According to this article in AllThingsD, Apple is pitching the idea of subscription-based TV via iTunes to content producers. I’m assuming the idea is “pay $30/month and see as much stuff on iTunes as you like”. I further assume that Apple’s business model will remain “we make money on hardware, you make money on content” (i.e. 30% for Apple to cover costs, 70% to … someone … for content). I’m certainly no expert, but from my random readings on the subject, Apple’s deals generally favor content-producers to a staggering degree compared to pretty much anyone else. (Amazon, purportedly, takes 70% of eBook revenues from the Kindle, which is quite a lot given the pretty much total lack of added value on their part. Similarly, Cable TV companies pay only a tiny fraction of subscriber fees to content producers.)
The main thing preventing iTunes from being the best deal for TV as things stand (aside from piracy, of course) is the lack of content. Only two-thirds of the TV shows I’d want to watch are available via iTunes, and many of those are available for free (with ads) from Hulu. The cost of buying all the TV shows I’d like to watch and/or buy each month (that aren’t available for free on Hulu or elsewhere) is significantly lower than the cost of digital cable (but not basic analog) if they were available.
$30/month is the same as the cost of 15 TV episodes on iTunes (or 10 HD episodes). A lot of people would do the arithmetic and figure — OK which episodes will I end up buying on DVD or similar? If you’re like me and end up buying about five seasons of TV per year ($150-250) and would be just as happy to have a digital copy (I, for one, would prefer to give up on DVDs which are fragile and easy to misplace) then you can figure in another $15-20/month. Who has time to watch 17-25 episodes of TV each month? TV via iTunes is already competitive with broadcast/cable/DVD in terms of price to viewers and, I suspect, return to content producers, but the question is whether everything you want to watch is available.
And the real problem is that if you want a good broadband connection in the US, you’re basically stuck with cable or DSL, both of which come bundled with TV in some way or another. So Apple has two problems — making more content available and overcoming the bundling of legacy TV content with broadband.