Consumers anxiously awaiting Apple’s internet based, live streaming television service will continue to wait until at least 2016. Apple Inc. was supposed to unveil its streaming TV service at the upcoming September launch of the company’s new products. However, trouble with securing content deals as well as difficulties creating a computer than can handle the required capacity have slowed progress. Therefore, service will likely be delayed until next year.
Apple is facing television content licensing problems that it did not face when it took over the music industry several years ago. Back when iTunes was created, music artists and industry executives were in the throes of dealing with pirated music and peer-to-peer music sharing practices. Services like Napster allowed users to download music for free and, in turn, artists made no money. So when iTunes came along and actually offered to pay the artists a very tiny fee for their music, the music industry jumped at the deal. Conversely, the television industry is in a much different position. Presently, Apple is new to the market and cable companies, satellite television providers and services like Netflix and Amazon Prime dominate the field.
Networks like the idea of another service paying for their content, but they are in a position to hold out for the right price. Eddy Cue, Apple senior vice president of Internet software and services said earlier this spring that, “TV is a hard problem to solve. One of the problems you have with TV is you have a disparate system with a bunch of providers. There’s no standards. There’s a lot of rights issues.”
Apple is trying to find the right combination of channels to appeal to an increasing number of cord-cutters (those cancelling their traditional cable and satellite television subscriptions) while charging a reasonable subscription fee, likely in the $30-$40 range.
Apple also has had trouble developing a network that ensure a bug-free, fast viewing experience throughout the entire country. In order to make the process economically feasible, Apple needs to “store” popular shows near the viewers as opposed to storing everything in its four data centers in California, Oregon, North Carolina and Nevada. Nick Del Rio, an analyst with Moffettnathanson LLC observed that, “Apple could send every bit from one central point, but the bandwidth costs would be exorbitant. Plus, the service would be terrible.”
So, as Apple works on its television streaming service, it will continue to promote its Apple Music streaming service (which presently is not doing as well as expected) and its Apple Pay mobile-wallet platform (which also is not doing very well). It remains to be seen whether Apple TV will revolutionize the television industry as iTunes revolutionized the music industry.
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