Apple takes $3m daily from TV and movies: What's next for Apple TV?

HBO Go and WatchESPN added to the streaming service's line-up

James Vincent
Thursday 20 June 2013 12:14 BST
Apple's second version of Apple TV
Apple's second version of Apple TV

Apple’s plans for TV have long been a focus for industry speculation. Their current outing, the £99 streaming box Apple TV, has been seen by many as only a half-hearted attempt to move into the market. However, new figures released by the company suggest plans may be coalescing, with Apple making at least $3m a day from TV and movie sales.

The figures came alongside an Apple press releasing announcing that the HBO GO and WatchESPN channels would be joining the line-up of programming on Apple TV. The company also specified that over one billion TV episodes and 380 million movies had been bought from iTunes, with daily figures of 350,000 movies and 800,000 TV episodes.

Combining this data with the mean figure of Apple’s prices (they charge between 99c and $20 for movies, whilst TV shows are $3 per HD episode), the Financial Times suggested a revenue of between $3m and $4m, before the studios take their percentage.

 The current Apple TV product (sometimes dubbed ‘the puck’ for its small form factor and rounded edges) works by streaming digital content to consumers TVs from a range of sources including iTunes, Netflix and Hulu. Apple have sold more than 13m Apple TV units globally, with 2m sold just at the end of last year’s holiday season.

This places Apple as simply a go-between for networks and consumers, using their technology to maintain the existing model of TV distribution, where consumers must pay each media provider separately before unlocking their content to be streamed via Apple TV.

The latest additions of HBO Go and WatchESPN perpetuate this model, leading some industry commentators to complain about Apple’s lack of innovation. Writing in Forbes Mark Rogowsky summed up the situation by saying ‘AppleTV grabs HBO and ESPN, but disrupts nothing’.

The problem with thinking Apple can instantly ‘disrupt’ the TV industry as they managed with iTunes and the music industry is one of right technology, wrong time.

As a distributor of content Apple always has to negotiate with publishers for licenses – a tricky deal as the publishers suspect (rightly) that they are selling the family silver and undermining their own relevance. Recent spats over eBook price fixing show that even when publishers and distributors are in agreement, the results are not always pretty.

With iTunes’ takeover of the music industry Apple were helped by the fear of illegal filesharing from the likes of Napster. Executives were worried and Steve Jobs - in a series of now legendary negotiations – bullied, cajoled and flattered them into accepting his lifeline: the one-two knockout combo of the iPod and iTunes.

However, although it’s undeniable that iTunes and its competitors have subsequently rejuvenated how music is sold for the consumer, the labels are not so happy. In the US revenue from the music industry topped out at around $38 billion a year a decade ago and has since fell by more than half to $16.5 billion in 2012. Big TV studios can’t help but be scared by these figures, and instead of jumping straight into bed with Apple they’re trying to find ways to keep control of their content.

When quizzed on the subject at the All Things Digital conference, Apple CEO Tim Cook was typically cryptic. He famously upgraded his opinion of Apple TV from just a “hobby” to “an area of great interest” but was not forthcoming of future plans, despite voicing criticism of the current industry.

“When you look at the TV experience, it’s not an experience that I think very many people love,” said Cook. “It’s not one that has been brought up to date for this decade. It’s still an experience much like 10 years ago or 20 years ago.”

The most recent advances for Apple TV – the additions of the new channels, the sales figures – are by no means an indication of an upcoming attack on the industry, but they do show that the situation is continuing to develop.

At the moment, revenues from Apple TV still only account for 2% of the $90 billion US cable and satellite industry. When it comes to hunting whole industries, this is bigger game than even music. But with a war-chest of $147 billion dollars to work with (that’s enough cash that they could close the company tomorrow, stop all sales, and yet still pay their workers for another ten years), it seems like if Apple don’t take on the challenge, no-one else will.

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