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In the Ring: Apple TV Versus CableIn the Ring: Apple TV Versus Cable

If apps are the future of TV, Apple may have some trouble when it pits itself against cable, telco and satellite TV providers.

Mari Silbey

September 21, 2015

4 Min Read
In the Ring: Apple TV Versus Cable

Someday Apple might launch its own pay-TV service, but for now it's living in a wary state of "coopetition" with the cable, telco and satellite TV providers.

On the one hand, Apple Inc. (Nasdaq: AAPL) is competing with multichannel video programming distributors (MVPDs) by offering access on the Apple TV to several streaming services with features layered on top like unified search and discovery, support for voice commands and a touch-screen remote.

On the other hand, the MVPDs still control some of the most desirable content, which means Apple will likely need their cooperation in order to make critical TV channels available on its new retail device.

On that topic (and bear with me -- the connection will make sense in a minute), what struck me most about the launch of the Apple TV was how the company positioned itself for the product's evolution. CEO Tim Cook called apps the future of television, suggesting that all programming could be delivered in app form right alongside apps for games, productivity and more. It's a brilliant move in that Apple can build quickly on the strength of its existing iOS developer ecosystem. (See Apple Brings tvOS to Apple TV.)

However, it will also create new challenges if Apple has to continue to rely on other pay-TV providers for content.

Here's why: The MVPDs also believe apps are the future of television. Even though very few of them today offer apps for connected TVs, they recognize that if they have to give ground in the hardware battle, it's better for them to do it in a way that preserves more of their control over the user interface.

Want to know more about the impact of web services on the pay-TV sector? Check out our dedicated OTT services content channel here on Light Reading.

This is the same debate that came up during months of work with the Federal Communications Commission (FCC) developing recommendations on a successor technology to the CableCARD. MVPDs on the appointed advisory committee argued that apps make it possible to open up the market to new TV devices, and therefore that apps can solve the problem of creating retail competition. Others on the committee, however, argued that locking the pay-TV experience up in an app forces any new retail products to act as dumb terminals, simply playing host to services and value that others provide. (See DSTAC: 2 Opposing Views on the Future of TV.)

Instead of an app approach, companies like TiVo Inc. (Nasdaq: TIVO) and Google Fiber Inc. believe they should be allowed to access video content directly so that they can develop new features of their own that add value to the viewing experience. In theory, MVPDs could allow that access even through the confines of an app, but there's no requirement for them to do so, and there is potential business risk.

As an example, MVPDs could open up access to their content metadata so that their shows would be included in Apple's unified search feature. But if they did that, then they'd risk losing revenue whenever Apple exposed a cheaper or more convenient source of the same content. They'd also lose audience share if Apple recommended something else of interest that a viewer decided to watch instead.

But that's just an example of a feature we know about today. What about features that haven't been invented yet?

Verizon Communications Inc. (NYSE: VZ) plans to offer a clip-and-share feature with its new Go90 service. What if Apple could take advantage of something similar and let users transfer clips from TV shows directly from an MVPD app into the Apple TV user interface? Apple could make them available from a folder in the UI, and maybe even make them accessible to other iOS apps like games or communications services.

We don't entirely know what's possible with TV in the IP era, but that's because the era is just getting started. What happens next will be as much a result of industry collaboration (willing or unwilling) as it is of technology development.

Of course, if Apple launches its own compelling pay-TV bundle, the issue of gaining cooperation from the MVPDs will be moot. But for now it's handicapped without their help.

Apple can be as innovative with TV as it likes, but only where the MVPDs haven't locked up access.

— Mari Silbey, Senior Editor, Cable/Video, Light Reading

About the Author(s)

Mari Silbey

Senior Editor, Cable/Video

Mari Silbey is a senior editor covering broadband infrastructure, video delivery, smart cities and all things cable. Previously, she worked independently for nearly a decade, contributing to trade publications, authoring custom research reports and consulting for a variety of corporate and association clients. Among her storied (and sometimes dubious) achievements, Mari launched the corporate blog for Motorola's Home division way back in 2007, ran a content development program for Limelight Networks and did her best to entertain the video nerd masses as a long-time columnist for the media blog Zatz Not Funny. She is based in Washington, D.C.

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