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Apple’s Rumored $.99 TV Rentals Are Beyond Unimpressive

by Travis Harvey | August 25, 2010

Whispers are once again making the rounds that Apple is working hard to lay the ground work for television show rentals.  Bloomberg’s recent report is certainly not the first time these rumors have been heard but there’s a chance we could see some announcements this coming September during Apple’s annual media event.  There’s still one problem: these television rental ‘deals’ aren’t in the least bit impressive.

The typical cable subscription carries with it about 70 channels.  In the U.S. this is pretty much the most basic cable you’re going to get.  Depending on your provider and service bundling, you’re looking at maybe $40 per month to access the 70+ channels to which you’ll have access.   This means on average you’re paying much less than $1 per channel, evenly distributed.  So now Apple wants to charge you $1 per episode of any particular show?  Remember it’s a rental and if Bloomberg is correct, it’s only yours for 48 hours.  Pff.

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The chart above shows wholesale prices that make up a typical cable subscription that has become part of a subscriber’s monthly bill.  When you break down which channels you watch versus which pay for, you’ll quickly wish for an a la carte pricing scheme.  The industry average per channel in the chart above is a mere $.20 but there’s also well over 70 channels grouped into that average.

Lets say the first column is the typical basic cable package.  I can count on one hand the number of those channels I’d actually choose through a la carte pricing, even if their price was higher than the fee shown in the table.   In fact, the sum of my channel’s pricing barely exceeds $1.  It’s funny because I’d be more than willing to pay each of those networks $1 each per month for access to their content.  I’m not asking for on-demand shows, just regular access to stream the content that any other cable subscriber would have.  Instead of the $1.14 they’re making combined, they’d easily be up to $5.

Of course these numbers are wholesale sales to cable companies but I can’t imagine half of the networks listed are pulling in anything over $.50 per channel.  And Apple wants consumers to fork over $.99 per episode?  Good luck with that.  Call me when you’re looking to charge $.99 per channel.  Heck, I’ll give them some leeway and raise the stakes to $1.99 per channel.  My wallet is open when you get around to making some real deals.

What do you think?  Is $.99 per episode still to much to ask?  Can you see yourself dropping the cash in any rare circumstances?  Let us know in the comments.