// Home / News

Apple TV faces battle with media executives

By Reuters

Posted on 2 Sep 2010 at 08:35

Apple's revamped TV service faces a battle with television networks if it is to grow into a success, according to media executives.

Steve Jobs launched the slimmed down Apple TV yesterday evening at $99 in the US and £99 in the UK.

However, while UK content deals remain unclear, in the US Apple has just two networks on board - Walt Disney ABC and News Corp's Fox. Several other media conglomerates - including NBC Universal, CBS and Viacom - are notably absent from the roster.

Chief among concerns in the entertainment industry are the terms Apple is seeking for rental deals, according to several media executives. In its discussions, they said, Apple is asking for deals that would give it 30% of the rental fee.

That revenue-sharing breakdown is similar to agreements Apple has struck for TV show and movie downloads from iTunes. But executives point out that iTunes downloads are priced at $1.99 to $2.99 and say they are hesitant to replicate those deals at prices of $0.99.

"Steve Jobs' thing is if we lower the price point we'll sell more stuff," said one media executive close to the talks.

Another said: "This is a plan that is designed to sell iPads, iPods and iPhones. It is not a plan that is designed to appropriately value content."

Still, some analysts believe other media companies might feel pressured to strike deals if the $0.99 rental model proves popular with consumers.

What is more, Apple co-founder Steve Jobs has been proved right before in forcing through business models for media companies, in particular with the music business.

As for the media companies, they worry they could find themselves in the same company as the book and music industries struggling to cope with a downward spiral on pricing.

Evercore analyst Alan Gould believes that "getting the consumer used to a $0.99 price for a TV show (rental or sale) and further empowering Apple as the '800 pound gorilla' ... is unwise".

Another industry-watcher, Larry Haverty, a Gabelli funds portfolio manager who owns media stocks, said even the current download deals on iTunes had failed to significantly help the bottom line for entertainment companies.

"My guess is that the revenue streams from the existing $1.99 downloads aren't particularly significant," said Haverty.

Viacom, CBS and NBC declined to comment.

Subscribe to PC Pro magazine. We'll give you 3 issues for £1 plus a free gift - click here

From around the web

User comments

Just to be clear

I buy this for £99 (ignoring the $

By greemble on 2 Sep 2010

Where'd the rest of my post go?

As I tried to say:

Are the other Internet TV providers (Joost, Project Canvas, Zattoo, JumpTV, SeeSaw, et al) charging for each & every show?

If not - Why should I pay Apple for the same content?

By greemble on 2 Sep 2010

Apple TV - Good idea let down by serious flaws

First of all £99 = $130 in pre-VAT at current exchange rate terms. I resent being ripped off on FX.

Secondly, where's the reasonably priced/free content? Will it support iPlayer, 4OD, Project Canvas, streaming services from ILoveFilms.com? Why the limitation to 720p?

By ParimalKumar on 2 Sep 2010

Access to alternative Free content? This is Apple here!

Apple Tv marries to iTunes, as does any other Apple accessory with some memory. Apple wants to control the whole bangshoot, from codec, to drm, to content, to price. Apply TV is for Apple content, not to be confused with a media player which supports a host of codecs and content providers. It has always been the flaw in the product - without a credit card and an iTunes account, AppleTV is a chocolate tea pot.

Still, if you are in control of the whole process, the upside is the video content will always play... right?

By tymitoh on 7 Sep 2010

720p limitation

The 720P rectriction? So Apple can release the 1080p version later on, and have people queuing up outside their stores on product launch day to but it. Apply never give all the features, no matter how technologically possible/practical/sensible. Look at the difference between the 4 iPhone models, the current model really doesn;t have anything in it that was technologically and affordably possible - yet we get one, and queue for the next one and so on. Gotta admire Apple in creating demand by not giving you everything from day one.

By tymitoh on 7 Sep 2010

Leave a comment

You need to Login or Register to comment.