Apple still working on a script for Apple TV

Its much-hyped set -- and perhaps a new service -- is a long way from reality, but the company keeps pushing.

By Jonathan Berr Aug 23, 2013 7:17AM
The Apple Inc. logo is displayed on the back of the new MacBook Pro (David Paul Morris/Bloomberg via Getty Images)

For years, there has been talk of an Apple (AAPL) TV set. Now, there is at least some action to go with it.

According to Quartz, the maker of the iPhone and iPad has held discussions with major content providers such as Walt Disney's (DIS) ESPN, Time Warner's (TWX) HBO and Viacom (VIA), whose channels include MTV and Comedy Central, "to provide content for a television set that would emphasize apps over cable TV."

Exactly what that means isn't clear. The business news site says Apple may form its own pay-TV service. However, it will need to overcome many problems to make that idea a reality. First, content won't come cheap. Providers will demand steep licensing fees that will easily cost tens of billions annually, perhaps more if Apple wants any sort of exclusivity.

Content providers also will likely demand that Apple take their unpopular channels if it wants their popular ones, preserving the bundling of channel tiers that consumers have grown to despise. This would make it harder for Apple to differentiate itself from the incumbent players.

Pay-TV providers aren't crazy about the practice, either. Earlier this year, Cablevision (CVC), a  New York-based cable operator, sued Viacom on antitrust grounds over channel bundling. Viacom has denied wrongdoing.

The other problem -- and it's a big one-- is that other companies such as Google (GOOG), Intel (INTC) and Sony (SNE) are all said to be pursuing similar ideas. Apple's approach, though, is unique because it wants to build a TV set to "control the entire experience" of watching TV. That would mean consumers would say so long -- and in many cases, good riddance -- to their cable boxes. It's all very risky.

"TV sets are expensive, and people generally keep them longer than Apple's other popular products, like computers and phones," Quartz pointed out. "In its talks with content companies, say sources, Apple notes that it has nearly 600 million iTunes accounts and is good at getting people to pay for content."

Apple is also going to need to make peace with cable companies because this new service would need vasts amounts of the Internet bandwidth they provide to millions of homes.  
 
If Apple can pull this off, it will counter critics who say that its days of hypergrowth are over. But the obstacles it faces in making a dream of late co-founder Steve Jobs a reality are formidable.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.


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3Comments
Aug 23, 2013 8:02AM
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"First, content won't come cheap"

Remember that, all you idiots who think you will save money in the long run by ditching cable. The cost of streaming is going to skyrocket very soon. Content is expensive and needs to be paid for one way or another.
Aug 23, 2013 10:13PM
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I remember when T.V. --- Not the T.V--- was free  I never thought I'd actually miss those rabbit ears!
Aug 23, 2013 7:55PM
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Why would anyone want an Apple TV in their house, especially when Apple says that it wants to  "control the entire experience".  I don't know about you, but I want to control what I experience through my TV.  Especially since an Apple TV will probably cost more than a regular one.  I guess they figure there are enough fanboys out there who don't want to think for themselves that it will be enormously profitable.
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