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tv ? 2
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[Craig Seeman] “I’m not sure the contracts for Optical Discs subscriptions are the same as for streaming. Notice the differences in content. It seems not all of their optical disc contract even becoming streaming available so far down the road in its life that the value has declined considerably. In fact I think this is part of Netflix’s dilemma. i don’t think you can lump them together. Neither did Netflix apparently. I understand part of the attempted split was the hope that they’d negotiate for better content on the streaming side.”
I didn’t mean to lump them together. For the purposes of our discussion, I’m ignoring shiny discs altogether and focusing only on streaming.
[Craig Seeman] “In other words if Netflix were purchased it may mean a near complete loss of the optical disc catalogue. Given that Apple has some portion of that, they may really have an interest in the streaming catalogue to “bulk up” their iTunes offerings and give them an avenue to a subscription based service. Even if it means a renegotiation, if Apple feels they’d be in a much better position to negotiate it might be worth it to them.”
Everyone playing in this space must be aware of Apple’s ambitions and their Scrooge McDuck piles of cash [link]. If the studios want to avoid the labels’ fates, then they’ll be as vigilant about Apple buying their way through the backdoor as they are negotiating their way through the front.
If Netflix were of the kind of strategic value to Apple that you’re suggesting, then the studios’ counsel is failing them.
I’m not saying this can’t or won’t happen — I’m just saying that I don’t think this is the most likely outcome.
[Craig Seeman] “Which would seem to be opposite of Apple’s goals.”
It is certainly the opposite of Apple’s goals. Apple pursues lock-in today the way Microsoft did in the 90s. They were a lot more open in the “Rip. Mix. Burn” days, when the user experience sold computers. Now that content sells devices, it’s a different story. Again, just like the old Microsoft of 15 years ago, it’s appealing in the short term, but a little scary in the long term.
[Craig Seeman] “You can get Netflix on virtually anything at the moment though. That’s about as hardware independent as I can imagine. “
Netflix streaming gets costly fast on the go, and it’s useless in mobile situations like airplanes. Downloading (or at least caching) content would be valuable.
[Craig Seeman] “Apple will have to play hardball to get the Studio distributors to budge… and they may. Again though, keep in mind that Netflex streaming library is not their most valuable stuff. This has been Netflix’s problem as well.”
The studios recognize the value of their holdings, and they want to ensure they are getting at least their fair share of that value. That’s good business.
Walter Soyka
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[Walter Soyka] “If the studios want to avoid the labels’ fates, then they’ll be as vigilant about Apple buying their way through the backdoor as they are negotiating their way through the front.”
I’m sure they are. That’s why Apple is probably poking around nooks and crannies. That’s why I also find all this talk about AppleHDTV odd. I just can’t see that happening unless they’ve got an idea about getting content. They may just be “tech ready” should the “contract content solution” materialize and nothing more.
[Walter Soyka] “If Netflix were of the kind of strategic value to Apple that you’re suggesting, then the studios’ counsel is failing them.”
I’m not sure of Netflix’s real value to Apple but I see it as a possibility if, and only if, all the dominos were in the right place. I have not doubt that Apple’s counsel is looking for spaces in between the character kerning for holes to exploit. Not that they’ll find it but if Apple is even spending a few farthings for something more than their AppleTV hobby it’s because they feel there’s a reason to be ready “just in case.”
Netflix might be a bit of a mess and it might be as a result of their attempted split . . . so who knows if Apple is exploring a small wound with a poison dart.
[Walter Soyka] “I’m not saying this can’t or won’t happen — I’m just saying that I don’t think this is the most likely outcome.”
Yet on the other hand I don’t see them getting anywhere through “normal” negotiation much as you seem to indicate as well. They have to have “some strategic position” to strong arm. I can’t see too many places for that to happen (there probably aren’t too many).
[Walter Soyka] “Apple pursues lock-in today the way Microsoft did in the 90s.”
I was going to use that analogy in my last post actually.
[Walter Soyka] “The studios recognize the value of their holdings, and they want to ensure they are getting at least their fair share of that value. That’s good business.”
But I’m not sure what other markets “Attack of the 50 Foot Cheerleader” has or even the 1993 season of X-Files at this point. Not that they don’t have value, they do but again what’s on Netflix Streaming is not the premium “shiny disc” content. It’s not that Apple would want these at lower prices but the “strong arm” position would be, “we’ll take over the contracts and pay you what you were getting from Netflix.” That wouldn’t work on premium content because the studio won’t stand for being shut out of other revenue streams so they’d lose a lot more than that on an Apple monopoly.
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Craig,
I totally get what you are saying (I’ve had similar discussions with others about this same topic) I just disagree with your underlying premise that customers will be okay with Apple buying Netflix and making it an solely iTunes-based service.
The iPod paved the way for the iTMS and the iPhone paved the way for the App Store. If the hardware wasn’t up to snuff the media/software sales side of things wouldn’t blossom. So the big question, in my mind, is how is Apple going to turn AppleTV into a must have piece of hardware?
We all agree that content is key for a video distribution service (and in Apple’s case AppleTV hardware sales) but content distributors and producers are 1. leery of Apple due to how Apple was able to corner the digital music market early (not to mention dictate terms to AT&T) and 2. times have changed since the iTMS launched. Companies now, by way of a free app, can reach users directly on mobile devices, home theater equipment and video game consoles.
That’s why I swung back around to Apple’s UI strength. AppleTV used to do something unique but it no longer does. Apple’s strength the past decade has to been to do what others have done but with better execution. If they can do that and offer more content (not even exclusive content) then I think they can wedge themselves into the living room on marketing and doing things just a little better, a little smoother, than the competition. Some sort of Siri-enable thing that helps you easily find and organize the content you are interested in and it of course ties in with the rest of your Apple devices.
Apple takes pride in their hardware and I can’t see them elevating AppleTV out of ‘hobby’ status until they think they have a game changing pice of hardware to sell.
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[Andrew Kimery] ” I just disagree with your underlying premise that customers will be okay with Apple buying Netflix and making it an solely iTunes-based service. “
I didn’t say customers would be happy. Some would argue the fundamental existence of this very forum as proof of that.
[Andrew Kimery] “Apple takes pride in their hardware and I can’t see them elevating AppleTV out of ‘hobby’ status until they think they have a game changing pice of hardware to sell.”
And the content to go with it. Apple is about control of content. That’ been integrated into their business model whether it’s iTunes or, now, even the Mac App store.
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[Craig Seeman] “I didn’t say customers would be happy. Some would argue the fundamental existence of this very forum as proof of that.”
There’s a big difference though between FCP Legend & FCPX and Apple buying Netflix and turning it into an Apple-only service. At the most basic level FCPX is an attempt to bring editing to a broader audience while what we are talking about is bringing Netflix’s content, which already reaches a very broad audience, to a much smaller audience and hoping that the big audience pays the price of admission and follows along.
[Craig Seeman] “And the content to go with it. Apple is about control of content. That’ been integrated into their business model whether it’s iTunes or, now, even the Mac App store.”
And the content to go with it of course, but if the hardware is poor that’s a problem. That’s the case w/AppleTV right now. There’s nothing that stands out about it so very few people, relatively speaking, are buying it. Same thing when Roku first came out. It was the only way to get Netflix on your TV besides using a computer (which was a pain) but that wasn’t a compelling enough reason for people to buy an otherwise lackluster box. Hardware and the user experience comes first with Apple and I don’t think this case is any different.
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My 2 cents.
Apple’s largest advantage in this space, to my thinking, is in two areas.
A – they have a zillion customer credit cards on file tied into a secure purchase system that is robust and works really, really well.
B – they have the lions share of agile, personal viewing devices under the control of a single vendor.I think the compelling case for Apple to consolidate TV is simply the one that drove the success of the original iTMS – which is that they made it EASY to consume content via a single portal and not have to break the law to do it.
Face it – every single bit of content we’re discussing here is available via Torrent the day after it first appears on the planet.
To make the strongest possible business going forward, big companies are in trouble if they rely too much on enforced scarcity as a business plan driver. There’s are a couple of generations out there already schooled in getting around those kind of barriers – so erecting them is largely a matter of annoying your next generation of customers. Not smart, IMO.
I think the better bet is systems that make it EASY for customers to access and use content at will at a palatable price.
Personally, Apple buying NetFlix would have basically ONE impact on me.
Instead of managing TWO accounts – I’d get to manage ONE. Win for me.
If I perceive that there’s no significant difference in quality of product or price (within limits) then ONE vendor beats TWO – all other things being equal.
I do NOT want to be in a world where I have to maintain discrete billing accounts with Apple, NetFlix, Hulu, NBC, etc, etc, etc, to get to the content I want. If nothing else it’s disheartening to have to pay the overhead and profits of a dozen companies to get access to the content I prefer.
I’ll eventually pick the ONE that most meets my needs – and either do without or “cherry pick” content from the others that I don’t feel I can live without. But I’m decreasingly willing to pay subscription fees to 10 companies to deliver what are largely overlapping services with much of the same content in their back-catalogs.
YMMV.
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[Bill Davis] “Apple’s largest advantage in this space, to my thinking, is in two areas.
A – they have a zillion customer credit cards on file tied into a secure purchase system that is robust and works really, really well.
B – they have the lions share of agile, personal viewing devices under the control of a single vendor.”In fact a big part of the hullaballoo when Netflix says they were going to split optical and streaming into two companies or two services, was how inconvenient it would be to manage two accounts.
Even thought today you can get both iTunes and Netflix on any iOS device including AppleTV, there’s a major strong attraction in the market to desire single account convenience.
The advantage to Apple is that the very large Netflix subscriber base would exponentially grow the iTunes subscriber base (as far as video goes).
How upset would currently Netflix subscribers be to add an AppleTV to the mix? Many, like myself, may already own iPhones or iPads but not AppleTVs. I might grumble mildly if I had to move from my Samsung connected device (Blu-ray) to an AppleTV but I suspect most would make the move.
Consumers have been through these bounces before with Netflix. Remember there was a time not too long ago when streaming was simply an additional feature to the DVD rental service. They split those and raised prices and while there was some blowback for a bit, things settled down. I seriously doubt it would be catastrophic if Apple bought Netflix and integrated the subscription service into iTunes.
I also think the Studio really don’t have too many places to run to with comparable volume that would pay their contracts. That’s why I think this would be the potential strong arm tactic Apple could do.
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