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Apple Wants a Mini-Bundle With HBO, Showtime and Starz. But Why?

Apple is interested in becoming more of a virtual pay-TV operator — albeit in a very limited fashion.

The tech giant, as first reported by Re/code, wants to cobble together a premium-cable bundle available on Apple TV that would include HBO, Showtime and Starz for a single monthly price.

But so what? Apple already offers HBO, Showtime and Starz services a la carte. HBO Now initially launched on Apple TV in April 2015, followed by CBS-owned Showtime later that summer. Starz alighted on the Apple set-top in April 2016.

Even if Apple can wrangle terms to bundle HBO, Showtime and Starz together — and there’s no guarantee that will happen — the move is more tactical than a big strategic shift. As always in these cases, the devil’s in the pricing and packaging details: If Apple can offer the suites of the Big Three premium cable nets for less than pay-TV operators do, that might nudge the needle a bit. But the pricing for the standalone OTT channels is not a savings over traditional cable or satellite TV: HBO Now is $14.99 via Apple TV, while Showtime is $10.99 and Starz is $8.99.

While a mini-bundle with HBO, Showtime and Starz could be a baby step toward a bigger virtual TV package from Apple, execs from Apple have disavowed any intentions to try go down that road. It’s a segment is already crowded with services like Dish’s Sling, AT&T’s DirecTV Now, Sony PlayStation Vue, and FuboTV; services from Hulu and YouTube are set to come in the next few months, and now Verizon is expected roll out a virtual TV service this summer.

Note, too, that unlike other connected-device makers (such as Roku), Apple demands an ongoing cut of the subscription price for services purchased through its hardware platforms. Companies must pay Apple 30% of any monthly charges for users who sign up on Apple devices, that steps down to 15% after 12 months, under terms the company rolled out last year. The so-called “App Store tax” has been a big issue for some subscription-service providers (see: Spotify).

In the grand scheme of things, Apple serving up a premium-cable bundle is not a big deal. But along with the scores of other moves in the internet-video space, it could — even if in an ever-so-incremental way — convince more subscribers to bail on their existing cable, satellite or telco TV fat bundles.

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