Tuesday, June 26, 2012


Dove head-first into yet another discussion about HBO yesterday. You know, the one where everyone wants to pay for HBO without having to first subscribe to cable. Don't get me wrong, even though I want this to happen I do realize HBO probably won't be offered sans cable any time soon. The umbilical cord must be cut first, and ma cable is doing her best to hide the scissors.

Harry Marks was also in on this discussion, and it prompted him to write a short post on the subject. While I agree with most of his conclusions, I want to share a few thoughts of my own. The first has to do with price. Harry writes...
"The cable companies work with HBO to secure worthwhile deals for their subscribers so these premium channels don’t cost upwards of $20 per month - the starting price, Carmody states, that HBO would have to charge if one were to access the channel independently of the current cable structure."
True, HBO would need to charge more for cable-free access. $20 a month for HBO does sound like a lot, but I would certainly be willing to pay it—maybe even $25. Why? Look at it from a cord-cutter's perspective... Right now our only option is to sign up for a ~$40/month basic cable package, add HBO for ~$15, then pay at least $5 more to rent the required HD-DVR. That's $25 vs. $60+ a month—still sound expensive? "But you get 70+ extra channels too!" Sorry, not interested. I can subscribe to Netflix and Hulu+ and still pocket almost $20 a month.

If HBO needs $25 a month for a standalone subscription, then OFFER IT AT $25. Let consumers decide if that's too expensive! Unfortunately this isn't likely to happen. HBO is one of the few remaining trump cards the cable companies have left to play (live sports is another). About the only thing I see changing this is the collapse and/or reboot of the cable industry as we know it. Which brings me to...
"So, not only have we screwed the cable companies out of money (which will be reflected in a higher bill due to their needing to recoup costs), but fewer people will pay for HBO as a result of the higher prices. Fewer subscribers means less money to produce shows like Game of Thrones, which means less content and eventually no reason to pay for HBO at all."
This IS coming, and it will be painful. Painful for the cable companies fighting to stay out of the red, and painful for consumers who will no doubt be used as temporary flotation devices. While I have no faith in the current cable business model going forward, I do believe HBO can be salvaged if the shackles are removed before it's too late. Whether or not HBO goes down with the ship will be up to Time Warner. If HBO loses too many subscribers before it's set free, it may be game over.
"As much as we hate the current system, it’s the only reason we can watch shows like Game of Thrones at all."
This is one line I definitely disagree with. The secret sauce that allows multi-million dollar shows to be made is simply a large paying audience. I do agree that it's incredibly naive to think an upstart company could create a show like Game of Thrones. Any company that doesn't already have enough money to bankroll the project themselves would have a hard time finding investors. Movie studios might be able to pull it off since they already have the resources. Instead of "Direct to DVD" we could possibly see "Direct to Streaming" content, but a much likelier source would be companies like Netflix and Hulu. Actually "likelier" is being modest. Both Netflix and Hulu are already starting to produce their own original content. No, the budgets for the shows don't currently rival those of Game of Thrones, but as subscribers grow there is no reason why they can't and won't. Netflix already has almost as many subscribers as HBO (25 million vs 29 million). Being embedded in practically every TV and TV-related device shipping today should help them continue their growth. If HBO won't give people what they want, someone else most certainly will. That's the whole reason the cable industry is in their current predicament.

High quality television will find a way into existence as long as people care to watch. We won't be doomed to expensive bundles and poor customer service forever.

Tuesday, June 5, 2012

Don't bet on Gatekeeper making its way into iOS

The topic of side-loaded apps has been brought up a couple times this past week. Rene Ritchie gave it a mention in his article iOS 6: Higher hanging fruit, and John Gruber talked a little bit about it with John Moltz on episode three of The Talk Show (~40 min). I'm sure it's been mentioned other places as well, and now that Gatekeeper has been announced for OS X Mountain Lion I'm sure it will be brought up even more. Unfortunately, I've got bad news for those of you who are getting your hopes up.

Gruber seems a little more open to the idea than Rene—at least that's what I took away from his conversation on The Talk Show. But both of them definitely realize there would be downsides for Apple. I think Rene summed it up quite nicely in this paragraph…
Unfortunately, I don't think Apple would do this. It wouldn't really change the type of apps that are available -- for example, the system-level hacks of jailbreak -- and it would almost certainly lead to developers cutting Apple out of the 30% share of app sales Apple takes to maintain the App Store. Apple has shown they're not fond of end runs around the App Store for subscriptions, and they'd likely be even less so for paid apps.
While I believe this is reason enough for Apple to say no, I don't believe either is a true deal breaker. Yes, Apple makes a little bit of money from their 30% cut, but they are also providing a service for that fee. They host your app, provide a way for hundreds of millions of people to find it, and make it dead simple for people to buy it. They also subsidize the hosting of all the free iOS apps with that income. If developers really wanted to take all of that responsibility on themselves, I don't think Apple would mind. I also think the Gatekeeper system being developed for Mountain Lion would be a brilliant way to enable the side-loading of apps on iOS. So why exactly do I find it so hard to believe that Apple will open up the flood gates? One word …Amazon.

If Apple were to allow apps to be loaded from other sources, nothing would prevent Amazon from creating a rival store—one that provides many of the same benefits, and is even more developer-friendly. Imagine the delight if developers had practically no fear of their apps being rejected, no week-long update waiting periods, and only had to give up 20% of their earnings to be listed in the world's largest online retailer. Unless you give your app away, I think you'd be hard-pressed to find a good reason NOT to dump the App Store, or at the very least support both. I can't imagine Apple EVER letting this happen unless some legal action forces it upon them. They will not let another company jump in and undermine their ecosystem, especially one as cut-throat and beloved as Amazon. The only sure way to keep this from happening is to remain the sole app provider, and that's exactly what I expect them to do.

Amazon already jumped in and created a store for Android apps. Imagine the motivation they would have to create a store for apps that people are actually willing to pay for.