Unauthoritative Pronouncements

Ben Thompson goes on a deep dive over how Apple’s OTT service will mostly move money around. This is very much in line with my own thinking. This is all about advertising money. See here, and here.

From Thompson’s conclusion:

Notice, though, who is not winning here, at least financially: consumers. The money is simply moving around. In fact, of the three major players in this proposed deal, Apple will likely earn the least:

• Content owners have pricing power because they create must-see TV
• Cable companies have pricing power because they own the pipe
• Apple is simply proposing to be content’s customer service layer in place of the cable companies

The benefit for Apple is the strengthening of their ecosystem: owning the TV will make iPhone and Watches more valuable (see Apple’s New Market); this too is the main way in which consumers win, and why they will switch: a better UI, better integration with their devices, and a company that actually cares. Just be prepared to pay the same, if not more, than you pay today.

Thompson also breaks down the business of TV at the top of his post, although he glosses over the complex interaction between TV studios, film studios, and networks that make up divisions of media companies. The networks buy shows, and broadcast rights for films, from the TV studios and film studios respectively. Fox’s TV studio doesn’t always make content for Fox’s broadcast and cable networks, for example, and Fox’s networks don’t exclusively show 20th Century Fox films. The TV studios are even making shows for Netflix and Amazon, with Netflix and Amazon acting as the network in that relationship, and obviating the role the broadcast network division plays in collecting ad revenue.