Apple-Comcast talks likely limited in scope, user experience not a priority for cable providers
While rumors of talks between Apple and cable provider Comcast generated buzz over the weekend, one Wall Street analyst doesn't expect the discussions to go much beyond the possibility of having a Comcast-branded application available for Apple TV.
Analyst Kannan Venkateshwar of Barclays Capital believes that if a deal were to be struck between Apple and Comcast, it would likely be a simple agreement to have a Comcast channel appear on the Apple TV set-top box, alongside other options like Netflix and Hulu. The analyst covers Comcast stock for Barclays, and viewed the potential deal in light of what it could mean for the cable provider's bottom line.
"Such an arrangement would imply that any subscriber to such a service would have to be a Comcast subscriber who happens to have Apple hardware, rather than an Apple customer who becomes a Comcast subscriber," he said.
Venkateshwar went on to explain that Apple had something to offer cellular providers when it entered the smartphone market: The iPhone offered more power to users, which increased mobile data consumption and allowed service providers to sell more profitable smartphone data plans.
In contrast, Apple's current situation does not give cable providers much incentive to make an aggressive deal beyond the "inevitability" of Internet-based live and on-demand TV. Venkateshwar said Apple's experience in simplifying the user experience could be a benefit for a company like Comcast, but their history suggests that cable providers wouldn't go down that route.
For example, he said, TiVo has been around for more than a decade, and has consistently provided a better user experience than the cable boxes offered by service providers like Comcast. And yet TiVo has never been allowed into the existing cable infrastructure on a wide scale.
In his view, if a cable provider such as Comcast were truly looking to upgrade to a better user experience, it would be easier and cheaper to ink a deal with TiVo than Apple. That opportunity has been around for more than 10 years, and companies like Comcast have not gone down that route.
Word first surfaced on Sunday that Apple and Comcast have allegedly held talks for a deal that would allow Apple to bypass Web congestion on Comcast's infrastructure to user's homes. That arrangement would in theory provide faster and more reliable performance to users watching streaming video content.
There was no indication that discussion between Apple and Comcast have gone any farther than that. That's in contrast to earlier reports suggesting that Apple was working on a partnership with Time Warner Cable that would serve up live and on-demand streaming content through the Apple TV to Time Warner subscribers.
If Apple and Time Warner were in fact going down that road, it's possible that a wrench may have been thrown into those plans when it was announced in February that Comcast intends to purchase Time Warner. Apple, meanwhile, is rumored to be planning to introduce a new Apple TV set-top box as soon as April, though it's been claimed that the actual product may not ship to consumers until this fall.
Analyst Kannan Venkateshwar of Barclays Capital believes that if a deal were to be struck between Apple and Comcast, it would likely be a simple agreement to have a Comcast channel appear on the Apple TV set-top box, alongside other options like Netflix and Hulu. The analyst covers Comcast stock for Barclays, and viewed the potential deal in light of what it could mean for the cable provider's bottom line.
"Such an arrangement would imply that any subscriber to such a service would have to be a Comcast subscriber who happens to have Apple hardware, rather than an Apple customer who becomes a Comcast subscriber," he said.
Venkateshwar went on to explain that Apple had something to offer cellular providers when it entered the smartphone market: The iPhone offered more power to users, which increased mobile data consumption and allowed service providers to sell more profitable smartphone data plans.
Comcast's limited arrangement with TiVo since 2005 is seen as a sign that the company is not greatly concerned with improving its cable user experience.
In contrast, Apple's current situation does not give cable providers much incentive to make an aggressive deal beyond the "inevitability" of Internet-based live and on-demand TV. Venkateshwar said Apple's experience in simplifying the user experience could be a benefit for a company like Comcast, but their history suggests that cable providers wouldn't go down that route.
For example, he said, TiVo has been around for more than a decade, and has consistently provided a better user experience than the cable boxes offered by service providers like Comcast. And yet TiVo has never been allowed into the existing cable infrastructure on a wide scale.
In his view, if a cable provider such as Comcast were truly looking to upgrade to a better user experience, it would be easier and cheaper to ink a deal with TiVo than Apple. That opportunity has been around for more than 10 years, and companies like Comcast have not gone down that route.
Word first surfaced on Sunday that Apple and Comcast have allegedly held talks for a deal that would allow Apple to bypass Web congestion on Comcast's infrastructure to user's homes. That arrangement would in theory provide faster and more reliable performance to users watching streaming video content.
There was no indication that discussion between Apple and Comcast have gone any farther than that. That's in contrast to earlier reports suggesting that Apple was working on a partnership with Time Warner Cable that would serve up live and on-demand streaming content through the Apple TV to Time Warner subscribers.
If Apple and Time Warner were in fact going down that road, it's possible that a wrench may have been thrown into those plans when it was announced in February that Comcast intends to purchase Time Warner. Apple, meanwhile, is rumored to be planning to introduce a new Apple TV set-top box as soon as April, though it's been claimed that the actual product may not ship to consumers until this fall.
Comments
How about people who access the Internet through any ISP (e.g., via Charter broadband) get access to Comcast services via AppleTV and a subscription purchased through iTunes?
The difference here with Apple compared to TiVo is the ubiquitousness of Apple users. If this were to expand to iPads/iPhones the potential Comcast user base would grow as Apple users look for the Comcast cable-Apple TV tie-in and it could stave off the competition of the satellite companies. TiVo doesn't provide that.
Does not compute! Why?
One can be an apple customer who then subscribes to Comcast app to get additional content through different apple devices !
Sounds like someone's trying to halt the nosedive in their Netflix holdings.
The difference here with Apple compared to TiVo is the ubiquitousness of Apple users. If this were to expand to iPads/iPhones the potential Comcast user base would grow as Apple users look for the Comcast cable-Apple TV tie-in and it could stave off the competition of the satellite companies. TiVo doesn't provide that.
My first thought was, "Oh it is Barclays dissing yet another rumored Apple opportunity." My second thought was, "Which stock is the analyst attempting to prop up thanks to this rumor?" Amazingly, analysts are only talking about Netflix's stock taking a hit from this rumor. I have yet to read one story talking about what is causing Google's stock to drop ($25.11 as of this post).
Boy is that an understatement.
That is what I want to see happen. Start with Comcast (like AT&T with the iPhone) and then expand to others. Help the cable cos transition to their next, inevitable phase, but offer TV packages that they can monetize. (This would be their more lucrative data plans in the smartphone example). This would allow true competition. Sounds a lot more like 'cracking TV' than slapping a ? on a TV.
But I am also in need of something to hold my jaw up. This analyst makes way too much sense.
As a very happy Netflix customer I hope they stay just like they are as an independent company. As an AAPl shareholder that also worries what an acquisition by Google, Amazon, or Microsoft might do to Netflix I would prefer Apple to those alternatives. It make a lot of sense for Apple to buy Netflix. iTunes does alright with music but not so much with videos. They could keep the current Netflix experience and simply augment it with new releases in iTunes that you could rent for just a day or two or buy if you wish. That combination of older and original content on Netflix along with new content to rent or own would be a powerful ecosystem.
m'Kay?
No customer on earth is excited or enticed by a Comast App that lets you access your Comcast TV subscription, but on AppleTV. Maybe the benefit would be paying for your cable subscription and NOT a $10 HD box rental on top if it.....but I doubt Comcast would allow that in such a context.
No, the other only consumer-oritented move (and thus the only one Apple would care about) would be providing a Comcast App that AppleTV users could subscribe to, maybe at several different price tiers, to access different tiered allotments of Comcast cable offering.
I have Comcast Internet now, but refuse to pay for cable or a set top box. My house is more than satisfied by AppleTV + Comcast Internet.
However, it would be nice to access some basic channels once in a while, or maybe even more. And if they offered $9.99/mon, purchased through iTunes, for basic channels, and maybe $19.99 a month for a higher package, $29.99 for even more, and so on...they could attract money BACK from the people from that give up on cable and rental boxes and refuse to entertain that business.
The conversation was more about Comcast blackmailing Apple, something along the line of if Apple does not pay like Netflix then Comcast will throttle any streaming content from Comcast customer to anything Apple.
Remember USSC stuck down network neutrality, service provider can not allocate bandwidth as they like.
"Remember USSC stuck down network neutrality, service provider can not allocate bandwidth as they like.
[/quote]
"a very happy Netflix customer I hope they stay just like they are as an independent company. As an AAPl shareholder that also worries what an acquisition by Google, Amazon, or Microsoft might do to Netflix I would prefer Apple to those alternatives. It make a lot of sense for Apple to buy Netflix."
Google is working the game with their fiber. My experience thus far is not good. Just, can't get it right at some Starbucks. Apple buy Netflix not a bad idea at the right price. The build out of Apple data centers no one seems to care about is impressive. Friends live near one.
The reality is I don't think Apple will do another AT&T type deal. Comcast has many network issues and stability in major markets that it probably be one of many last mile providers. Real technological challenges present, I think, a mix.
"user experience not a priority for cable providers"
Boy is that an understatement.
"user experience not a priority for cable providers"
It has never been a priority for cable providers, once you have signed up for their service.
And give up a 30% cut? Why would anyone do that?