Report: DVR could turn Apple TV into multi-billion dollar business

Posted:
in iPod + iTunes + AppleTV edited January 2014
By integrating digital video recording (DVR) features into Apple TV, Apple stands to transform its niche media hub business into a serious growth driver worth over a billion dollars annually, according to one Wall Street analyst.



Reacting to a patent filing uncovered by AppleInsider on Thursday, American Technology Research analyst Shaw Wu said he sees DVR features like those portrayed in the filing cropping up in a third or fourth revision to Apple TV, turning the device into a real business rather than just a "hobby."



"We estimate AppleTV to be a very minor contributor today at ~0.3-0.4 percent of revenue or $100-125 million annually," he wrote in a note to clients.Â*"We believe adding the ability to watch and record live TV could turn this into a billion dollar, if not multi-billion dollar business."



Wu said the cost of hardware components needed to equip the media box with DVR features is almost negligible, or about $12-15 in incremental cost per unit.

Â*Â*

"We (as well as many others) have been clamoring for DVR and/or TV tuner capabilities since the introduction of Apple TV 1.0 in January 2007 and even Apple TV 2.0 with movie rentals in January 2008," he added. "We are pleased to see Apple listening to customers similar to what it has done with iPhone, with adding native access to Exchange server."



The analyst, however, took pause in his report to note that there have been patent filings from Apple in the past that have not come to fruition "yet."Â*One example, he said, is Bluetooth stereo headsets which have yet to ship but "will at some point as cost of components decline."



Separately, he cited his own sources as saying that Apple and Sony appear to be in the final negotiation stages of bringing Blu-ray to Macs.



"Thus while near-term trends look difficult with a looming recession and a slow-down in consumer spending, we continue to believe Apple is well-positioned to weather the storm better than most with its strong fundamentals," he wrote. "[We] reiterate [our] BUY rating and price target of $175."
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Comments

  • Reply 1 of 157
    I voted "I'd likely purchased" but I really want more information. If Apple goes this route (make AppleTV a DVR), then Apple should buy Tivo. Have two media client set-top boxes: a low-end basic AppleTV non-DVR set top box (something that cost less than $179) and an Apple Tivo product (mid tier and high end).



    I also see Apple partnering with Cisco in this realm.
  • Reply 2 of 157
    wtbardwtbard Posts: 42member
    Since I don't have an HDTV, Apple TV is of no use to me. Perhaps in a few years I'll get one. When I do, it will require new furniture so it will be an expensive proposition.
  • Reply 3 of 157
    boogabooga Posts: 1,080member
    Quote:
    Originally Posted by GuyInFlorida View Post


    I voted "I'd likely purchased" but I really want more information. If Apple goes this route (make AppleTV a DVR), then Apple should buy Tivo. Have two media client set-top boxes: a low-end basic AppleTV non-DVR set top box (something that cost less than $179) and an Apple Tivo product (mid tier and high end).



    I also see Apple partnering with Cisco in this realm.



    Agreed. TiVo is best-of-breed here, widely recognized as the best user experience, and have already explored all kinds of partnerships and technological directions. With the cash on which Apple is sitting, to go the DVR route alone would probably just lead to continued stagnation for the AppleTV product line.



    TiVo's market cap is less than 850M. Apple could buy it with chump change.
  • Reply 4 of 157
    I really hope Apple will take this analyst's advice. It is too great of an opportunity to pass up and will definitely give Apple another piece of the consumer market share. It would also be great if that thing had a super drive in it - or maybe even a Blu-Ray drive.
  • Reply 5 of 157
    tacojohntacojohn Posts: 980member
    They could just release an add on that works through the USB port on the back? just make it optional for people...
  • Reply 6 of 157
    freenyfreeny Posts: 128member
    Nothing like stating the obvious



    But I guess without articles like this many on Wall Street wouldn't have a clue.
  • Reply 7 of 157
    Agreed. Make this another mostly soft update with perhaps the need of a small add-on via one of the rear ports. There may be some additional cost to existing TV owners, but I'm sure most will pay for the added value.
  • Reply 8 of 157
    teckstudteckstud Posts: 6,476member
    I'll believe this when I see it. It's hard to believe Apple would have launched this product in the first place without that feature. I don't see Hollywood greenlighting Apple the rights to record their content. But it would be great.
  • Reply 9 of 157
    tenobelltenobell Posts: 7,014member
    I don't think DVR in itself will do much to help ATV. It may have been different when DVR was rare But today cable companies dominate the DVR market that I'd unlikely to change.



    What would help ATV more is to open up to other video download services. Such as Netflix, Hulu, and Joost.
  • Reply 10 of 157
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by AppleInsider View Post




    Separately, he cited his own sources as saying that Apple and Sony appear to be in the final negotiation stages of bringing Blu-ray to Macs.

    ][/url][/c]





    And there you have it. Blu-ray to all Macs- esp the next gen laptops and iMacs. Finally no more discussion on whether there will or why there should not be.
  • Reply 11 of 157
    akacakac Posts: 511member
    Tivo used to be the best experience. I still love them, but here are a few things that make it not the best anymore:



    1) No PIP while in the channel guide or other places.

    2) Tivo HD/S3 is very slow in many areas.

    3) Tivo HD/S3 does not work with SDV. This means I can't even use it here in Austin.

    4) Constant bugs in HD/S3 software make it like a 2 year beta project.



    I love Tivo, but HD/S3 has seriously made me unhappy with them.
  • Reply 12 of 157
    abster2coreabster2core Posts: 2,501member
    Quote:
    Originally Posted by teckstud View Post


    And there you have it. Blu-ray to all Macs- esp the next gen laptops and iMacs. Finally no more discussion on whether there will or why there should not be.



    Not to burst your bubble, but how did, "?Apple and Sony appear to be in the final negotiation stages of bringing Blu-ray to Macs." come to be, "And there you have it. Blu-ray to all Macs??"
  • Reply 13 of 157
    marzetta7marzetta7 Posts: 1,321member
    Awesome! Throw in a BD-R drive into the AppleTV and there you will have the ultimate entertainment hub IMO...



    1) Dowload Music and Movies from iTunes

    2) Record Live TV with DVR

    3) Burn any wanted TV programs onto BD disc via its BDR drive.
  • Reply 14 of 157
    tulkastulkas Posts: 3,754member
    Makes sense for Apple to consider this. Given Jobs desire to find ways to include recurring revenue with Apple devices, this would be a built in way to collect consistent, recurring revenue. iTune/iPod provides very inconsistent recurring revenue. Macs provide zero, other than perhaps .Mac. iPhone is obviously the business model of choice, as it provides ongoing, consistent revenue.



    DVR functionality would allows AppleTV to generate not only revenue through media sales and rentals as it does now. It would generate another stream of consistent revenue, though less than iPhone on a monthly basis, through a required monthly subscription fee, much as TiVo does now. So, a AppleTV with DVR would give them two recurring revenue streams, which makes it ideal, so long as it is implemented and marketed properly.
  • Reply 15 of 157
    virgil-tb2virgil-tb2 Posts: 1,416member
    Not to burst any bubbles, but there have been "insider reports" for more than a year that Apple has many different configurations of AppleTV already working internally. People have seen AppleTV's with optical drives, AppleTV's with DVR aspects etc. in a variety of price-points and configurations working in a lab somewhere in the depths of Apple HQ.



    They do this kind of thing all the time with products, especially when entering a new market. The existence of these working models (and even the patenting of same), does not necessarily imply they will be available for purchase. That's a separate decision.



    That being said, the complete failure of their attempts to get any digital content from the media companies might drive them to put optical drives and DVR capabilities on the market in the short term. IMO they are hoping to do an end-run around the traditional networks and echew physical media altogether, but scaling back their aspirations a bit might give them more momentum at this point. Could happen.
  • Reply 16 of 157
    I had a roommate with Tivo. It was fine. But once I moved out, I didn't find it worth the service charge for how rarely I used it. If AppleTV had DVR functionality without the service charge, I would use it much more.



    I realize ~$13 a month is not a ton, but for how often I would use it, I'd rather buy a few more beers with that cash.
  • Reply 17 of 157
    SpamSandwichSpamSandwich Posts: 31,504member
    Quote:
    Originally Posted by TenoBell View Post


    I don't think DVR in itself will do much to help ATV. It may have been different when DVR was rare But today cable companies dominate the DVR market that I'd unlikely to change.



    What would help ATV more is to open up to other video download services. Such as Netflix, Hulu, and Joost.



    Netflix is the undisputed leader of through the mail DVD rentals, but they also have slim pickings for video on demand. The bottleneck is the studios. Apple clearly needs to step up and offer to digitize movies for the studios on their dime, otherwise this will stretch out for an eternity.
  • Reply 18 of 157
    boogabooga Posts: 1,080member
    Quote:
    Originally Posted by Akac View Post


    Tivo used to be the best experience. I still love them, but here are a few things that make it not the best anymore:



    1) No PIP while in the channel guide or other places.

    2) Tivo HD/S3 is very slow in many areas.

    3) Tivo HD/S3 does not work with SDV. This means I can't even use it here in Austin.

    4) Constant bugs in HD/S3 software make it like a 2 year beta project.



    I love Tivo, but HD/S3 has seriously made me unhappy with them.



    So what DVR is better? It's sure not the ones supplied by the cable or FiOS companies.
  • Reply 19 of 157
    tulkastulkas Posts: 3,754member
    Quote:
    Originally Posted by TenoBell View Post


    What would help ATV more is to open up to other video download services. Such as Netflix, Hulu, and Joost.



    Not going to happen. This would be like saying the should have opened iPod to other paid music services. You could argue that this might have increased iPod market share, but it definately would have eroded the additional revenue stream. Obviously, as with iPod/iTunes, if you build a compelling eco-system, you don't need to open it up to drive the device sales and you keep your recurring revenue. Apple is all about value-added products now to revenue above ticket price of the device.
  • Reply 20 of 157
    I put "i'd probably get one" but really I'm more inclined to "check it out" as posted above, I'd need more info.



    My current DVR has twin tuners, so records 2 programmes at once while watching a recording, or even watching a third channel as long as its on the same Mux as one of the other channels.



    So THATS what Apples gotta beat for me to bite. I can't see them doing that in a 1st Gen product.



    I've also got a 160GB drive 3.5" and its "big enough" but I'd be happier with 250GB or above, given Apples pursuit of "as small as possible" that will mean a 2.5" drive as currently in the aTV which will add to the overall cost of the unit, at anything approaching a useful amount of recording time.



    My DVR only has recordings on it, no photos, no music (well a little off the digital radio) and knowing the way I like my aTV filled up to near capacity with a variety of content I'm not so sure a 250Gb drive would cut it!



    unfortunately thats a lot of boxes not ticked.



    the only thing they might win out on is on interface, and I just cant see that happening either, the REAL golden shot for a good PVR is series linking and rapid searching of the EPG nail that and make it a pleasure and you have something, unfortunately if one has to constantly juggle with recordings/disc space, then the experience becomes a pain in the backside.



    All this assumes a stand alone device working independent of any computer..



    Integration with iTunes and the net also could more than likely add pluses.



    by all means "bring it on" and let us see what its capable of
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