Report: New Apple TV To Cost $99, Subscription Service Needed To Go With It

Last week Engadget reported that Apple is working on their next-generation Apple TV, described as an "iPhone without a screen" saying it will retail for only $99. The report says the device will have capacity for 16GB of storage via flash memory and will support 1080p streaming. While any Apple device priced at $99 will sell well, if Apple offers a monthly subscription service similar to Netflix, then this truly could be a game changer for the industry.

Clearly the big difference with this new Apple TV is the fact that Apple is going to focus on delivering movies via streaming for rental or via some kind of subscription service, rather than consumers purchasing the content for download. With only 16GB of storage, the new Apple TV can't hold many movies but can act as the streaming gateway between iTunes and your TV. This also make sense since Apple has already said they plan to bring a lot of their content into the cloud when they open their new data center in North Carolina later this year.

If Apple does not offer some kind of subscription based service, the device will sell well if priced at $99, but will not truly be a game changer. Just renting one movie at a time is not a big deal and won't draw in a new group of consumers. From a hardware perspective, the original Apple TV wasn't lacking any functionality, it was simply too expensive and didn't have any kind of content service consumers wanted. But in the three and half years since the Apple TV was released, we've seen Apple launch each of their new devices with some kind of content lineup.

The hardware specs for the new Apple TV is not the big story, instead, it's how Apple plans to package their content lineup in the iTunes store for the device and what content owners will let them do. Apple can't make any money from a $99 device, so we all know there is going to have to be some kind of content based service offering and my guess is that it will involve some kind of subscription service.

  • http://profile.typepad.com/zholy2009 zholy

    Paying a $99 entry-fee to be able to pay a $TBD monthly subscription fee doesn’t make economic sense to be, especially if I already have NetFlix… Apple TV will come back to market in a more successful form. If this happens, it makes more sense to sell a $99 device to stream your iTunes purchases and access Netflix Streaming (similar to the iPad app). Remember… Apple is first-and-foremost a hardware company.
    With iPhone OS 4.0, iPhone owners will enjoy over 100 new features that make it easier to interact with apps, manage email, read books, and more.New features include the following:
    http://www.aneesoft.com/tutorials/iphone/iphone-os-4-new-features.html

  • Txemi

    Hi Dan, why would it be a game changer only if they add a subscription? If the new Apple TV box is based on iPhone OS, it will likely run the iPad Netflix app, only slightly adapted to the big screen.
    The game changer would be the iPhone OS applied to the TV and what it implies. Imagine all the Apps you can write for a TV, plus a web browser on your TV, plus all games running also on your big screen and maybe controlled from your iPhone/iPod multitouch screen.. I think that would be a game changer…
    http://disruptionmatters.com/2010/06/01/dreaming-about-the-new-apple-tv/

  • http://www.BusinessOfVideo.com Dan Rayburn

    @Txemi: If all you want to do is run Netflix on your TV, there are nearly 100 devices that can do that. The Apple TV would not offer anything different or better than the other options on the market.
    I don’t think I get your reference to apps and the browser on the TV. How would any of that be controlled? If I have to have an iPhone/iPad to be able to control the Apple TV, then the market for who they can sell the device to is limited.

  • InvestorGater

    Dan, this is what Engadget said about the Apple TV-iPhone interrelationship:
    [[ . . . The new architecture of the device will be based directly on the iPhone 4, meaning it will get the same internals, down to that A4 CPU and a limited amount of flash storage . . . though it will be capable of full 1080p HD (!). The device . . . has been described to some as "an iPhone without a screen." . . . . ]]
    http://www.engadget.com/2010/05/28/the-next-apple-tv-revealed-cloud-storage-and-iphone-os-on-tap/