Alphabet Inc (NASDAQ:GOOGL) isn’t exactly a direct competitor to Apple Inc. (NASDAQ:AAPL), but the former just eclipsed the latter, and seemingly out of nowhere.
One of the worst-kept secrets in the industry has been Apple’s determination to get into the TV business. The company has been working for years trying to put together an online TV service, hoping to offer 25 channels for between $30 and $40 monthly. That project seemed to have been put on hold when AAPL and broadcasters couldn’t reach an agreement on price.
But Alphabet has just succeeded where Apple failed.
YouTube TV — live TV from over 40 providers including the big networks for $35 per month — is now official.
YouTube TV Takes on Cable
YouTube TV was announced on Tuesday. Launching “soon” in the U.S., this is Google’s skinny TV bundle for cord cutters. The four major networks are onboard. So is Walt Disney Co’s (NYSE:DIS) ESPN, along with regional sports networks. Google is also including some content from its premium YouTube Red service. All told, there will be over 40 different content providers — not bad for $35 per month.
Subscribers get unlimited cloud DVR storage, search powered by Google’s AI, six user accounts (three streams can be active simultaneously) and the ability to watch YouTube TV on a variety of devices including smartphones, tablets, PCs and Google Chromecast.
In other word, this is pretty much what Apple has been struggling to release.
YouTubeTV is Eerily Similar to Apple’s Television Plans
Apple has to have been watching Google’s YouTube TV announcement with dismay. Its rival beat it to the punch with the streaming TV bundle it had envisioned offering with the Apple TV.
What makes it even more galling is how close YouTube TV is to what AAPL was negotiating.
In May 2015, AAPL and CBS Corporation (NYSE:CBS) were in talks about a subscription Apple television streaming service, but money was reportedly a sticking point. In December of that year, CBS CEO Les Moonves confirmed to Business Insider that his network had been in talks with Apple, and were close to settling on a monthly price to charge consumers. Moonves was throwing around $35 — exactly the price that YouTube TV is charging.
Apple balked. Apparently Google was waiting in the wings.
Where Does This Leave AAPL and Its TV Strategy?
At this point, Apple’s entire television strategy seems to be struggling.
There was hope that the new Apple TV that launched in 2015 would come with a streaming TV bundle. That didn’t happen. Now Apple’s set-top streamer is suffering from disappointing sales. The box costs twice what Google and Amazon.com, Inc. (NASDAQ:AMZN) charge for their streamers, but lacks the 4K support rivals offer.
Last year, AAPL was showing off a new TV app that would serve as a hub for streaming content, tracking use across multiple services and devices. But it failed to get buy-in from Netflix, Inc. (NASDAQ:NFLX), making its usefulness questionable.
Google’s YouTube TV launch is the icing on the cake.
Where Can Apple Go From Here?
Don’t expect Apple to give up on its plans, of course.
The signs of a renewed push toward taking over your living room began last month. Apple hired the former head of Amazon’s Fire TV to take over as the head of marketing for Apple TV. This move has raised expectations that AAPL will revamp its Apple TV hardware. It also freed up the previous head of Apple TV to help lead Apple’s efforts to sign content deals — something he had considerable experience in from his previous role as senior VP of content distribution at Hulu.
While YouTube TV offers a fixed content bundle, AAPL had always pushed for subscribers having an option to choose their own bundle, Moonves says. If the company can accomplish that goal, it still can position an Apple television streaming service as being something unique.
With YouTube TV, Google may have beaten Apple to the punch when it comes to being first of the tech giants to offer a cheap way to cut the cable, but the war is likely just beginning.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
