[opendtv] Pushing the Right Buttons

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Fri, 19 Jul 2013 09:19:16 -0400


Pushing the Right Buttons
Apple’s Move Into TV Relies on Cooperation With Industry Leaders

Published: July 17, 2013
When Apple wanted to revolutionize cellphones, it held hands with AT&T. The 
partners fought endlessly, but the public loved the finished product: the 

Now, as Apple tries to reimagine television, it is taking the partnership route 
again, collaborating with distributors like Time Warner Cable and programmers 
like the Walt Disney Company on apps that might eliminate the unpleasant parts 
of TV watching, like bothersome set-top boxes or clunky remote controls.

Apple’s broader strategy — what its chief executive, Timothy D. Cook, recently 
called its “grand vision” for television — remains shrouded in secrecy, as 
everything Apple-related tends to be. Some analysts continue to predict, as 
they have for years, that the company will someday come out with a full-blown 
television set.

Whether or not an iTV ever materializes, the company’s more modest steps, like 
improving the $100 Apple TV box that 13 million households now have and adding 
access to cable channels through the box, suggest that its strategy stands in 
stark contrast to Google’s, which is contemplating an Internet cable service 
that would compete directly with distributors like Comcast and Time Warner 

Reports emerged earlier this week that Google has held talks with several 
channel owners about licensing channels for such a service, but no content 
deals are within reach.

Apple weighed something similar years ago, but its executives concluded that it 
should work with the industry’s powerful incumbents, rather than against them.

“Apple’s probably going to have greater access to content by deciding to 
cooperate,” said Natalie Clayton, who oversees digital video research for Frank 
N. Magid Associates.

Case in point, Apple last month turned on HBO and ESPN apps for Apple TV 
owners, much to the delight of all involved. But those work only for people who 
have an existing cable or satellite subscription.

Coming next is an app from Time Warner Cable, allowing some of the company’s 12 
million subscribers to watch live and on-demand shows without a separate 
set-top box. The app will effectively add an Apple layer on top of the TV 
screen, providing what its proponents say is a programming guide that is far 
superior to anything offered by Time Warner.

Apple has talked in-depth with other big distributors about similar apps, 
according to people involved in the talks. Its intent is to collect a fee from 
distributors in exchange for enhancing their television service and in that 
way, theoretically, make subscribers more likely to keep paying for cable.

“They’re trying to apply their software expertise, their user interface 
expertise,” one of the people said. (The people, both at distributors and 
programmers, insisted on anonymity because they said public comments would 
interfere with the private talks with Apple.)

Apple has sought support from programmers as well. It has proposed, for 
instance, an ad-skipping technology that would compensate networks for the 
skipped ads by charging users. While the idea is far-fetched, it intrigued some 
of the channel owners who were briefed about it and excited Apple followers 
when it was first reported by the technology writer Jessica Lessin earlier this 

For Apple, further moves into television could neutralize some of the 
skepticism about the company’s future since the death of Steve Jobs in 2011. 
Investor concerns that the company might not have another iPhone- or iPad-level 
innovation on the way have dragged down its stock price, which topped $700 for 
the first time last September, but has recently hovered closer to $400.

For the time being, Apple TV is a small part of its business — something best 
suited to “hobbyists,” as Mr. Cook put it at the D: All Things Digital 
conference in May. At that time, he hinted at the opportunity Apple saw in the 
living room, calling traditional TV watching “not an experience that I think 
many people love” and “too much like 10 or 20 years ago.”

It is easy to see how Apple could help. Products like Apple TV and Roku, which 
connect TVs to the Internet’s wealth of streaming content, have proliferated 
because the set-top boxes that cable companies supply have not kept up with 
shifts in consumer behavior. But the streaming boxes remain a somewhat niche 

Apple could choose to market its box more heavily, especially as competition 
heats up from Amazon and other companies. Or it could eliminate the need for 
any box at all by building its own TV set. Reports this week that Apple may 
acquire PrimeSense, a maker of motion-sensing technology that could be used to 
control a TV without a physical remote, prompted a new round of guessing about 

In Apple’s partnership approach, some see the company placing a multitude of 
bets, recognizing that television could evolve in any number of ways.

Through Apple TV, it is simultaneously supporting established distributors and 
programmers as well as a parallel universe of streaming TV, as represented by 
Netflix, Hulu and Amazon.

Last month, in a little-noticed move, the company approved an app for Sky News, 
the British-based cable news channel. Sky could already be streamed live free 
on the Web, but by creating an app for Apple TV, the channel gained access to 
the television sets in 13 million homes without the need for complex 
negotiations with cable companies.

The Sky News app is free, but the software that powers it, from a company 
called 1 Mainstream, also allows for à la carte subscriptions.

Asked about the implications of the app, Rajeev Raman, the chief executive of 1 
Mainstream, said: “It’s a learning year for Apple. And it’s a learning year for 
all of us, to say, O.K., what really does work?”

In effect the app is a more direct route to consumers for Sky News. Bloomberg 
TV, already available on cable, tried something similar earlier this year by 
cutting a carriage deal with Aereo, the streaming service backed by Barry 
Diller. But Aereo is antagonistic toward networks and existing distributors; 
Apple, at least for now, is positioning itself as a friend.

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