Will Apple’s new foray into streaming be able to swim in the same waters as Netflix and Disney, or will it go the way of Verizon’s Go90? Recode executive editor Peter Kafka and The Verge’s editor-in-chief Nilay Patel discuss Apple’s plan for streaming, news, and more.
You can listen to the discussion in its entirety on The Vergecast right now. Below is a lightly edited excerpt from this interview regarding Apple’s potential plans for streaming TV.
Peter Kafka: So there is one product called the Apple TV app which also works on your box, but it also sits on your phone and is essentially a TV guide. Which, by the way, seems like a pretty good idea, if you look at a world where the bundle has been broken up or there’s lots of different places to get video. It’d be great to have one place that has all of them. Who controls that real estate? That’s a big expensive question. But as a user, that makes sense to me. I’d like to know where all my stuff is and what I can watch. That’s what Apple has tried to build. There is also a storefront component to it. A big part of the Apple video strategy here is to get you to subscribe to HBO or Showtime or Starz or CBS. And for Apple to take a cut of that subscription. I think that is more important to them than whatever subscription service we’re eventually going to watch.
Then there is this other thing, I don’t know what it’s called. Apple TV Plus? This is the thing that we still don’t know what it is, but it’s going to have some TV shows and maybe a few movies, and people like J.J. Abrams and Steven Spielberg and Jennifer Aniston and Reese Witherspoon and Oprah Winfrey are all involved in some way.
So they’re going to have stuff that you can watch, and you may or may not pay for it. They’re describing it as a subscription service. I don’t think they’re actually going to charge you actual money for it, I think it’s going to get bundled in some way. I don’t think they can charge you for it if they do it to be so small, because compared to what you’re going to get from Netflix or HBO or Disney Plus, it’s maybe 30 shows. A couple shows a month. I don’t think you can charge people for that. So that’s what they are.
The TV box obviously existed and the TV guide strategy has been around for a couple of years.
Nilay Patel: What was the thing they wanted to do?
They wanted to put together their own bundle of TV channels and sell them to you, which now is something that many people like Google, Hulu, Sling, Sony, and AT&T are all doing in various forms. Apple wanted its own form of this, they wanted a specific set of channels and a specific price point, but they could never get it.
That’s actually one thing I don’t understand. Why wouldn’t they just pay the money and get what they wanted? It seems like everyone else can get the same basic deal.
Apple will tell you they wanted a specific deal. They wanted it to be $25 or $30 and basically wanted to take sports out of the bundle. So this really comes down primarily to Disney, which owns ESPN. ESPN is sort of the key for Disney in the bundle, and Disney — for years and years and years — has resisted separating ESPN out from the rest of its stuff. And so that seemed to be the major sticking point. Some of the other networks, I’ve been told, had already signed on to Apple, yet to do a skinnier bundle.
If you go look at the other bundles everyone else is selling, they all pretty much replicate what you would normally get through Comcast or Charter. You pay $40 or $50 a month. You get this many channels, it kind of looks like the same thing.
So Apple wasn’t able to launch this sort of over-the-top channels streaming thing. It didn’t happen for them. So they said “Okay, we’re going to spend a billion dollars on Oprah and Steven Spielberg and Jennifer Aniston, and make 30 shows which will just be like a sweetener” and then they’re going to now launch this new TV app and the real money is going to come from Showtime subscriptions.
That’s what I believe, yeah. When and if they eventually announce pricing, I think it’ll become clear. Everyone sort of wants to describe this in shorthand as a Netflix killer, but again Netflix is $10 to $20 depending on what you’re getting, and you’re getting our Triple Frontier, Friends, plus whatever new shows that Netflix is making.
Plus a bunch of old stuff, whether it’s Friends or old movies or old TV shows. And that’s why even if you don’t like Triple Frontier, which is a thoroughly mediocre but entertaining movie, it doesn’t matter because there’s a bunch of other stuff there and so you feel like you’re getting $10 worth of value.
People live their entire life in Netflix.
And you don’t even have to love everything you’re watching, it’s just there. It’s kind of like TV. It’s just like flipping through the cable channels.
Which is why Netflix won’t disaggregate its content from its interface.
Right. They have the bundle, they’ve basically made a bundle for you. It’s just one channel, it’s one little box. So that works really well for Netflix and it’s hard to imagine someone saying I will pay as much as I’m paying for Netflix or Hulu or any of the other competitive services for a Jennifer Aniston show. Even if that show is great. Then you just buy the one individual show. It’s hard to imagine them coming out with a competing compelling service, which is why I think they’re going to throw this to iPhone owners, to people who buy a bigger bundle of stuff. You can imagine what else could go into an Apple bundle.
It seems like the bundle that’s coming is “Just start paying us monthly for an iPhone. We’ll give you a new iPhone every 18 months.” They’ll just raise that price a little bit and you’ll get the suite of services in your iPhone and there’s a Jennifer Anniston show.
Right. They’ve got news, they’ve got music. They’re going to have something with video. There’s a game service. I’m paying them monthly for iCloud storage and I didn’t want to, but eventually they made me. I’m sure I’m paying for AppleCare. So you can sort of see how they can mix and match those bundles. And maybe it gets interesting and somewhere in there, there’s a video thing that you’re simply paying for. And then keeping 30 percent or so of your Showtime monthly subscription, that could be a lot of money for them.