Hulu Is Going to Launch What Was Denied to Apple: A Cable-like Internet Subscription Service

Apple has struggled mightily to become a major player in the delivery of video entertainment. Unlike music, Apple has run into a complex, sophisticated industry that connects studios, networks, and carriers. Now, it appears that Hulu is going to do what Apple wanted to do but could not. It punctuates the question: what should Apple really be trying to do for customers? 

At one time, it was thought that Apple would build a next generation HDTV. Or 4KTV. And lend all kinds of technical refinements to the viewing experience. It didn't happen.

At one time, it was thought that Apple would acquire Disney and get a toehold in the content ownership business. Apple, an outsider, would have become one of the players. It didn't happen.

At one time, it was thought that Apple would acquire Comcast or Time Warner Cable. That would have given Apple control over some of the delivery pipes and vested Apple in the industy.  It didn't happen.

So what did Apple settle for? Apple tried to negotiate a TV subscription service that would have, essentially, undermined the revenue stream of the TV industry and upset the business model the studios and networks have with their carrier partners. See, for example, "3 Reasons Apple’s TV Subscription Service Failed."

What a Great Idea, Sir!

What Apple may have done is to inspire Hulu, which already has content deals with the studios, to roll their own cable-like subscription service. That's exactly what Hulu plans to do in early 2017. You can read about it at Home Media Magazine. "Hulu Developing Online TV Service." To quote the article:

The $40 Hulu online TV service would attempt to market Disney (notably ESPN and Disney Channel), Fox and other pay-TV channels to an estimated 10 million to 15 million broadband-only households.

By some cosmic, unexplainable coincidence, the estimated monthly price is US$40, just about what Apple had in mind.

While this doesn't solve the cord-cutter problem of local news and live sports, it is a recognition that certain kinds of customers are eager to drop the "inertia channels" to get precisely (or almost) what they want, streamed, when they want it, and for a lot less than the $100+ cable and satellite have been extracting from customers for a few years now.

While it isn't known at this point is what the service will be called or whether it will have an app for the 4G Apple TV. Hulu already has its Hulu app for Apple TV. In that app you can already charge one of Hulu's Limited or No Commercials plans to your Apple ID.

And so it seems likely that Hulu would deliver this new service in the same fashion as well. That is, provided Hulu is willing to pay Apple 30 percent (or the actual, lower rate Hulu may have already negotiated.)

For perspective and comparison, from what I've read, Apple has told Amazon it would be just fine to have the Amazon Video app on the 4G Apple TV. There's been no barrier here except Amazon's own self-interest. For more, see: "Why is Amazon Video still missing from the Apple TV?"

But I digress.

The point here is that Apple seems to have expected the TV industry to let it have a set of keys to the kingdom, and the kingdom declined. Then, the kingdom got the idea that they should really do what Apple wanted to do themselves. Turnabout....

What is Apple's End Game?

All of this raises the question about what Apple is trying to achieve and what products it thinks will appeal to customers.

A case in point is a pair of new products from two companies that don't think they're too big to deliver what cord cutters want. Check out these links to see what I mean before you continue.

  1. TiVo Roamio OTA. "TiVo goes after cable cutters with more storage, no service fee."
  2. Tablo. "Tablo Brings Live Network Television, DVR Functionality To Apple TV."

These two products deliver a very focused solution and are likely to cause the customers to be pleased as punch. They use advanced technology but are likely to be simple enough to "just work." (I could be wrong, but I doubt it given TiVo's experience.)

In the grand scheme of things, Apple goes after the Really Big Deals, but in the entertainment industry, the CEOs are experienced and hard-nosed. Apple got nowhere. The good news is that there's plenty of opportunity for Apple to give us really cool, industry compatible hardware that solves a specific problem beautifully and doesn't involve Imperial Entanglements.

If only Apple were willing to do that.