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The rumors from last year about Apple preparing to launch a subscription video service were at best premature. One analyst says that without a new content offering, Apple TV isn't very special.

Apple introduces a new Apple TV with support for 1080p HD photos and videos.

Apple still has no subscription video service, and without it, Apple TV is nothing to get excited about, one industry analyst says.

As part of Apple's press event for the iPad today in San Francisco, the company announced that Apple TV would get an upgrade. The system will support 1080p movies and TV shows. Navigation was improved. Movies and TV shows will be supported in iCloud so they can be accessed from iPads and iPhones as well.

Dan Rayburn, principle analyst for research firm Frost & Sullivan, is unimpressed. He argues that Apple TV could be so much more, if it had a subscription service similar to Netflix's. Rayburn predicts that without such a service, Apple TV will remain a so-called hobby for Apple.

"While it's nice to see Apple offer 1080p support on their device," Rayburn wrote on his blog today, "to date, they have sold less than 5 million second-generation Apple TV units in the past 18 months. Without some kind of content subscription service, this updated Apple TV isn't going to disrupt the market at all."

It's not as if Apple hasn't tried to get a subscription service going. Rayburn says an executive with a major cable company told him that Apple has been in discussions about launching a subscription video service for at least two years. And remember all those rumors from last year, when analysts and bloggers sent the hearts of Apple fans aflutter by reporting that Apple was planning to launch a Netflix rival?

Apple has definitely talked to the studios and TV networks about such a service, but my film industry sources say the major Hollywood studios are less interested in renting movies than in selling them. They still want to rent, but with DVD sales in decline, the focus is on sales.

Rayburn believes that Apple won't build its own TV sets unless it can disrupt the market, and there just isn't a lot of room to do that. Creating TV sets with, say, higher resolutions or superior screens would force the price up too high, he said. With the market for TV sets hurting, he doesn't think that Apple will do anything until it can come at the sector in a sexy new way.

Originally posted here:
For Apple TV, subscription video service still missing

The rumors from last year about Apple preparing to launch a subscription video service were at best premature. One analyst says that without a new content offering, Apple TV isn't very special.

Apple introduces a new Apple TV with support for 1080p HD photos and videos.

Apple still has no subscription video service, and without it, Apple TV is nothing to get excited about, one industry analyst says.

As part of Apple's press event for the iPad today in San Francisco, the company announced that Apple TV would get an upgrade. The system will support 1080p movies and TV shows. Navigation was improved. Movies and TV shows will be supported in iCloud so they can be accessed from iPads and iPhones as well.

Dan Rayburn, principle analyst for research firm Frost & Sullivan, is unimpressed. He argues that Apple TV could be so much more, if it had a subscription service similar to Netflix's. Rayburn predicts that without such a service, Apple TV will remain a so-called hobby for Apple.

"While it's nice to see Apple offer 1080p support on their device," Rayburn wrote on his blog today, "to date, they have sold less than 5 million second-generation Apple TV units in the past 18 months. Without some kind of content subscription service, this updated Apple TV isn't going to disrupt the market at all."

It's not as if Apple hasn't tried to get a subscription service going. Rayburn says an executive with a major cable company told him that Apple has been in discussions about launching a subscription video service for at least two years. And remember all those rumors from last year, when analysts and bloggers sent the hearts of Apple fans aflutter by reporting that Apple was planning to launch a Netflix rival?

Apple has definitely talked to the studios and TV networks about such a service, but my film industry sources say the major Hollywood studios are less interested in renting movies than in selling them. They still want to rent, but with DVD sales in decline, the focus is on sales.

Rayburn believes that Apple won't build its own TV sets unless it can disrupt the market, and there just isn't a lot of room to do that. Creating TV sets with, say, higher resolutions or superior screens would force the price up too high, he said. With the market for TV sets hurting, he doesn't think that Apple will do anything until it can come at the sector in a sexy new way.

Read more here:
Still missing from Apple TV: subscription video service

Netflix (Nasdaq: NFLX) seems bent on showing up on your cable bill, and now it's starting to become painfully obvious why the dot-com flick-streamer is talking to cable providers about offering Netflix as a premium add-on service.

In a note to clients yesterday, Barclays Capital analyst Anthony DiClemente praises the move by pointing out how it should increase Netflix's subscriber base, lower its subscriber acquisition costs, and deliver long-term profit growth.

Obviously, it remains to be seen what the ultimate product will look like, but Netflix won't be able to charge more than the $7.99 a month it charges existing streaming subscribers. With cable companies historically taking roughly half of the revenue, how can Netflix, making $4 or so a month off each cable customer, be better off than it would be by reaching out directly?

Well, let's drag out the churn card.

As the world churns Netflix is no longer reporting its monthly defection rate, and there's a good reason for that. Streaming customers are a fickle lot. Netflix's churn for members taking out DVDs was never all that impressive, but at least they have unwatched Netflix DVDs around the house. They also have steady and predictable queues -- unlike with the streaming product, where a good chunk of a member's queues can be wiped clean by the end of a licensing deal.

In the last quarter that Netflix reported domestic churn -- last year's second quarter -- churn clocked in at a stubborn 4.2%. That's a monthly rate, implying that Netflix loses roughly half of its subscribers over the course of a year.

Now let's compare Netflix to DIRECTV (NYSE: DTV) . The country's largest satellite television provider reported its latest quarterly financials on Monday. The service provider with 19.4 million stateside subscribers -- and growing -- doesn't have any reason to hide its churn. Just 1.5% of its accounts are canceling every month. Maybe it's the gear. Maybe it's complacency. However, it would also follow that premium movie channels that cable and satellite television customers tack on would also have healthy loyalty rates.

If Netflix is just a small line item on your cable bill, you're less likely to nix the service than you would be if it was a stand-alone offering. And -- to Netflix's credit -- it's just too darn easy to terminate the service.

Apple leads the way One of the interesting developments surrounding yesterday's Apple TV announcement -- yes, it wasn't all iPad for Apple (Nasdaq: AAPL) yesterday -- was a partnership with Netflix. Apple TV owners can now sign up for Netflix directly through Apple's small set-top home theater gadget.

The new Apple TV will allow couch potatoes to stream Netflix in high-def 1080p, backed by rich Dolby Digital 5.1 audio. However, the interesting twist is that the subscriptions are managed through Apple iTunes.

Read more:
The Real Reason Behind Netflix's Cable Push

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