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Is This Apple's TV Game Changer?

Tim Cook has already confirmed that Apple (NASDAQ: AAPL  ) has a "grand vision" of the TV. Jessica Lessin, who was The Wall Street Journal's top tech reporter before spinning off on her own last month, has an idea of what the Mac maker may be planning.

Apple wants to allow viewers to skip ads and commercials, and is willing to pay the media companies the difference. The company wants make a "premium" version of television service where users could skip ads. It's not clear if Apple would share these costs by charging a fee for the "premium" version, or if it would foot the bill itself.

Such a system would undermine the current economics of the industry, which still relies heavily on ad dollars and the TV ratings that drive those marketing budgets.

Time Warner Cable (UNKNOWN: TWC.DL  ) has been named as one of the cable operators most willing to play ball with Apple, which entails ceding control of the interface to Apple. The countless number of interfaces that TV users currently have to cope with was always one of the biggest problems that Steve Jobs saw in the status quo, which he detailed in 2010:

Well, you just end up with a table full of remotes, a cluster full of boxes, a bunch of different UIs -- and that's the situation we have today. The only way that's ever gonna change is if you can really go back to square one and tear up the set-top box and redesign it from scratch with a consistent UI across all these different functions and get it to the consumer in a way that they're willing to pay for it. And right now, there's no way to do that.

That's why Apple's current set-top box mostly uses the same basic interface among all "apps," even with integrated third-party services like Netflix.

Cable operators like Time Warner aren't too keen on the idea of giving up advertising revenue, but it might be worth partnering with Apple to fight the trend of cord cutting. Service fees from customers are larger than advertising revenue, so if Apple can convey an ad-skipping value proposition that translates into higher service fees, it could be worth it. For example, Time Warner's video service revenue last quarter was $2.67 billion, much more than the $228 million in ad revenue.

Apple has quite a large following of loyal users, and if Time Warner can piggyback on the Mac maker's user base, it might be worth making some concessions.

Right now, the iPhone is Apple's greatest product. Even if an Apple TV becomes its show-stealer, the company will eventually destroy that, too. Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

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  • Report this Comment On July 17, 2013, at 9:25 AM, twolf2919 wrote:

    I don't think Apple will have to come to a "content agreement" with the cable providers because I think Apple will simply become the cable customer's representative! Currently, we have a cable box under our TV with a COAX going in and HDMI out. We have, as Steve Jobs complained, a myriad of remotes to control the TV, the cable box, possibly a DVR, etc.

    Now, imagine if Apple handled your "Cable contract" for you! Essentially your end of the cable connection will go to Apple's data center instead of to your house and Apple then streams whatever you want to see to your Apple TV (or Apple TV box). You'll use your iPad, iPod, iPhone to choose what you want to see (I first wrote about this idea and others for Apple TV 6 months ago in a blog post:

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