Apple, Cable and the Stalemate of Internet TV
Waiting for Apple to revolutionize TV? Expect it to connect your living room to a wealth of content? Don't hold your breath. Cable's in the way.
After a sit-down with Apple's chief of Internet software Eddy Cue, analyst Andy Hargreaves doesn't think iTV is coming. And that the traditional broadcast revolution is still a long way off. Hargreaves said the main problems in the television market are the "poor quality of the interface and forced bundling of pay-TV content." Apple can create a platform to streamline the interface, but the content is a question mark. From that, Apple needs to wait, since there's little point making hardware if it fails to sell content to support it.
If you're eagerly looking for alternatives to pay-TV and settle for incomplete options like Netflix and Hulu, Apple's lack of effort isn't the most disconcerting thing. It's the slowdown in content deals. CEO Tim Cook, along with Cue, held several meetings with cable companies like Time Warner, yet both are vague about the future of Apple and television. "We're going to keep pulling the string and see where it takes us," Cook said at an AllThingsD conference. And he reiterated the product "will lead us somewhere" on a recent conference call.
But where exactly is it leading?
The truth may be simple, and Cook isn't denying it -- but more likely, he's not completely sure. Apple has strong ideas for a broadcast model, but in the case of the TV industry, significant forces stand in the way. That's similar to Apple when it first ruffled feathers in the music industry. Through persistence, it wore down record labels that hesitated on iTunes. But piracy reached such unmanageable levels that they had no other options and embrace the digital music ecosystem. Apple has a strong vision for a product, market and execution. And the iPod, iPhone and iPad are strong examples of creating and redefining these industries.
Pay-TV providers, meanwhile, don't face that dilemma. They control the content and price and have imposed their will on networks looking to offer programming in other ways. For example, you can't access HBO's Go app without a subscription to a cable provider. Even Hulu is heading to that "authentication" method, where you'll have to log in with your cable account before gaining access to a site's content.
Cable providers are worried about subscribers dropping expensive subscriptions for digital options, but overall, they still enjoy a strong customer base. As a result, they come to Apple's negotiating table in a stronger position. Simply put, they don't need Apple's connected-TV just yet -- but that may change as consumers shift online.
Content providers are resolute when it comes to how they make programming available, and with subscription prices rising and nowhere else for customers to go, they're unlikely to entertain pitches from Apple about a change to the status quo. Apple's failure to break through in negotiations doesn't mean it's impossible for another company, but that's the same as the pretty girl turning down the smoothest-talking, best-looking guy: If he can't get her, no one can.
The fact is, life is too good in the world of cable. They won't consider a partnership. They're in the driver's seat and they know it, which allows them to sit back, entertain proposals from companies like Apple, make demands of their own and then turn offers down without blinking if their terms aren't met, stifling entertainment innovation in the process.
Since author Walter Isaacson, writer of Steve Jobs' biography, hinted in his book that the late CEO had his sights set on revamping TV, reports have run rampant. And since then, analysts have speculated about Apple's TV intentions, as the tech world awaits its next move in home entertainment.
It's not the only company working on a TV device, but its track record in the music industry makes it one of the strongest candidates. A quick look at its history shows it doesn't dive into projects, whether a new market, product or even a specific feature, unless it feels its chances of success are high. But it's not coming soon. ♦
Categories: Media Mind