April 1, 2015
Apple wants the TV guys to provide their shows for its proposed streaming video service. But that’s not the only thing Apple wants from the TV guys: It wants them to provide the streams, too.
Apple is asking TV networks to handle the responsibility and cost of the streaming infrastructure associated with its Web video service, industry executives say. That issue is one of many unresolved questions about the proposed service, which Apple would like to launch next fall but can’t until it lines up programming deals.
Apple’s proposal isn’t necessarily surprising, since video services that stream via Apple apps today — including some of the networks Apple wants to work with, like Fox, CBS and Disney — all “stand up” their own streams, by working with content delivery networks like EdgeCast.
Streaming video costs aren’t prohibitive: Delivery to your living room runs an average of around five cents per hour per stream, says Tom Morgan, a video industry veteran now running streaming service Net2TV.
That said, outside of Netflix, which streams billions of hours of video every three months, most streaming services haven’t experienced significant demand to date. The notion of paying their own freight for a heavily promoted Apple service has given executives pause, sources say.
TV sources say Apple executive Eddy Cue, who heads up the company’s media efforts and is leading negotiations for the new streaming service, has told them that Apple feels it should concentrate on what it’s best at — creating consumer hardware and software — and leave other tasks, like streaming infrastructure, for people who specialize in it.
An alternative theory, suggested by someone involved in the discussions: Apple thinks that if programmers are responsible for handling their own streams, Internet providers like Comcast* and Verizon, who sell their own bundles of video programming, will be less likely to penalize Apple’s service.
Last year, Netflix complained loudly that it had to sign commercial agreements with Comcast, Verizon and other broadband providers in order to get speedy delivery of its streams.
Apple declined to comment.