Nick Ehle

I am still hoping for Apple to offer an iTunes video subscription plan, but at least for now it looks like they are planning to introduce reduced pricing in 2010 for some of TV shows that they offer for sale.

This pricing strategy is partly to encourage users to buy video for the iPad. The other half of the strategy is to introduce more consumers to the iTunes store as another way to watch their favorite shows and convince them that iTunes is a viable alternative to their monthly cable bill.

It’s just a matter of time until the industry reaches a tipping point and enough people fire their cable company in favor of iTunes, Hulu, and other cable alternatives. Once this happens, content owners will be more empowered to negotiate a subscription plan with Apple.

I’m hoping that we will reach this tipping point in 12 – 18 months. My Apple TV is getting a little long in the tooth, and a subsciption plan is a great reason for Apple to update the device.

I am very excited about the coming iPad, even though the tech elite have already dismissed the new device (Gizmodo sums up this point of view pretty well). They are all missing the point.

The iPad is a new class of device entirely and is not meant to replace the laptop (or netbook) and does not need the same functionality. The iPad is going to popular with consumers that are looking for an easier way to consume their content and are looking for a simpler overall computing experience.

Most of the online audience are consumers of content. They read blogs, watch YouTube, listen to music, use Facebook and Twitter. Forrester calls them “Spectators,” and in 2008, they were 70% of the online audience. Not only do Spectators spend most of their time on the Internet consuming content, but they are also online at the same time that they are watching TV. This trend is continuing, and consumer multitasking is creating more hours in the day.

In my house, the iPad is going to replace the laptop in front of the TV or my iPhone that I use to catch up on my RSS feeds at the end of the day. It’s also going to be a great way to consume video, and I think that a future iTunes subscription plan for video is going to make the iPad sell like gangbusters. No Flash support on a device like this is one of the limitations that does disappoint me a bit, but I can already get Netflix and Hulu on my HD television.

The iPad’s size and touchscreen is also going to make new types of media possible, including the Sports Illustrated tablet format that we saw late last year. Any media company that ignores the capabilities product is going to be missing out on an exciting new form of content distribution and another digital revenue stream.

In my experience, all cable companies are customer service challenged, and their success relies on maintaining an oligopoly where they deliver minimal service and gouging prices. Comcast, Cablevision, Time Warner, et al know this and will do all that they can to keep out emerging competitors. In the past, potential rivals have a high barrier to entry because of the formidable cost of building the network, but with the infrastructure already in place and only getting better, new competitors are changing the game. If the noughties were the decade that the newspaper died, I think the teens is when Big Cable will become dumb pipes.

The Apple TV is considered a “hobby device.”

Personally, I gave up my cable TV over a year ago in favor of iTunes. Now, I watch Jon Stewart and Stephen Colbert on the subway during my daily commute, and I catch up on LOST and The Office on my Apple TV at home. I watch about 10 shows on a consistent basis, which averages out to $50 a month in iTunes subscriptions. In short, the content I enjoy is available when I want it, where I want it, and how I want it. Plus, I don’t have to pay that $100 cable bill every month. Compared to most people, including even my most technophilic friends, I am definitely and edge case user, but I think that this experience is the future of television.

The much hyped and hoped for iTunes subscription model could bring this experience to the masses and really start to cause some headaches for the cable industry. Out of the big networks, CBS and ABC (Disney) are rumored to be in discussions with Apple. NBC is probably not going to be a part of this deal since it is being acquired by Comcast, but if the subscription model proves to be success, NBC and Fox will come on board as well.

With the upcoming Apple event on Jan 27 and rumored launch of Apple’s tablet, there is no clear consensus on why a normal user would buy it. In my opinion, the iTunes subscription would be the most compelling and game changing feature for the Apple tablet. We’ll see what happens on Wednesday. It could be the beginning of the end for Big Cable.