After Steve Jobs left the scene, he offered a tantalizing hint from the grave about the huge revolution in TV that lies just around the corner. "I finally cracked it," he says in his posthumous autobiography "Steve Jobs," alluding to the blueprint he developed for user-friendly Internet TV.

"This quote seems to offer the best evidence we have seen that such a device is actually in the works," says Goldman Sachs analyst Bill Shope.

That quote also set off rampant speculation about whether the next iteration of Apple TV will be an actual TV, a plug-in device or some kind of collaboration with a TV manufacturer (not likely). It reached a fever pitch at the huge Consumer Electronics Show in Las Vegas earlier this month, overshadowing lots of actual devices.

As is the way with Apple (AAPL, news), the details of any such device are a closely guarded secret. But the implications are clear. Apple may soon change the world of TV and movies the way it has the music industry -- leaving a host of video entertainment players wounded, from cable providers and content producers to traditional advertisers and the DVD industry.

Apple won't have this new world of TV to itself, of course. Just as Google (GOOG, news)proved itself to be a worthy Apple competitor in smartphones with the Android operating system, the search giant also wants to be a major force as TV and movies go online.

image: Michael Brush

Michael Brush

Other major forces at work here are evolving consumer tastes and habits in video consumption -- including a willingness to pay a buck or two for a TV show you can get for free, or at least with a cable subscription -- and that inexorable source of change, technology itself. It's making the transition to online TV and movie consumption not only possible, but easy.

The Apple model

Except to extreme Apple fans, the exact form the Apple TV takes almost doesn't matter, because Apple's motivations are already clear. It needs a great Internet TV device to move more people onto its platform and into its cloud of online content storage services -- two key pieces of Apple's strategy, says Dave Eiswert, who manages the T. Rowe Price Global Technology (PRGTX)fund, which has beaten competitors by an annualized 8.5% over the past three years.

The model here is what's already happened to the music industry. Great devices, starting with the original iPod, combined online with Apple's easy-to-use iTunes store to change the way people buy and own music. The record store, the CD, makers of rival music players and a lot of online competitors were left in the dust. The recording industry learned to play by Apple's new rules.

The difference now is that Apple wants to move the entertainment its customers own off of their Macs and PCs and into its online cloud. This will tie more customers to Apple's ecosystem -- and make it more likely that the next device they buy will be an Apple product.

"Apple wants to move away from the Mac to the cloud as the center of your Apple experience, and Apple TV plays into that," says Eiswert. "It is a battle about platforms, and Apple TV is just one part of that platform strategy. The point of Apple TV is to hook you into their platform and sell more iPhones, iPads and Macs."

Apple TV: The device

Of course, you can already buy "Apple TV" -- a box that lets you stream video from computers to your television. And you can buy TV and movies from the iTunes store to watch on a computer or other Apple device.

But an actual Apple TV -- or a more sophisticated version of the current offering -- could be a game changer.

If history is our guide, we can guess the new Apple TV will be a cool device, probably the coolest of its kind. It will likely be voice-activated using a variation of the Siri system that already allows users to talk to the iPhone. Expect state-of-the art touch screens and intuitive controls. "They have revolutionized so many devices, it is almost inevitable that they would try with TV," says Peter Atkins, managing director of Permian Partners, an investment firm. "My guess is it is a near-term thing, within the next year, possibly."

The device could spur another growth phase for Apple, which this week again reported strong earnings driven by iPhone sales. It would also to contribute to an ongoing change in how we buy and watch video -- shifting consumption online while steamrolling traditional video and TV outfits like cable and satellite companies. SNL Kagan estimates the number of people who "cut the cord" and convert to what industry experts call "over-the-top" or online TV and video will grow to 12.1 million households by 2015, about 10% of homes.

Lots of college students -- who often shape trends -- are already there, viewing just about all their TV and other video content online, points out Michael Scanlon, a tech analyst with the John Hancock Balanced A (SVBAX)fund, which has beaten competitors by an annualized 3.5% over the past five years. "Long term, over-the-top content will succeed. It will just be a slow march to get there," says Eiswert.

Here's who's likely to get hurt as all this plays out.

Cable and satellite TV companies

"Obviously at the forefront are any of the cable providers," says Scanlon. "At some point you'll get to where you don't have a cable connection. You just watch all content from the Web." Satellite TV companies face a similar risk.

With a variety of devices in hand and high-speed Internet access almost everywhere, consumers want to be able to chose when and where they watch video content instead of being tied to broadcasters' schedules.

There's another factor at work: A lot of consumers are overpaying for cable, in the sense that they pay a big monthly bill but watch only a few channels. "You are subsidizing all these other channels," says Eiswert. "It's a bizarre business model that has evolved over time. This doesn't make any sense now, because the technology exists to deliver it differently."

SNL Kagan forecasts cable and satellite subscriber growth won't keep up with the growth in households over the medium term, mainly because more people will switch over to the Internet. But change could come much more quickly, depending on the impact of a new Apple TV. A cool and simple-to-use device could catch fire like the iPhone and the iPad did.

None of the major cable or satellite companies, including Comcast (CMCSA, news), Cablevision Systems (CVC, news), Dish Network (DISH, news), would talk with me about the threat.

In defense of cable, Morningstar analyst Michael Hodel points out that $80 a month, a typical cable TV bill, isn't such a bad deal, considering that the average consumer watches four hours of TV a day. Plus, many people actually like having hundreds of channels to surf, and viewing habits run deep. We crave, for example, the sense of belonging that derives from "water cooler moments" when mass audiences watch huge events like the Super Bowl or the last episode of "Lost" and then talk about them.

"I don't think there's going to be a precipitous drop-off in cable subscriptions that will come about in a year or two," says Hodel.

Even Google TV experts -- also aggressively pioneering Web video consumption -- don't think cable is doomed. "The Web won't completely kill traditional TV," says Rishi Chandra, Google TV director of product management.

Cable companies are fighting back by putting a lot more content online and making it available on demand, giving consumers flexibility. Comcast's Xfinity TV offers hundreds of thousands of movies and TV shows online. Comcast just inked a deal with Walt Disney (DIS, news)that moves ESPN, ABC and Disney shows online and on demand.

But can they keep up? The other megatrend playing out here is the growing availability of a nearly unlimited choice of video content online, including specialized niche programming at places like YouTube.

Google's Chandra puts it this way: Video content has morphed from three channels in the early days of TV, to 300 channels with the advent of cable, to 3 million channels with the rise of the Internet. Google is promoting the trend by rolling out YouTube channels, putting a Google TV operating system on a lot of popular TVs and helping consumers find things through search.

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Of course, a lot of consumers get their Internet service along with cable. So, as we convert to Web-based TV and video in a big way, expect cable companies to raise prices for Internet service to offset cable subscriber losses. "I suspect they are not going to spend a lot to be the backbone for delivering high-bandwidth use and not charge more for it," says Michael Sansoterra, portfolio manager of the RidgeWorth Large Cap Growth (STCAX)fund, which has beaten competing funds by an annualized 1.5% over the past five years.

Here's a quick look at some other potential winners and losers as TV and movies go online:

Content providers

Paying $1 or $2 or more to download an episode of a popular TV show may seem high now. But technology will drive down the cost of content for at least two reasons.

First, the Internet makes it a lot cheaper to deliver content, which means more will be available. Second, technology is making it cheaper to produce content, which also means more will be available. When more of a product becomes available, its price normally falls; that's likely to happen to video content, too, predicts Sansoterra.

This is not good news for major content providers such as Disney, Viacom (VIA, news)or TV networks like CBS (CBS, news)and NBCUniversal, now majority-owned by Comcast. Their production costs will remain relatively high.

That could be one reason a lot of movie and TV companies have been reluctant to go online or play with Apple. They don't want to give up profits, as the music industry has. So they're wary of abandoning the cable-and-satellite distribution system that has been so good to them.

"Content creators don't want to upset what has been a pretty lucrative system for them for a long time," says Hodel.

How long they can resist, though, remains to be seen, especially as the number of Apple users keeps increasing, says Shope, at Goldman Sachs.

Traditional advertisers

The rise of online video consumption means it will be easier for advertisers to learn even more about your tastes by tracking more of what you watch. This is a dream for advertisers, because it means they can target ads more precisely. This ability to better target ads means even more ad dollars will move to the Internet, away from traditional advertising venues like newspapers, magazines and regular TV, says Sansoterra.

DVD companies

This one's fairly easy to call. Companies that now get a lot of their revenue from DVD distribution will get hit as most TV shows and movies become available quickly online.

This includes Netflix (NFLX, news)and Coinstar (CSTR, news), the company behind the Redbox DVD rental system. Content providers like Disney and Viacom may also feel some pain, since they reap profits from DVD sales.

Netflix, of course, has tried to move online, with mixed success. And if Apple does to TV what it has done with music, it may simply suck all the air out of the room.

TV manufacturers

This one's a little harder to call until we know what an Apple TV will actually look like.

Yes, iPods hold most of the music-player market, and the iPad is dominant among tablet computers. But phones powered by Google's Android are competitive with iPhones, and Macs haven't taken the market from PCs. So a flat screen from a giant like Sanyo or Samsung and running something like an Android operating system could well compete with an Apple TV.

Some potential winners

Analysts point to several possible winners in the transition to online video and TV consumption, besides Apple and Google.

Sycamore Networks (SCMR, news)has a bandwidth-management system that reduces congestion in the major pipelines of smartphone providers. It delivers popular videos to cellphone towers for distribution from that point on, reducing bandwidth consumption, says Scanlon, at John Hancock.

Eiswert, at the T. Rowe Price Global Technology fund, owns at least two companies as plays on the increased interactivity expected in the Apple TV and other devices. One is Nuance Communications (NUAN, news), which makes voice-recognition technology similar to the kind used in Siri feature on iPhones. Another is Atmel (ATML, news), which makes chips used in touch technology on phones and tablets, and probably on TVs of the future.

For other investment options, of course, there's always Apple stock. In five years it's gone from around $90 to around $425. And if you're wondering what could possibly push it higher, Apple TV may be the next big thing.

At the time of publication, Michael Brush did not own or control shares of any company or fund mentioned in this column.

Michael Brush is the editor of Brush Up on Stocks, an investment newsletter. Click here to find Brush's most recent articles and blog posts.