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We've seen it countless times now: Tech giant Apple's entry into a new market can fundamentally change things, and quickly.
Although the possibility has been discussed for years, the recent cacophony of rumors has me convinced that Apple indeed plans to launch its much-ballyhooed IP-based TV product at some point later this year.
However, if or when it eventually enters this space, Apple will likely encounter a number of extremely determined rivals. DISH Network , for example, launched Sling TV in early February to somewhat mixed reviews. And while Sling TV has some interesting potential, Japanese electronics giant Sony's recently unveiled PlayStation Vue over-the-top service poses a particularly interesting threat to Apple's rumored TV service.
A room with a Vue
The PlayStation Vue content streaming service, unveiled earlier this month,is for now limited to only New York, Chicago, and Philadelphia. However, it clearly represents Sony's ambitions to compete in the budding market of IP-based TV content.
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PlayStation Vue is available to PlayStation3 and PS4 ownersin these markets and comes in three pricing tiers, which range from $49.99 to $69.99 per month.PlayStation Vue also doesn't require any long-term contracts for subscribers. The content lineup seems a little thin, lacking popular sports programming such as ESPN and add-on channels including HBO and Showtime.However, Sony should be in an especially advantageous position to maximize its content offerings versus DISH and Apple.
You scratch my back?
Aside from pricing, one of the fundamental hurdles DISH, Sony, Apple, and any other entrants into this market will face is access to desirable content. It's no accident that the vast majority of the most popular TV networks are owned by a select few of the largest media companies in the world. It's also no accident that some of the so-called "Big Six,"including Comcast, have been involved in the TV distribution business.
This concentration of ownership -- and the cross-licensing the modern cable bundle necessitates -- creates a genuine hurdle for any new market entrant to overcome. Negotiating with powerful content owners such asWalt Disney, which controls ESPN and other prized programming, can quickly become expensive for a company like DISH or even Apple. Worse yet, creating a channel lineup on par with many core cable bundles requires a new entrant to deal with dual-threat content owners and cable distributors like Comcast.
It's a brutal competitive dynamic, and helps explain the cable industry's storied history of sloth-like change.Apple and DISH face particularly frustrating uphill battles here, but there's reason to think Sony and its PlayStation Vue service might fare at least marginally better in navigating this delicate dance.
Like Comcast, Sony also owns several prominent content production assets. Sony's most compelling media assets are in either music or movie production, but the company could still potentially parlay these assets -- especially its extensive film library -- to its benefit at the negotiating table.
Plenty of the Big Six media companies fill network time with popular third-party movies and TV from the likes of Sony, among many others. Now, Sony's media assets are not necessarily an integral component of the U.S. television market. However, owning content that some cable networks want to syndicate at least gives Sony a slightly better hand of cards to play compared to DISH or Apple.
Sony says it wants to eventually sign up many of its roughly 35 million PlayStation 3 and PlayStation 4 users in the U.S. for PlayStation Vue. This aim puts it at direct odds with the cable industry with which it must negotiate. However, between its massive installed base of current PlayStation users and its popular media assets, I think Sony has one of the most interesting hands to play as it competes to disrupt the cable industry in the years to come.
The article 1 Key Reason Sony's PlayStation Vue Could Threaten Apple's TV Ambitions originally appeared on Fool.com.
Andrew Tonner owns shares of Apple. The Motley Fool recommends Apple and Walt Disney. The Motley Fool owns shares of Apple and Walt Disney. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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