Live and local will be a big challenge for Apple's streaming TV service

ReCode is reporting Apple wants to include live local broadcasts as part of its streaming TV service:

Industry executives familiar with Apple’s plans say the company wants to provide customers in cities around the U.S. with programming from their local broadcast stations. That would distinguish Apple’s planned offering from those already available from Sony and Dish’s Sling, which to date have only offered local programming in a handful of cities, or none at all.

This could be a key differentiator from other streaming services. Broadcast networks still dominate TV ratings, especially with live events such as sports and awards shows. Many people are also in the habit of watching their local news and weather. No other streaming service offers this on the national level. It would seem Playstation wants to with its Vue service, but it has only launched in three markets so far and at $50-$70/month may end up costing more than Apple's service (rumored to be $30-$40/month). CBS's All Access ($6/month) only includes CBS content, and doesn't include many big live events such as the NFL and the Grammys.

As the ReCode article goes on to say, including live local streams could lead to delays in Apple's plans because many local TV stations are independently operated affiliates of the big networks, and would need to be negotiated with one at a time. Just this week TechCrunch reports CBS's streaming service now includes live streams for over 60% of US households after launching with the station's 14 owned and operated stations last fall. This is impressive, but CBS can't even offer a product that includes live streams from all of its local affiliates. ABC Go (which requires cable TV) only includes live streaming in 8 markets.

These local affiliate deals take time to negotiate, and if Apple wants stations to provide their own streams it may take a significant technology investment on each station's part. That leaves Apple a few options:

  1. Launch in a limited number of markets as Playstation Vue has
  2. Wait until deals are done for most major markets, which may take several months
  3. Scrap plans for live local streams and focus product around live national streams

Unless they go with #3 I wouldn't expect to see anything at WWDC in June, unfortunately. As more premium cable channels go a la carte (HBO) or are included in 'skinny' streaming bundles (ESPN, AMC, Disney, CNN) it seems live local broadcasts could be a key differentiator to the service. However, Aereo provided local live streaming of broadcast networks in 10 major markets for $8/month and reportedly only had 75,000 subscribers before courts ordered it to be shut down.

This raises some interesting questions. Although broadcast network ratings remain strong relative to cable networks, they generally skew toward older demographics. Perhaps those that value broadcast TV the most are less likely to be interested in a streaming TV service. I thought Aereo had a solid value proposition for people that didn't need want cable and didn't get antenna reception (as is the case in cities with many skyscrapers), but that is a market somewhat limited in size.

It will be interesting to see what Apple launches and how they market the service. Who is their target customer? The millennial that doesn't have cable but has Netflix and would like to watch some things live? Or will it be focused on big national networks and on-demand viewing?