Once hoping for a fall launch, Apple is now looking to bring its Web TV service to market in 2016, according to Bloomberg.
Talks to license programming from TV networks such as those owned by CBS Corp. and 21st Century Fox are progressing slowly because Apple wants to offer a package of popular channels for US$40 a month, the article adds, quoting unnamed “people familiar with Apple’s plans.” What’s more, the Cupertino, California-based company doesn’t have the computer network capacity in place to ensure a good viewing experience, Bloomberg adds.
Regarding network capacity, Apple wants to improve quality and keep bandwidth costs down by using CDNs to stream content from data centers that are close to users, says Seeking Alpha. The company has been building out its own CDN, and also continues to use market leader Akamai’s services, the article adds.
A CDN (content delivery network) is a large distributed system of servers deployed in multiple data centers across the Internet. The goal is to serve content to end-users with high availability and high performance.
What do we know about Apple’s rumored TV service, which I call Apple Web TV? The Wall Street Times says that Apple is in talks with programmers to offer a slimmed-down bundle of TV networks that will be available on Apple gadgets such as the Apple TV, iPad, and iPhone. The service will reportedly have about 25 channels and cost between US$30 and $40 per month. (J.P. Morgan analyst Rod Hall tells investors that $40 is too high and would dampen the chances for the subscription service to succeed.)
Apple’s Web TV offering will reportedly be anchored by broadcasters such as ABC, CBS and Fox, but won’t include smaller channels typically included in a standard cable TV package. If the WSJ is right, Apple’s new service may have one channel that may have folks who’ve been hesitant to cancel their cable or satellite service doing just that. The station: ESPN. Disney and Viacom are also reported to be in discussions for inclusion in the Apple Web TV service.
If Apple does launch a streaming video service, it could be huge. “Apple remains one of the few companies in the world that has the potential to transform the TV industry, and we believe consumers are ready for a change,” Cantor Fitzgerald analyst Brian White wrote to clients in a March 17 research report.
Wells Fargo analyst Maynard Um doesn’t think Apple’s rumored Web TV service will provide big margins for the company. The company’s goal is to entice people to buy its Apple TV set-top box (and, perhaps, eventually an Apple-branded HDTV).
“We believe margins may be low when taking content and other costs into account. Rather, we believe this strategy could be to drive further lock-in to stem any threats of attrition and potential to gain share (i.e. hardware sales),” he said in a note to clients. “We believe the amount and quality of the content will dictate Apple’s success though inversely cost Apple more to procure making critical mass more important to absorb the costs.”
