When Apple (NASDAQ:AAPL) enters a market it usually does so in a way that reinvents the category.
The iPod, iPhone, iPad and now the Apple Watch all broke new ground. By innovating the company has created new categories, created markets where none existed, and established itself as a leader.
That history of trailblazing leaves Apple TV a bit of a mystery. Though it has a sufficiently pleasant interface and a slightly innovative remote, the set-top box broke no new ground. Apple TV is simply not much different than the Roku boxes that preceded it, and even after various software refreshes it is not dissimilar to Amazon.com's (NASDAQ:AMZN) Kindle Fire TV devices and the Google (NASDAQ:GOOG) (NASDAQ:GOOGL) Chromecast.
It's a fine set-top box with a bit of Apple flair in its appearance, but the company's streaming media player was not revolutionary in any way. That might change, however, with the long-awaited fresh iteration of the product and its accompanying live television streaming service.
What is Apple doing?
It has been known for a while the Apple intends to launch a live-streaming television service in the style of DISH Network's Sling TV. That product is expected to have "about 25 channels, anchored by broadcasters such as ABC, CBS and Fox" for a price of $30-$40 per month, according to The Wall Street Journal. It would be tied to new TV hardware, though it might also be offered on other devices.
The streaming service, which was originally expected to launch in the fall, sounded promising enough, but it was really just a variation on Sling TV leaning on the major broadcast networks rather than the DISH service's mix of channels aimed at millennials. Apple might also have to delay its TV plans because it plans not just to offer networks, but local programming as well, Re/code reported.
That could be a game changer that makes Apple's streaming service a legitimate alternative to traditional wired cable. Sling plays at the edge, going after cord cutters and cord nevers. Apple would be launching a frontal assault on Comcast (NASDAQ:CMCSA), Time Warner Cable (UNKNOWN:TWC.DL), Charter Communications (NASDAQ:CHTR), and every other cable player.
Of course, pulling this off will not be easy, which explains why Apple has not launched its service and might not do so in the planned time frame.
Why is this a big deal
Currently, traditional wired cable and satellite companies have an exclusive hold on local cable. That means they are the only places where people can watch the local news or view content such as regionally televised sporting events. Yes, options such as traffic, weather, and even most sports can be found online or had at a price, but there's a convenience to accessing them through cable when most bedrooms and living rooms have TV.
Select local channels are available online through single-network services such as the Watch ABC app. But of the two big live streaming plays, DISH's does not offer this content, and Sony's (NYSE:SNE), which offers a cable-like service at cable-like prices, has most of it, but only in the limited markets it currently serves. If Apple can make a deal for this content, it would give people localized television service while cutting cable and satellite out of the loop. That means kids would still be able to see school cancellations on snow days and mom and dad could check the local traffic report in the same way they do now while maybe paying much less.
Is this going to happen?
It's not easy. It took Apple two years to get "the rights to show live programming via its Watch ABC app, and its livestreams remain limited to viewers in eight cities," according to Re/code. It's also possible that even if Apple can get the streaming rights, so many different feeds would require "the broadcasters to build new streaming infrastructure," the tech news site reported.
Apple, the article reported, understands that while local news and other programming do not fit with the traditional image of a cord cutter, the company is building a service aimed at a much broader audience.
Apple's pitch to TV networks is that it wants its service to have mass appeal -- "this is supposed to be for 30 million people," says one executive who has talked to Apple -- and it believes local TV will be part of that. An alternative explanation: Apple may also be courting TV executives who would like to believe that local TV is important as the face of the network.
It's a bold vision; local content has always had a place in television, and Apple could become the only streaming service that offers it. What's clear is that if it does happen, it's not ready yet -- Apple has not made any deals for local content, according to Re/code.
Will it work?
If Apple can make the deals for a streaming service with local content that it sells at a better price than cable then it should have a hit on its hands. Apple has a loyal customer base, and the major cable companies are not popular even with their own customers.
Pulling this off will clearly take some time -- obviously more than Apple counted on -- but it could very well be worth the wait.
The current live streaming and other options for cord cutters have limited appeal. Apple is clearly trying to create something a little closer to what people already have, but in a streaming format. If it can pull it off, the company could cause a mass exodus from cable.
Editor's note: The story has been updated to reflect that Sony does offer some local networks in the markets it serves.
Daniel Kline owns shares of Apple. He has used Apple TV but prefers Amazon's Fire box. The Motley Fool recommends Amazon.com, Apple, Google (A shares), and Google (C shares). The Motley Fool owns shares of Amazon.com, Apple, Google (A shares), and Google (C shares). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.