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Who Will Land the Apple Television?

11:45 AM -- If Apple Inc. (Nasdaq: AAPL) has a pricey big-screen television on the roadmap, the current thinking is that the company has become eager to partner with pay-TV providers rather than go through the cost and headaches of creating a subscription TV service on its own.

That way, Apple still controls the user interface, can sell apps and services directly, and provide access to live, linear programming -- something that the stand-alone Apple TV device is still sorely lacking. (See Apple's Connected TV Nears Production and Jobs Bio Confirms Apple Television Plan .)

And the strategy would sort of mirror the one Microsoft Corp. (Nasdaq: MSFT) is taking with the Xbox 360. Microsoft, like Apple, has lots of money, but got sticker shock when it found out how much it would cost to build a subscription video service from the ground up, opting instead for a partnership strategy. (See Comcast Won't Cap Xbox 360 Streaming and Comcast, Verizon Connect With the Xbox 360.)

If the business deal doesn't hand over too much control, one could see why an MSO, telco or satellite TV provider would consider letting Apple inside the gates. Cable's still losing video subscribers, so a partnership with Apple could help to reverse that trend. The set will reportedly be expensive, so I wouldn't expect there to be an iPhone-level effect on those subscribers, but it could be worth the risk should the set turn out to be a hot seller.

But BTIG Research analyst Richard Greenfield thinks cable may be on the outside looking in, particularly if Apple decides to be choosy and one of its big goals is to secure national coverage for its new gizmo.

He predicts in a blog post (registration required) that DirecTV Group Inc. (NYSE: DTV) and Dish Network LLC (Nasdaq: DISH) are "prime candidates" to work with Apple, because they would give the new TV access to their national pay-TV footprint right away. He envisions them providing Apple with video APIs that let Apple design the look and feel of the programming bundle, store content on the TV and in the iCloud, and use iTunes for video-on-demand.

To make a sizable dent on the cable end, Apple would have to carve out separate deals with Comcast Corp. (Nasdaq: CMCSA, CMCSK), Time Warner Cable Inc. (NYSE: TWC), Cox Communications Inc. , Cablevision Systems Corp. (NYSE: CVC) and Charter Communications Inc. Even if Apple extended that to AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ), already partners on the mobile side, that would still leave it with some significant gaps.

Of course, Apple could try to work with all of the above, but that's not really the Apple Way when it comes to service provider partnerships. Temporary exclusivity, followed by deals with new carriers over time, has helped to keep demand for the iPhone stoked, so Apple could try to replicate this approach with its fancy new television.

And securing deals with the satellite guys could give Apple lots of negotiation leverage with the MSOs. The cable guys, Greenfield reasons, would almost be forced to cut authentication deals with Apple or risk losing more share.

— Jeff Baumgartner, Site Editor, Light Reading Cable



AESerm 12/5/2012 | 5:36:34 PM
re: Who Will Land the Apple Television?

With Sony announcing (as expected) 10k job reduction today and pledging to turn around its TV business, after 8 years of losses, Apple may smell blood in the water. Others are having trouble making money at making TVs. Retina Display (a favorite feature among iTab users) and the Apple UI and mystique could win it business among the high-end crowd -- and if that's their target market, it would sound more DirecTV than Dish. 

msilbey 12/5/2012 | 5:36:33 PM
re: Who Will Land the Apple Television?

At a gut level, this makes a lot of sense to me. It certainly seems to mirror what Apple did on the wireless side - co-opting the carrier model rather than trying to work around it, and then essentially upending it by shifting power away from the pipe providers. Mad brilliance if Apple can pull it off a second time. But there are an awful lot of moving parts here. Can't wait to see what happens next. 

Jeff Baumgartner 12/5/2012 | 5:36:33 PM
re: Who Will Land the Apple Television?

Plus , for better or worse, Dish has fiddled around with these kind of partnerships.  Their Google TV experiment (okay, it's an actual product)  comes to mind, not that it's helped Dish much.  I doubt Apple would let something out that was that unpolished. JB

Jeff Baumgartner 12/5/2012 | 5:36:33 PM
re: Who Will Land the Apple Television?

The timing is a bit strange since the TV business is pretty bad right now, so maybe Apple can inject some consumer excitement into a product category that needs it. Apple's had a hard time conquering video so far, so this would be a huge bet.  Can it pay off?  This will be a big ticket item. JB


 

joanengebretson 12/5/2012 | 5:36:33 PM
re: Who Will Land the Apple Television?

I'd say the odds are better on Dish than DirecTV as a potential partner for Apple. DirecTV has stronger ties with telcos through marketing agreements than Dish does.

AESerm 12/5/2012 | 5:36:32 PM
re: Who Will Land the Apple Television?

Sorry... not following you. What's the point of marketing agreements with telcos?

msilbey 12/5/2012 | 5:36:29 PM
re: Who Will Land the Apple Television?

The coffee shop patrons around me are wondering why I've fallen out of my chair laughing. Apple... CableCARD... guffaw, giggle, gasp!... :)

Jeff Baumgartner 12/5/2012 | 5:36:29 PM
re: Who Will Land the Apple Television?

Full integration with pay-TV providers would be a good way to go. Of course, anyone will be able to just buy the set and get cable with a separate set-top box, but that would eliminate the integration and make the Apple television look like another connected TV, though probably with a slicker interface than the others. But that means customers would still have to toggle the inputs and use one for cable TV+VoD and another for the Apple goodies.   If cable is as protective of the user interface as it seems to be, I'm guessing they'd also be protective of havign their services come through the primary input.


Of course, Apple could add a CableCARD slot and do tru2way. Right, right. I know. Not. Gonna. Happen.


 JB


 


 

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