Apple’s Hardball Negotiation Tactics Have Stalled Long-Rumored Streaming TV Service
It's no secret that Apple wants a piece of the streaming TV pie, but negotiating terms with big media firms has proven less than easy. That's especially true with Apple unwilling to budge on certain things, such as its insistence with Disney that the monthly rate per viewer it would pay to license the company's channels wouldn't change for several years.
According to The Wall Street Journal, Disney was shocked by some of Apple's hard line stances, the cost of licensing per viewer being one of them. Disney, which owns lucrative channels such as ESPN and ABC, essentially told Apple to take a hike, as it's grown accustomed to annual rate increases on licensed content. Even though Apple could potentially be a game changer in the streaming space, Disney felt it wasn't in its best interest to buck trends that have driven the industry for years.
Apple's insistence on certain terms has also frightened off 21st Century Fox and CBS, a pair of media bigwigs that, like Disney, aren't willing to bend even for Apple. It's a game to see who blinks first, only Apple doesn't much leverage—it needs media companies to jump on board if it's to offer a streaming service, whereas media companies don't necessarily need Apple.
This is new territory for Apple. It's also important that Apple figure things out. Most of Apple's revenue comes from iPhone sales, but it remains to how long that gravy train can fatten the company's pockets. Case in point, iPhone sales declined year-over-year in Apple's most recent quarter, marking the second quarter in a row of sagging iPhone revenue.
Apple's online TV plans include combining live channels with an on-demand library. In most industries, Apple's pretty good about negotiating favorable terms for itself, but in this case media giants worry that bending to Apple would mean that cable TV distributors and other streaming services would demand the same or similar terms.
While licensing and content availability are both major talking points in negotiations, there's also been concerns by potential media partners of how Apple's user interface would operate, including things like navigating the channel menu.
The good news is both sides are interested in making this happen, but until one side or the other budgets on key issues, talks will continue to drag on.
According to The Wall Street Journal, Disney was shocked by some of Apple's hard line stances, the cost of licensing per viewer being one of them. Disney, which owns lucrative channels such as ESPN and ABC, essentially told Apple to take a hike, as it's grown accustomed to annual rate increases on licensed content. Even though Apple could potentially be a game changer in the streaming space, Disney felt it wasn't in its best interest to buck trends that have driven the industry for years.
Apple's insistence on certain terms has also frightened off 21st Century Fox and CBS, a pair of media bigwigs that, like Disney, aren't willing to bend even for Apple. It's a game to see who blinks first, only Apple doesn't much leverage—it needs media companies to jump on board if it's to offer a streaming service, whereas media companies don't necessarily need Apple.
This is new territory for Apple. It's also important that Apple figure things out. Most of Apple's revenue comes from iPhone sales, but it remains to how long that gravy train can fatten the company's pockets. Case in point, iPhone sales declined year-over-year in Apple's most recent quarter, marking the second quarter in a row of sagging iPhone revenue.
Apple's online TV plans include combining live channels with an on-demand library. In most industries, Apple's pretty good about negotiating favorable terms for itself, but in this case media giants worry that bending to Apple would mean that cable TV distributors and other streaming services would demand the same or similar terms.
While licensing and content availability are both major talking points in negotiations, there's also been concerns by potential media partners of how Apple's user interface would operate, including things like navigating the channel menu.
The good news is both sides are interested in making this happen, but until one side or the other budgets on key issues, talks will continue to drag on.
