The revolution will have a monthly subscription

Introducing the first iteration of the Apple TV with an app store, Tim Cook (in)famously declared, “We believe the future of TV is apps.” The Apple TV stands out from its competitors for only two things: the App Store, and a much more powerful CPU than its competitors. So it’s safe to say that Apple genuinely does believe this is the future of TV.

It’s also safe to say, though, that it doesn’t appear to be panning out. Pretty much nobody buys Apple TVs for much other than what other streaming boxes do.1 We’re watching Netflix, Hulu, HBO, and Amazon Prime. (Well, we will be watching Prime. Later. Theoretically.)

What we want from TV is—sorry for the buzzword—content. In practice, it doesn’t matter how we get Game of Thrones or Star Trek: Discovery as long as we can get it easily on demand. Apps are arguably less help than hindrance. Imagine having a storefront that had all the shows, and we just paid per episode or per season for permanent access to our favorite shows–we could stream them or download them. Wouldn’t that be much better?

Ha ha! I’m pulling a fast one on you. Sorry. We had that from Apple and Amazon by the mid-2000s. Have you ever bought a TV show on iTunes? No? Yes, but only because it wasn’t available on Netflix? Once we got “all you can eat” streaming for $10–12 a month, we all said fuck this à la carte thing. We’ll just wait for all the networks and all the studios to put all the things on Netflix. Everybody wins!

But studios don’t make as much selling to Netflix as they used to in old syndication deals. They make a lot less. So what are they going to do? Start their own streaming service. Yay! You know Hulu, Netflix, and Amazon Prime, and HBO Go/Now. Maybe you know Walmart’s me-too Vudu service. And you’ve recently heard Trek nerds bitch about CBS All Access. But there’s also Crunchyroll, Feeln, Acorn TV, Filmstruck, BritBox, Shudder, Screambox, Youtube Red, and others that I’m certainly forgetting—and that’s without counting the “cable replacement” services like Sling Orange, PlayStation Vue and Hulu Live. Disney is gearing up for their service, with plans to pull their stuff off other streaming services. And there’s whatever the hell Apple is doing.2

“But nobody’s going to subscribe to all those streaming services!” Not if you’re already paying $100+ a month for cable before you add any streaming services, no. But imagine a world (it’s easy if you try) in which you’re only paying, say, $50 a month for network access with no bundled television. All your shows now come from streaming services. So the chances are you’re going to end up subscribing to more than just Netflix and one other.

If you look at cord cutting as a money-saving move, this sounds depressing: it’s painting a picture of a future where the money you save by going data-only gets eaten up by streaming services. Well, true. But now you’re paying for everything on demand, in most cases commercial-free. Honestly, that’s still a win.

“Okay, but even if you get me to pay for five or six services, you listed eighteen services and claimed you were probably forgetting some. That is not gonna happen.” No, it isn’t. Most of those services aren’t going to survive long-term. They’re going to merge with other services or just quietly vanish. (SeeSo, we hardly knew yeeso.) But streaming video will likely never consolidate to a point where you can get every show you want by ponying up for one or two big names.

Is this just about money? Is it just greed that stops networks and studios from making it easier on all us consumers by just putting everything on Netflix or Hulu? Sort of. But it’s also about control.

Giant aggregators kind of reverse the way we think of monopolies working: instead of giant companies gaining control over a market and gouging consumers at retail, they lower retail prices and deliver the real pain to the suppliers. Walmart is the original giant aggregator, and it’s not hard to find stories of companies driven to bankruptcy by “success” selling through them. Twenty-First Century Walmart, Amazon, is remarkably cavalier about counterfeiters selling physical goods on their site. And you don’t have to be on the take from Penguin Random House to wonder whether it’s particularly healthy for self-publishers to rely on Amazon for three-quarters or more of their sales. If they decide they’d rather only give “indies” a 50% cut of the cover price instead of 70%, well, what are you gonna do about it? Pray they don’t alter the deal any further.3

The music industry still blames Apple’s iTunes ecosystem for destroying the once-lucrative CD market. So it’s not surprising that studios have decided that if on-demand streaming was truly going to be the future of television, they did not, in fact, want to chill with Netflix. Think about streaming music: artists say that unless they’re Taylor Swift, they’re making bupkis from Spotify, yet Spotify pays out so much for music that they’re still not profitable. These sound mutually exclusive, but they’re not: Spotify and friends should have charged $15 or $20 a month for unlimited music streaming, not $10.

Does that mean that Netflix should be charging us more than $9.99 $10.99? If they wanted to be the video version of Spotify, yes. But they don’t: they want to be a network. Amazon wants to be a network. Hulu wants to be a network. Apple (probably) wants to be a network. CBS wants to remain a network.

And at the end of the day, that’s what this boils down to: video streaming services aren’t the new airwaves, they’re the new networks. And since we’ve pretty much all collectively decided we can’t stand commercial breaks—how we “paid” for most network programming for sixty-odd years—we’re going to end up paying those networks directly.

So the future of TV is not apps—the future of TV is, just like the past of TV, networks. The key shift is a move from an advertising-supported model to consumers paying the networks directly.4

But will this future last as long as what it’s replacing? The network-and-affiliate broadcast model has been with us for nearly a century, predating television itself. That’s a lot harder to say. The model definitely needs tweaks—streaming services need to stop treating their metadata as proprietary secret sauce and let companies building streaming appliances build comprehensive cross-service program guides, for a start. But it seems to me like this future, even if it’s not precisely the one we wanted, has legs.

It’s much less clear to me whether this model will work well for software, as more and more programs take cues from Adobe and Microsoft and move toward subscription models. That, however, is another post.

  1. The Apple TV is arguably most of the way to being a solid “casual” game console, but it’s become clear that Apple has no idea how to make it attractive to either developers or consumers in that space. 
  2. I suspect Jason Snell is correct: Apple will take an “HBO approach…offering a dozen original series and a curated collection of films and classic TV shows.” 
  3. This is what much of Amazon’s stock price was historically based on: investors bet they would do exactly what Walmart did. That this hasn’t come to pass may well be due to Amazon Web Services becoming the company’s biggest revenue driver. 
  4. Advertising-supported services that are free to watch will stick around, but there’s a strong antipathy toward services with monthly bills and ads. I doubt that “blended” model will be with us long-term.