Later this month, Sony (NYSE:SNE) will let consumers subscribe to Internet-based TV channels on an individual basis. This concept -- a la carte cable -- has long been seen as a sort of holy grail for the industry; a model many consumers, beset by expensive, bloated cable bills, have pined for.
And it's a concept that analysts once expected Apple (NASDAQ:AAPL) to pioneer. The Cupertino tech giant is widely expected to enter the realm of Internet-based TV in the near future -- and when it does, Sony could stand as one of its most significant competitors.
A la carte channels come to PlayStation Vue
Sony's Internet-based TV service, PlayStation Vue, is far from a la carte cable. In fact, as it currently exists, PlayStation Vue doesn't differ noticeably from traditional pay-TV providers. It offers three plans (Access, Core, and Elite) priced between $50 and $70 per month, and it gives subscribers a large bundle of around 50 to 80 channels.
Admittedly, PlayStation Vue has some advantages over traditional providers -- there are no contracts to sign and the interface may be superior -- but it also has its limitations (it requires a PlayStation 3 or PlayStation 4 to use and is only available in select geographic regions). Given its cost, it may not make sense for most consumers. In its review back in March, The Wall Street Journal praised PlayStation Vue's many innovative features, but ultimately concluded that it isn't going to save anyone much money.
That, however, could be about to change. During its press conference at the E3 conference last month, Sony announced that it would be bringing a la carte channels to PlayStation Vue in July. Its initial lineup is quite small -- Showtime, Fox Soccer Plus, and Machinima -- but if Sony can expand the list over time, it will be able to offer consumers something quite desirable.
"We will be the first pay TV service to allow users to subscribe to individual channels without the purchase of a multi-channel bundle," Sony's Andrew House said.
Apple's next service
To some extent, Apple is already offering something similar, though it hasn't framed it in the same way as Sony. Current Apple TV owners can subscribe to one channel -- HBO -- on an a la carte basis through its temporarily exclusive HBO Now app. Starting next week, Apple TV users will also be able to subscribe to Showtime without having to pay for any other channels.
Like PlayStation Vue, Apple is expected to eventually roll out its own Internet-based streaming cable alternative. In March, The Wall Street Journal reported that Apple was in talks with content providers to create such a service, and that it planned to unveil it at its Worldwide Developers Conference in June ahead of a fall launch.
That never happened. According to Re/code, Apple was unable to come to terms with content providers. The iPhone-maker continues to work on the service, but it may not launch until later this year, or it could be delayed until 2016. When Apple does finally unveil it, it could do so alongside an updated version of its Apple TV streaming set-top box.
Apple TV remains a competent choice for streaming video, but it hasn't received a major update in over three years. Many of its rivals have passed it both in features and in sales. Apple's CEO, Tim Cook, has declared that Apple TV is no longer just a "hobby," so updated hardware and a more concentrated focus appear to be inevitable. Indeed, various media outlets, including The New York Times, have reported on Apple's upcoming, updated TV hardware.
Apple TV has never been a major profit driver. At just $69, there isn't room for much of a profit margin, and in fact, Apple may be subsidizing the device. Last year, competitor Roku's CEO suggested that Apple was selling it at a loss, using it to reinforce its broader ecosystem and, with its AirPlay screen mirroring, boost sales of its iPad. But that may not always be the case. Apple's website currently states that the Apple TV "starts at $69": an interesting choice of words, given that it also stops at $69. (Apple is only selling one model today.)
Future Apple TV models could carry much higher price tags. Paired with a more advanced A9 processor, Apple's Metal API, and access to the iTunes app store, it could double as a game console, encroaching on Sony's market. Chipmaker NVIDIA is already offering something comparable -- its recently released $199 Shield Console is an Android TV-based set-top box with a gaming focus.
Apple TV vs. the PlayStation 4?
Today, Apple TV's primary competitors include the Chromecast, Fire TV, and Roku. All are priced similarly (under $100) and offer similar features (different ways to stream Internet video). But in the months and years to come, Sony's PlayStation 4 could emerge as Apple TV's chief rival in its quest to dominate the living room.
Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple and Nvidia. The Motley Fool owns shares of Apple. 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.