Another possible indicator that Apple is moving in this direction: It just updated its Apple TV software. While it appears that the rumored new subscription service would be via iTunes rather than the Apple TV platform -- one of the company's few initiatives that did not prove to be a rousing success -- Apple TV could wind up being part of it, Sterling suggested.

Tricky Negotiations?

Some content owners may balk over an iTunes TV subscription service, Sterling suggested, perhaps not wanting to repeat the mistake of music labels that agreed several years ago to set iTunes song prices at 99 cents and later came to regret it.

Network executives are apparently both intrigued and wary of the idea. Cable networks don't want to threaten existing relationships and subscription fees, and networks are worried about advertising revenue and TV ratings, according to Kafka's All Things Digital post.

Such a deal would generate new revenues, but it is difficult to know whether those new streams would replace what might be lost, noted Michael Goodman, director of analytics for Mercury Media.

Eventually the industry will go along with the proposal, he predicted.

"It is the direction the industry is moving in anyway," Goodman told MacNewsWorld, citing initiatives such as Epix, a new subscription movie channel that will also offer Web streaming.

Getting Napsterized?

"The cable and TV and movie industry know they have a choice: They can either fight this trend like the recording industry did and get Napsterized, or they can work with it," Goodman said.

Apple will certainly not be able to license any content that would heavily cannibalize cable's revenue streams, Goodman said.

"If Apple can make a case that that won't happen -- say, that it will only offer the shows after they first aired on cable -- then I think we will see something take off," he added.

The traditional entertainment industry is rapidly disaggregating, Andrea Belz of Belz Consulting, told MacNewsWorld.

This type of service is the next step in moving the entertainment center away from Hollywood -- with distribution relocating to Silicon Valley, she suggested.

"Apple is interested in all forms of entertainment -- both distribution and the viewing experience," observed Belz. "They are in a great position to take advantage of new offerings because of their investment in both a platform operating system and their extensive design expertise."

It will be interesting to see what is next, she said, as Apple has the gravitas to chart a path for the industry. It could, for example, unveil new hardware -- an iPod for streaming TV shows, she said. It could also set new price benchmarks as it did with the 99-cent song, depending on how much pushback it got from the industry.