How to make that argument to the content owners? Speak their language: money. With more than 220 million iOS devices out there, a streaming service for iOS users could prove lucrative—especially if it were tied into those iTunes accounts that all those users already have.
The people who won’t be happy, of course, are the middlemen who currently deliver the content to your screens: cable and satellite providers. That’s where things get tricky, because the content providers have a vested interest in keeping the distributors happy.
But Apple’s got a lever here, too: Government regulations on the recent merger of Comcast and NBC may mean that companies like Apple and Netflix must be offered comparable licensing terms to those offered to cable companies.
Subscribing to the theory
The real potential win for Apple, though, is adding a subscription media service. The company hasn’t ever really, genuinely tried this model, unless you count the Season Pass offerings on the iTunes Store—and I don’t. But the value proposition of Hulu is a huge part of its success; people are used to watching their television for “free” by consuming ads, or by paying a monthly fee to a provider (or Netflix), or by buying DVDs of entire seasons (which, in many cases, you can still get more cheaply than an entire digital season on iTunes). Apple’s approach of à-la-carte purchases and rentals looks decidedly old-school for a company that’s otherwise in the forefront of the digital media revolution.
(Image Caption: Hulu Plus has been gaining subscribers, though the total number pales next to iTunes Store accounts.)
Eight months into publicly offering its paid Hulu Plus subscription service, which gives access to more content as well as streaming on other devices, the company has racked up less than a million paid subscribers, though the adoption curve is apparently accelerating. While that may be small potatoes compared to the more than 225 million iTunes accounts Apple boasts, remember that in Hulu’s case each of those subscribers represents an actual recurring revenue of $8 per month.
Such a monthly charge could be a nice addition to Apple’s bottom line—I’d suspect that it could bolster that fee a bit further if it were willing to step away from the ads that Hulu Plus still serves to paying viewers. In fact, I wonder if an Apple-run Hulu could step away from advertising altogether, in favor of an exclusive paid service. Paying $10 or $15 per month for access to a large catalog of streaming exclusively on iOS devices and the Apple TV might be quite an appealing proposition for many consumers.
The match game