According to a report from Bloomberg, Apple has halted its negotiations with television networks due to the fact that a sub-$30 package arrangement cannot be settled upon. Apple has been hoping to finally provide its own unique streaming service package for Apple TV. Again negotiations have failed. Fine. The big boys don't want to play. Move on Apple. The horse is now officially dead.
Apple's leadership is showing signs of understanding that this endless feet dragging game by the major network holders is fruitless, and is now taking a different direction. Eddy Cue, Apple Sr. VP of software and services, suggested to buzzfeed that Presidential candidates should launch their own Apple TV apps. It appears Cue, like other content providers such as Netflix, is taking another route to flush out new Apple TV content. Unlike Netflix, that gambles big on high production cost original programming, Cue seems to be searching for those capable of producing, quick, low-cost streaming solutions, unique to the industry.
What immediately came to mind with Cue’s political bent, was the DNC and RNC, which could easily get into the Apple TV streaming game. The Republican and Democrat committees are the most powerful and influential political machines in the industry, are typically flush with cash. It is the heart of a primary season, leading into a year long Presidential race. These party organizations could produce a few live candidate talk shows, along with canned promotional content, quickly delivering it to millions of Americans through Apple TV. It makes a lot more sense than throwing costly 30 second slime ads at one another, which everyone tunes out now-a-days anyway. But there is more than just politics out there to be had and cultivated.
Short of going nuclear and buying out Disney, or working with NBCUniversal, resulting in prices no one will pay (as the giants of the industry are completely hooked on overpriced cable bundles), there is a more patient market approach. Fox Entertainment Group is among the smaller conglomerates, with its Fox News Channel acting as its cable cornerstone. In order to force change upon NBCUniversal (owned by Comcast) and Disney, Cue should be working to cut deals with the smaller players, going so far as to offer all of Fox Entertainment Group’s networks a-la-carte, and offering FoxSports 1 regional bundles. Apple should go so far as to make it a break even — or loss leading — venture. Apple needs to change the game and once the dominos have started to fall it can recoup its investment any number of ways. This is, after all, how iTunes financed its way to success.
Cue also needs to take a deep, hard look at sports. Though Silicon Valley is not comprised of a 100% nerd population, it is still quite oblivious tech firms do not fully understand the power of sports. The NFL, NBA, NHL or MLS, each bring their own loyal fan base that are more than willing to pay hundreds a year to route on their favorite franchises. Apple has had opportunity to bid and secure major sport packages, and had unfortunately passed on them each and every time.
If Apple is serious about the living room, then goal number one should be breaking the Cable/Content cartel. Rather than trying to work major deals with the companies that hold all the cards, Apple should attack with the thousand paper cuts approach, making smaller, yet costlier investments in content, carving out niche after niche, such as sports, news, and politics. This is the methodical winning approach. Each market segment brings with them a few hundred thousand, to a few million loyal customers at a time. Until Apple has created its own leverage nothing will change.
Cue needs to encourage cord cutting via targeting market segments, rather than trying to get cable subscribers from jumping en mass. As long as NBCUniversal and Disney own over 50% of cable bundled content, what does Apple have that compels them to change anything?
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