Video services

Apple's Pay-TV Path May Run Through Cable

Apple Inc. (Nasdaq: AAPL) is in talks with Time Warner Cable Inc. (NYSE: TWC) and other major MSOs about developing a set-top box that is capable of receiving cable pay-TV services, reports The Wall Street Journal.

It's the latest in a string of reports about Apple's interest in breaking into the pay-TV category using MSO partnerships rather than developing a subscription video service of its own. Buzz about Apple's video plans began to build again this week after the company was awarded a patent on Aug. 14 that describes a menu overlay and navigation system that can run on a video device. Example use-case illustrations show the pop-up menu accessing a range of live TV channels.

It's not clear if Apple's interest is in tweaking its Apple TV device for live TV or in creating an entirely new type of set-top product. The current Apple TV offers video from several over-the-top sources, such as Netflix Inc. (Nasdaq: NFLX), YouTube and Apple's own iTunes library, but still lacks access to live TV programming. (See New Apple TV Induces Zs.)

The Journal said the discussions have not yet led to any cable deals, noting that operators have historically been hesitant "to let Apple establish a foothold in the television business."

But cable's been more than willing to insert itself into the Apple ecosystem without establishing any direct content relationship with Cupertino. TW Cable, Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Cablevision Systems Corp. (NYSE: CVC), for example, have built apps or separate streaming devices that can ship all or part of their live TV lineups to iPads, though access is limited to the reach of the customer's home Wi-Fi signal. (See Comcast Beams Live TV to the iPad, Cablevision Launches iPad App With 280+ Channels , iPad, Xoom Get First Crack at Comcast's AnyPlay and TWC's iPad App Launches With (Some) Live TV.)

Why this matters
The reported discussions are yet another indication that Apple is trying to pursue partnerships with pay-TV operators rather than creating a subscription TV service on its own. If so, that strategy would share some similarities with the one Microsoft Corp. (Nasdaq: MSFT) has in play for the Xbox 360. Microsoft had interest in building its own pay-TV service, but changed direction after balking at the high costs of acquiring content. (See Microsoft Puts Pay-TV Plan on Pause .)

Apple's apparent interest in the cable box market could be coming at an opportune time. Major cable operators are undergoing an IP video migration that should make it less of a headache for consumer electronics companies to support MSO TV services than it has been using QAM video and CableCARDs. TiVo Inc. (Nasdaq: TIVO) took the CableCARD path and has the scars to show just how difficult that road has been. (See TiVo Plays VoD With Cisco.)

There's also an unprecedented level of disruption in the domestic set-top market. Motorola Mobility, the largest supplier of set-tops in the U.S., is now part of Google (Nasdaq: GOOG), which is expected to pursue a sale of Moto's cable assets as early as this fall. (See Google Preps Sale of Motorola Home.)

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— Jeff Baumgartner, Site Editor, Light Reading Cable

AESerm 12/5/2012 | 5:23:44 PM
re: Apple's Pay-TV Path May Run Through Cable

Would something like Comcast's set-top RDK stand to benefit Apple in their efforts? Or is it--as the financial guys like to say--orthogonal to Apple's own software?

Jeff Baumgartner 12/5/2012 | 5:23:42 PM
re: Apple's Pay-TV Path May Run Through Cable

It might, though I'd think Apple would want wider MSO adoption of the RDK, which is starting to happen, before it really jumped in.  But I also wonder how much of this is wishful thinking on Apple's behalf and if they can put together a biz deal that both sides can live with.

The MSOs have been pretty reluctant to let someone else take over the user experience/guide, though there's been some progress made with ceding some of that control TiVo and, in a more limited way, on the Xbox. JB

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