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It Might Be Too Late for Apple's Online TV Service

Like the return of King Arthur, Apple going bigger into the TV business — with an actual TV, a service, or both — has been a fond, if fairytale, wish of many TV and gadget fans. The latest news is a report in The Wall Street Journal today (March 17) that Apple will announce its own online TV service as soon as June, with it going live in the fall. Prices are rumored to be $30 - $40, and it would focus on network TV and the most popular cable channels. This comes about a week after Apple and HBO announced that the HBO Now app will be coming to Apple TV, iPads and iPhones in April — as a three-month exclusive.

Pay TV is broken, many people agree (cable companies are among the least popular of all US corporations). And Apple has a knack for fixing broken businesses, such as music downloads and smartphones. But that might not be the case for online TV, which would be Apple's greatest challenge yet.

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That's not necessarily bad news. If Apple fails at online TV, it will be because other companies offer something even better.

Prices might be high

Due to its huge sales, Apple has a lot of power to drive down the price of iPhone components. It's not the same with TV programming. Networks and cable channels have a good thing going, and they aren't going to give it away. HBO Now costs a hefty 15 per month — nearly twice as much as Netflix, and more than you pay to add it to a cable package, typically about $10.

As much as America hates cable companies, some of that ire should go to the big four networks. Their ever-rising licensing fees are one of the main reasons cable prices are going up. (Sports channels are another reason.) The Big Bang Theory is regularly the most popular TV show in the US, and CBS knows it. Networks are warming up to putting their shows online, buy not for cheap. The CBS service costs $6 per month. Multiply that by four networks, and you already have a big monthly bill — nearly as much as you pay for a starter cable TV package, which offers local news and other additional channels.

Plenty of competition

If Apple jumps into the online TV game, it will have lots of company. Sling TV, which launched in February, currently offers 20 channels (the roster keeps growing) for $20 per month. Sling offers mostly "cable" channels like AMC, A&E, History and Food Network - as well as ESPN and ESPN2. It's a different approach than Apple's purported network-focused one, but it's an appealing package. Sling TV runs on just about every device other than the Apple TV set-top box (including Macs, iPhones and iPads), and today it added an app for the Xbox One.

Sony, meanwhile, has been beta testing its own online TV service, PlayStation Vue. The final details and prices haven't been announced, but given the 35 million PlayStation 3 and PlayStation 4 consoles in the US, it has a huge ready-made audience. 

In fact, game consoles are by far the most popular way to watch online TV, according to market research firm NPD. However, NPD reports that Apple TV is the next most-popular device, ahead of Roku and Chromecast. NPD doesn't provide exact numbers, but Apple announced last week that it has sold 25 million of its Apple TV devices, which just got a $30 price drop to $69.

TV is going mobile

TV isn't just about televisions, however. People are watching more and more on smartphones and tablets. Nielsen's Total Audience Report for 2014 found that, in homes that subscribe to online video services, just 14 percent have smart TVs, while 65 percent have tablets. Apple reported that it sold 21.4 million iPads just in the last three months of 2014, and it has sold 700 million iPhones in the history of the product.

MORE: HBO on iPads and iPhones as Big a Deal As On Apple TV 

But here's the rub: Apple's competitors can or likely will be able to run on everything except the Apple TV. (Apple traditionally keeps competitors off the device, as it's done with Amazon Prime Instant Video.) Sling TV already works on Macs, iPhones and iPads, as well as all those Android devices.

Who knows? Perhaps Sony will finally learn its lesson that it can't go it alone, and will offer PlayStation Vue on products other than Sony's own. 

Whatever company — if any — prevails in the online TV battle, there will be millions of clear winners. Viewers will get ever more choices from companies eagerly competing for their business.

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