Three Guys and a Podcast: Apple News & Analysis
Qz.com (Quartz) delivered a report today claiming Apple was tuning their TV efforts, working to bring HBO, Nickelodeon, Comedy Central, EPSN and possibly others into an Apple-esque cable like experience, but running purely via the Internet. Quartz claims a network like HBO could represent a tipping point in breaking the cable stronghold, but there is one problem with their theory: it's wrong.
There is only one cable network that can upset the cable provider monopolies and their bundles.
The NFL's Sunday Ticket programming is the sole reason DirectTV is still in existence. Anyone who wants the Sunday Ticket must first sign up for a DirectTV bundle, in order to add Sunday Ticket to their subscription package. DirectTV does not divulge their Sunday Ticket subscribers, but based on their quarterly reports, up to 10% of their overall subscription base orders Sunday Ticket. That group of NFL lovers is around 2 million subscribers, or close to $2 billion in revenues a year for DirectTV.
HBO, Nickelodeon, Comedy Central and others are “nice to have channels”, but their programming is canned. The only factors keeping cable bundles in the lead over internet streaming are live sports and live news. The rest of this “canned” content can be found elsewhere, when and how the user wants it. What's more the NFL's Sunday Ticket fans are rabid, if not religious followers, of the pigskin sport. Wherever Sunday Ticket goes, those NFL fans will follow.
Google has been reported to be in talks with the NFL about acquiring for the Sunday Ticket for the 2014/2015 season and beyond. Google can easily outbid DirectTV, so there are only a few other forces that can outbid Google for those fans. Apple is one such company. Apple is in a unique position to acquire Sunday Ticket due to the fact that Apple need not make up all the outlay for the programming via subscriptions. Apple's unique tie-in with their own devices gives Apple the ability to make up, and create profits with their hardware sales.
iTunes has long been a break even, or slightly profitable venture for Apple. But without iTunes and its vast array of content, the iPod and beyond might have become niche devices at best. If Apple views the NFL as another iTunes relative content offering, then losing a bit of money per subscriber would be more than worth it for launching an IPTV service for Apple products.
Key to making this work for Apple is delivering the long rumored Apple HDTV, or perhaps 4K (UHD) TV, with Apple network services built-in for subscribing and viewing on any Apple device, anywhere, anytime.
Sunday Ticket would likely shift 75% or more of the rabid NFL fan base to an Apple TV or Apple UHD TV. Millions more Apple fans could potentially kick off an initial 10 million unit first year in sales. iTunes was not profitable overnight, but it has now become a $4 billion a quarter business for Apple and it is becoming more profitable every quarter. If Apple were to grab the NFL Sunday Ticket from the grasp of DirectTV and Google, it would immediately legitimize Apple as the leader in content, and instantly secure millions of subscribers, coupled with Apple hardware subscribers.
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