Apple May Have Found the Chink in TV’s Armor: Pay-for-Ad-Skipping

| The Back Page

Apple TVApple has been shopping networks and studios a service that would allow users to skip commercials for a fee. The negotiations represent a new spearhead from Apple to bring a premium TV platform to market, with the company seeing revenue-for-ad-skipping as an opportunity to get its corporate foot in the door.

The report comes from Jessica Lessin, a former Wall Street Journal reporter, who cited unnamed sources that had been "briefed on the negotiations."

Apple has long been known to have designs on the living room, either with a dedicated television set or an enhanced Apple TV-like settop box that would offer users an-Internet connected TV service.

Recently, Apple was reported to be close to a deal with Time Warner Cable that would allow the Apple TV (or its successor) to be the settop box for that company's cable subscribers, the first success Apple has had in its effort.

The company has been stymied by network and studio executives who aren't interested in giving control of the user experience to Apple and who are very interested in protecting their existing business models.

$$$

That's because the TV industry makes a lot of money. A lot of money (at least if you're not Apple). It seems they want to continue making lots of money, even though everyone and their brother knows that the Internet is in the process of messing all that up.

Most TV Suits—like Suits everywhere—would rather ride the gravy train until it wrecks than risk a disruption that could put them ahead of the game or fail.

Contrast that to the music and publishing industries, which were both in disastrous states when Apple approached them with its disruptive iTunes Store and iBooks (respectively). Their need was Apple's opportunity, which is almost always the case with anything disruptive.

The music industry signed up for Apple's (then) Mac-only iTunes Store and was subsequently saved from the folly of its own inept digital strategies. The publishing industry turned to Apple because Amazon was rapidly devaluing the publishing world's products (books). The DOJ rained on that parade, but the point is that the execs signed on because they were desperate.

::Facepalm::

Pullquote

That's the irony of the situation. Desperate industry execs sign on with Apple and then get upset that Apple owns the customer experience. They are oblivious to the reality that Apple is able to do this because the executives are very poor stewards of that experience and they resent the fact that Apple saved them.

It's irrational.

Back to the TV market: executives aren't desperate and fear change, but if Jessica Lessin's sources have it right, Apple found a chink in the armor, and that's DVR commercial skipping. Almost everyone with a DVR routinely skips commercials, and even TV execs know this will eventually erode advertising revenue as commercials become less and less effective.

Getting money for something that will eventually cost them money—and for which they are getting zero dollars right now—could be just the ticket to get TV Suits to let Apple in.

Think Differently

The question is whether or not customers would pay for this considering the fact that they don't have to pay now. Many will not, especially the enormous class of people who feel entitled to everything for free.

Apple has to understand this, too, and my assumption is that Apple believes its service would be compelling enough to get enough people paying to make it worthwhile. As with every disruptive product and service Apple has brought to market, you can be sure that Apple has a good reason to believe it will be successful.

In the meanwhile, people that enjoy good television programming should be willing to pay the ability to skip commercials. There is a tipping point where DVR (and pirate) behavior will begin to erode those profits we mentioned above. When that tipping point is reached, programming will suffer unless something else (like Apple's service) is there to replace or augment that revenue.

Sign Up for the Newsletter

Join the TMO Express Daily Newsletter to get the latest Mac headlines in your e-mail every weekday.

Comments

d'monder

I’ll give them $100, right now, if it means never seeing another Progressive commercial or that awful lady.

Please. smile

Lee Dronick

Bring it to Uverse please.

I am with D’monder, no ‘mo Flo. However, I do enjoy the creativity in many ads.

iJack

If I were Apple (and I am, you know), I would make a deal to get the North American rights to all the BBC and ITV channels. The shows are excellent (no, it’s not all Downton Abbey all the time), and most of the commercials are hilarious.

European television largely treats viewers as though they are adults. Here, we’re treated as though we’re just barely not children.

Glenn Connery

It simply isn’t true that “Almost everyone with a DVR routinely skips commercials”.  First, most people, even those with DVRs, watch the vast majority of their TV live.  Yeah I know, I don’t either, but those are the stats.  Second, even when they have the ability to skip commercials the majority of people don’t most of the time.  Yeah, I know I almost always do too.  But again, those are the stats.  You can see the most recent reference here:

http://www.engadget.com/2010/05/06/study-finds-commercial-skipping-dvrs-dont-affect-purchases-ti/

And note that this is a TiVo study.  With cable DVRs being INFINITELY WORSE a similar study might find more people watching LIVE (cuz the DVR doesn’t always work) and not skipping commercials (cuz the DVR controls are laggy and don’t always land you at the right spot).

Lancashire-Witch

@ijack.  The BBC - being a fee-based service - doesn’t have ads anyway in the UK. And radio without ads is much better.

Anyone seen Mrs Brown’s Boys yet?

ctopher

I’ve notice that my Time Warner DVR has changed its behavior. It used to be that when you stopped fast forward, it would back up just a bit before playing. I was really good at spotting when the commercial was over and the show began. At first that meant that I had to watch a bit of the last commercial. After awhile I got good at knowing how much show to let speed by before hitting play.

Now, when you hit play it just plays from where it stopped, so if you see program, you’ve already gone too far.

It really is an arms race.

Xwintelslave

If I’m already paying for access to streaming TV (as opposed to downloading episodes and watching them later), then should I also have to pay to skip commercials? Seems redundant, not to mention another ploy to bilk consumers. If access to the streaming content is otherwise free, then paying to skip is reasonable.

sym

Nice headline.  I didn’t know that TV had ‘armor.’  Another example of professionalism journalism without equal.

sym

For a real journalistic take on this story…

http://qz.com/104796/heres-all-the-evidence-that-apple-is-making-an-actual-tv-and-the-remote-will-likely-be-your-hand/

Log-in to comment