Partners key for Apple
‘GRAND VISION’ for television remains shrouded in secrecy
“Apple’s probably going to have greater access to content by deciding to co-operate.”
NATALIE CLAYTON, DIGITAL VIDEO RESEARCHER
When Apple wanted to revolutionize cellphones, it held hands with AT&T. The partners fought endlessly, but the public loved the finished product: the iPhone.
Now, as Apple tries to reimagine television, it is taking the partnership route again, collaborating with distributors like Time Warner Cable and programmers like the Walt Disney Co. on apps that might eliminate the unpleasant parts of TV watching, like bothersome set-top boxes or clunky remote controls.
Apple’s broader strategy — what its chief executive, Tim Cook, recently called its “grand vision” for television — remains shrouded in secrecy, as everything Applerelated tends to be. Some analysts continue to predict, as they have for years, that the company will someday come out with a full-blown television set.
Whether an i TV ever materializes, the company’s more modest steps, like improving the $100 Apple TV box that 13 million households now have and adding access to cable channels through the box, suggest that its strategy stands in stark contrast to Google’s, which is contemplating an Internet cable service that would compete directly with distributors like Comcast and Time Warner Cable.
Reports emerged this week that Google has held talks with several channel owners about licensing channels for such a service, but no deals are within reach.
Apple weighed something similar years ago, but its executives concluded that it should work with the industry’s powerful incumbents rather than against them.
“Apple’s probably going to have greater access to content by deciding to co-operate,” said Natalie Clayton, who oversees digital video research for Frank N. Magid Associates.
Case in point, Apple last month turned on HBO and ESPN apps for Apple TV owners. But those work only for people who have an existing cable or satellite subscription.
Coming next is an app from Time Warner Cable, allowing some of the company’s 12 million subscribers to watch live and on-demand shows without a separate set-top box. The app will effectively add an Apple layer on top of the TV screen, providing what its proponents say is a programming guide superior to anything offered by Time Warner.
Apple has talked in-depth with other big distributors about similar apps, according to people involved in the talks. Its intent is to collect a fee from distributors in exchange for enhancing their television service and in that way, theoretically, make sub- scribers more likely to keep paying for cable.
“They’re trying to apply their software expertise, their user interface expertise,” one of the people said. (The people insisted on anonymity because they said public comments would interfere with the private talks with Apple.)
Apple has sought support from programmers as well. It has proposed, for instance, an ad-skipping technology that would compensate networks for the skipped ads by charging users.
Although the idea is farfetched, it intrigued some of the channel owners who were briefed about it and excited Apple followers when it was first reported by technology writer Jessica Lessin this week.
For Apple, further moves into television could neutralize some of the skepticism about the company’s future since the death of Steve Jobs in 2011. Investor concerns that the company might not have another iPhone- or iPad-level innovation on the way have dragged down its stock price, which topped $700 for the first time in September but has recently hovered closer to $400.
For the time being, Apple TV is a small part of its business — something best suited to “hobbyists,” as Cook put it at the D: All Things Digital conference in May. At that time, he hinted at the opportunity Apple saw in the living room, calling traditional TV watching “not an experience that I think many people love” and “too much like 10 or 20 years ago.”
It is easy to see how Apple could help. Products like Apple TV and Roku, which connect TVs to the Internet’s wealth of streaming content, have proliferated because the set-top boxes that cable companies supply have not kept up with shifts in consumer behaviour. But the streaming boxes remain a somewhat niche technology.
Apple could choose to market its box more heavily, especially as competition heats up from Amazon and other companies. Or it could eliminate the need for a box by building its own TV set. Reports this week that Apple might acquire PrimeSense, a maker of motion-sensing technology that could be used to control a TV without a physical remote, prompted a new round of guessing.
In Apple’s partnership approach, some see the company placing a multitude of bets, recognizing that television could evolve in any number of ways.
Through Apple TV, it is simultaneously supporting established distributors and programmers as well as a parallel universe of streaming TV, as represented by Netflix, Hulu and Amazon.
Last month, in a littlenoticed move, the company approved an app for Sky News, a U.K.-based cable news channel. Sky could already be streamed live free on the web, but by creating an app for Apple TV, the channel gained access to the television sets in 13 million homes without the need for complex negotiations with cable companies.
The Sky News app is free, but the software that powers it, from a company called 1 Mainstream, also allows for à la carte subscriptions.
Asked about the app’s implications, Rajeev Raman, the chief executive of 1 Mainstream, said: “It’s a learning year for Apple. And it’s a learning year for all of us, to say, OK, what really does work?”
In effect the app is a more direct route to consumers for Sky News. Bloomberg TV, already available on cable, tried something similar earlier this year by cutting a carriage deal with Aereo, the streaming service backed by Barry Diller. But Aereo is antagonistic toward networks and existing distributors; Apple, at least for now, is positioning itself as a friend.