Apple seen partnering with existing cable operators for 'iTV' content

Posted:
in Future Apple Hardware edited January 2014


How Apple plans to provide content to users of its rumored television set remains unknown, but one Wall Street firm sees four potential ways Apple could approach one of its largest hurdles in bringing a connected television to market, with the most likely option seen as a partnership with existing cable providers.



Peter Misek with Jefferies presented his "what if" analyses related to content on the so-called "iTV" in a note to investors on Monday. In what he sees as the most likely scenario, Apple could gain access to non-exclusive content for its television set and forge deals with existing cable providers.



By potentially partnering with carriers and cable operators, Apple could enter the market on a level playing field with everyone else for content. With access to a variety of content through existing providers, as well as the content already available on the iTunes Store, Misek believes that Apple could package everything with a "superior user interface and ecosystem" and beat out the competition.



"We think that partnerships with carriers and MSOs are possible whereby they provide the video content," he wrote, "as they already have deals in place (at least to sell video over their own pipes), whereas Apple has to negotiate for new over-the-top distribution rights."



While partnerships with companies like AT&T, Verizon, Bell and Rogers, combined with the existing iTunes Store, are seen as the most likely option, Misek also presented three other directions Apple could potentially take. In one option, he said Apple could simply seed content, as Google does with its YouTube Original Channels.



In this scenario, Misek thinks Apple could select about 100 groups to create channels and provide upfront financing in exchange for a year of exclusivity. Given Apple's current clout in the entertainment industry with its iTunes Store, he believes Apple could target mainstream TV shows and movies with this method.



In another option, he said Apple could buy access to exclusive content, much as Netflix has done for the "House of Cards" program, and DirecTV has with its exclusive "NFL Sunday Ticket" package. With "headline deals," such as a rumored bid on the English Premier League rights, he thinks Apple would gain buzz.



But exclusive content deals for an Apple television could also open the company up to scrutiny from governments. He believes that antitrust concerns could limit exclusive content options for Apple.











The final possible scenario, as seen by Misek, is that Apple could become a Hollywood studio and produce its own content. But the analyst believes lower margins and higher risks would scare Apple away from that option, as the film and TV divisions of companies like Sony, Disney, Viacom and News Corp. have substantially lower margins than Apple.



Misek believes Apple's rumored entrance into the television market will be primarily to bolster the company's "halo effect," in which consumers buy into the Apple ecosystem and purchase its other products. He does not believe that an iTV with subscription revenue, as well as gross margins on the sale of HDTVs, would have much of an impact on the company's bottom line.



[ View article on AppleInsider ]

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Comments

  • Reply 1 of 71
    Why do they insist on calling this unicorn "iTV"? Everyone knows Apple doesn't have the trademark for that name.
  • Reply 2 of 71
    rogifanrogifan Posts: 10,669member
    I'm so sick of all these rumors of what Apple might do in the TV space. No one has any inside knowledge. They just spew off a bunch of s**t that then gets picked up by other analysts, tech blogs, Apple rumor/fan sites, etc. Who is Peter Misek and what does he know about Apple's TV plans? What is his speculation based on?
  • Reply 3 of 71
    rogifanrogifan Posts: 10,669member
    Quote:
    Originally Posted by SpamSandwich View Post


    Why do they insist on calling this unicorn "iTV"? Everyone knows Apple doesn't have the trademark for that name.



    And if it's not a television set won't it be called Apple TV?
  • Reply 4 of 71
    mstonemstone Posts: 11,510member
    Tough nut to crack. TV content comes with ad slots. How that ad revenue is sliced up is what is going to be the main issue. Getting the rights to a sitcom on iTunes is the easy part. How to make it a winning proposition for the cable and satellite companies is an entirely different matter.
  • Reply 5 of 71
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by mstone View Post


    Tough nut to crack. TV content comes with ad slots. How that ad revenue is sliced up is what is going to be the main issue. Getting the rights to a sitcom on iTunes is the easy part. How to make it a winning proposition for the cable and satellite companies is an entirely different matter.



    And not just national ad slots, but regional and local slots depending on the affiliate and provider setups. Touch nut indeed!



    I still contend the best way to deal with this is a box, not a set, and by partnering with cable operators instead of trying to go around them like Google did. At least this new rumour addresses that in some regard.
  • Reply 6 of 71
    davegeedavegee Posts: 2,765member
    Quote:
    Originally Posted by SpamSandwich View Post


    Why do they insist on calling this unicorn "iTV"? Everyone knows Apple doesn't have the trademark for that name.



    Kinda like Apple rolling out a product with the name iPhone when we all knew they didn't own the TM to that one either.
  • Reply 7 of 71
    Quote:
    Originally Posted by Rogifan View Post


    I'm so sick of all these rumors of what Apple might do in the TV space. No one has any inside knowledge. They just spew off a bunch of s**t that then gets picked up by other analysts, tech blogs, Apple rumor/fan sites, etc. Who is Peter Misek and what does he know about Apple's TV plans? What is his speculation based on?



    You're probably not going to enjoy spending time on a website for Apple based speculation then
  • Reply 8 of 71
    wigginwiggin Posts: 2,265member
    Quote:
    Originally Posted by SolipsismX View Post


    I still contend the best way to deal with this is a box, not a set, and by partnering with cable operators instead of trying to go around them like Google did. At least this new rumour addresses that in some regard.



    I could see Apple creating a TV set if only for show of a high-priced, high-end option. But if they don't replicate the experience in a low-price box I think it will ultimately be a niche, low-volume failure.



    As for working with the cable companies, that may make sense in the practical (ie, non-real) world; but I have a hard time seeing it ever happening. It maybe technologically feasible (despite the utter mess called CableCard), but considering the egos of the parties involved and the probable licensing entanglements, it seems a tall oder. The biggest hurdle could be the willingness of the cable companies to let Apple get a foot in the door. What is their movitation to play ball?



    We shall see...
  • Reply 9 of 71
    panupanu Posts: 135member
    Quote:
    Originally Posted by AppleInsider View Post


    the so-called "iTV"



    How reliable can this information be? The blogger is either forgetful or wet behind the ears. When Apple first announced the Apple TV, it did not yet have a name. Steve Jobs said that its code name was iTV, and stressed that it was just a code name and that the final name would be forthcoming. Despite those strong disclaimers, the real iTV was so protective of its name that it sued Apple preemptively. Now we have another blogger talking about an iTV made by Apple. I guess the people at the real iTV must be exasperated by all this.



    Whatever the new Apple TV is going to be called, it isn't iTV.
  • Reply 10 of 71
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Wiggin View Post


    I could see Apple creating a TV set if only for show of a high-priced, high-end option. But if they don't replicate the experience in a low-price box I think it will ultimately be a niche, low-volume failure.



    As for working with the cable companies, that may make sense in the practical (ie, non-real) world; but I have a hard time seeing it ever happening. It maybe technologically feasible (despite the utter mess called CableCard), but considering the egos of the parties involved and the probable licensing entanglements, it seems a tall oder. The biggest hurdle could be the willingness of the cable companies to let Apple get a foot in the door. What is their movitation to play ball?



    We shall see...



    Those cards never worked out. They won't get all the players to switch to IPTV so they'd likely have to build boxes to support each cable network. If they were doing that I'd think we'd have plenty of rumours about it.
  • Reply 11 of 71
    Quote:
    Originally Posted by Rogifan View Post


    And if it's not a television set won't it be called Apple TV?



    We already have a legitimate product called 'Apple TV'. To associate this nonsense with what could be Apple's blockbuster entrance into television is degrading in the extreme.



    And since the prevailing opinion is that people can't wrap their heads around the fact that the next iPhone is the 6th one, calling both a television and a small black box by the same name is probably too taxing.
  • Reply 12 of 71
    thomprthompr Posts: 1,510member
    Quote:
    Originally Posted by SpamSandwich View Post


    Why do they insist on calling this unicorn "iTV"? Everyone knows Apple doesn't have the trademark for that name.



    Something tells me that if if Apple wants to use the name "iTV" badly enough, they will find a way to make that happen, even if it means $$$.



    Thompson
  • Reply 13 of 71
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by DaveGee View Post


    Kinda like Apple rolling out a product with the name iPhone when we all knew they didn't own the TM to that one either.



    They had to get a licensing deal. In Japan they had to change their AirPort name to AirMac due to ownership by I-O Data.
  • Reply 14 of 71
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by SolipsismX View Post


    Those cards never worked out. They won't get all the players to switch to IPTV so they'd likely have to build boxes to support each cable network. If they were doing that I'd think we'd have plenty of rumours about it.



    Cable companies own the consumer Internet. DSL is too slow for TV and satellite has signal in the down direction only. In many neighborhoods there is only one cable provider so there is no competition. The last mile is made out of pure gold. What can Apple offer the cable companies in exchange for access to that last mile? Cable doesn't need Apple.
  • Reply 15 of 71
    solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by mstone View Post


    What can Apple offer the cable companies in exchange for access to that last mile? Cable doesn't need Apple.



    The only think I can think of is a box that they can charge more for and/or can only be had by paying for more premium content thus increasing the cable co.'s bottom line.
  • Reply 16 of 71
    mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by SolipsismX View Post


    The only think I can think of is a box that they can charge more for and/or can only be had by paying for more premium content thus increasing the cable co.'s bottom line.



    That would be like having the camel's nose under your tent. Giving Apple a foothold in that market will gradually chip away at their core services. There is no long term upside for Cable in that arrangement.
  • Reply 17 of 71
    Quote:
    Originally Posted by SolipsismX View Post


    The only think I can think of is a box that they can charge more for and/or can only be had by paying for more premium content thus increasing the cable co.'s bottom line.



    Well you kind of HAVE to know that its not going to be another set top box. Apple isn't a fan of adding to the clusterphuck of remotes.



    The only way something like that could work is if Apple competed w Cisco and instead integrated the box into the Television. They'd have to partner w quite a few cable companies... but here's the thing. Using the cable companies licensing to content they could use the internet to create a national cable provider. I wouldn't be surprised if they partnered w the smallest one with the most content and then stripped the UI down from there.



    Who knows, right? MOST everyone thought the iPhone was just going to be an iPod + a flip phone and a lot of people had no clue as to what the iPad was going to be. In fact most people were pissed when they learned it was just a large iPod touch (which by the way it is...).
  • Reply 18 of 71
    Quote:
    Originally Posted by SpamSandwich View Post


    Why do they insist on calling this unicorn "iTV"? Everyone knows Apple doesn't have the trademark for that name.



    They actually do in almost every country (except the obvious one).
  • Reply 19 of 71
    jason98jason98 Posts: 761member
    If iTV means hooking back to cable, then I am not with you here, Apple.
  • Reply 20 of 71
    What the hell. I'll take a shot at it.



    Form factor:

    -Edge to edge glass. Like the edges of the glass on the iMac (minus the chin)

    -FaceTime camera which everyone thinks is going to be amazing... BUT. It'll just be Okay. Think about it. Isn't FaceTime MUCH better when the camera is 18in away from the persons face? Better audio. Better picture. And the feeling of a more genuine exchange. People don't want to see you chillin on your couch from like 15 ft away...

    -Siri integration, but only on your iDevice.

    -Browse content via your iDevice (iPad, iPod Touch, iPhone.) So you can bring up a TV guide wo disrupting television viewing. You can watch previews of movies and docs. And you can read much more about the content. Also. For the purpose of DVRing... you'll be able to do this remotely with the same app.



    Thats all I got. Anything more than that would probably be way off. I won't be surprised to see Apple try and rope customers into having an iDevice along side this one. The original intent of the iPod was to only make it available to Mac users through iTunes. Apple wanted to feed the ecosystem. This will be a way for them to do that. There is NOTHING that competes w the iPod touch. Its actually kind of amazing. I wouldn't be surprised if Apples TV was only available to those who had iDevices (iPod Touch iPhone iPad). They wanted to do it before but didn't have the strength. Now they have the market presence to pull it off.
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