Reports that Apple (Nasdaq: AAPL) has been quietly pushing a technology and business model that would compensate TV companies every time a viewer skips an ad took my mind immediately to the App Store. Anyone who has played the hit game Candy Crush Saga might understand why.
The game, published by King.com, is the top-grossing app in Apple's App Store and in Google (Nasdaq: GOOG) Play. Think Gaming estimates Candy Crush Saga--which is free to download and play--is hauling in almost $633,000 a day. So where's all this money coming from?
In a word, skipping. The developers of Candy Crush Saga created a very fun (and addictive) game. Its most notable feature, outside of the actual game play, is that it includes an option TV viewers might find familiar. After playing a game, the user must wait a certain period of time before starting again, a bit like sitting through the commercial breaks that interrupt TV programming. But in Candy Crush Saga, users can skip the wait for a small fee.
Many do, and those fees have clearly begun to add up. Could something similar be in the works for TV ads?
To be fair, I have found no reports to suggest Apple would want to charge consumers for the privilege each time one actually skips an ad. Former Wall Street Journal reporter Jessica Lessin's scoop suggests Apple has offered to pay media companies when the ads within their shows are skipped by users of a premium tier of service, not necessarily pass those costs onto consumers for each transaction.
But it doesn't feel like too much of a stretch to think TV viewers might take an offer to pay a small fee for permission to jump to the next segment of a show.
Skipping ads is nothing new. Viewers can already skip ads with DVRs, and new devices like Dish's (Nasdaq: DISH) Hopper are making that even easier. And for decades viewers have avoided ads by muting the TV, changing the channel or leaving the room.
But let's put traditional, linear TV aside. Apple is a major distributor of online video through iTunes, where it sells ad-free episodes of TV shows for $2 in standard definition and $3 in high definition.
Now, imagine the "freemium" model of Candy Crush Saga applied to those episodes. Apple could sell episodes for far less, or even give them away for free if they included a full, traditional ad load. Then, it could offer viewers a chance to skip those ads in exchange for, say, a quarter for each block of ads skipped.
Ads could be skipped instantly, with metadata embedded in the video to tell the player where to resume playback. Click a button on your remote--or more likely, tap the screen of your iPhone--and the wait for the next segment ends.
Arguably, Netflix (Nasdaq: NFLX) already offers this very service. In exchange for a flat monthly fee, viewers avoid all ads.
Advertisers would hate to see this spread more widely. The idea that their potential customers--presumably the wealthiest and freest spending--would never see their marketing messages would not sit well with the major brands that sponsor most premium TV programming. At the very least, they would seek lower rates.
Apple is not alone among technology companies in reaching out to media content owners. Google has also reportedly discussed its plans to introduce an over-the-top TV service with networks. And Intel (Nasdaq: INTC) has already begun testing its service in the field.
All these companies have huge amounts of resources at their disposal. They might even have enough to convince the content owners they should play along.