Apple TV on the Outside, Same Old TV on the Inside
That’s the scenario Barclays analyst Anthony DiClemente sketches out in a new note. He figures that Apple could certainly come up with a cool piece of hardware — he imagines one that looks like a “large-scale iPad” — that would tie together the Internet with Apple’s existing suite of iOS apps and services.
But DiClemente doesn’t think Cook will be able to break open the traditional cable TV bundle. Which means that if you watch TV on Apple TV, it’s going to look a lot like the TV you’re already watching now. And it will cost the same to get that stuff to your set.
DiClemente is a media analyst, not a hardware guy, and his report focuses primarily on the reasons it will be so hard for Apple — or anyone — to truly disrupt the TV programming/distribution business. But here’s some of his speculation about the box, which is similar to other industry guesses:
- He doesn’t think it’s coming in 2012.
- He thinks it will use Apple’s Siri voice control as a “groundbreaking interface.”
- He imagines it could sell for $1,500.
- He thinks it could be “so much more than a TV — including gaming, video communication, content delivery, apps, computing and all the capabilities of the current Apple TV.”
All good, so far. But again, the problem will be when it comes to the TV programming part.
DiClemente argues, convincingly, that TV programmers don’t have any incentive to stop selling the bundles they’re already selling for big dollars (in seven- and 10-year deals).
The “affiliate fees” that cable providers pay for the bundles are now up to $30 billion a year, or about $30 per subscriber per month. And programmers aren’t going to do anything that weakens that revenue stream.
So whether Apple ends up working with the cable providers like Comcast and strikes deals that use Apple TVs in lieu of a cable box, or whether Apple works with the cable programmers like Viacom and uses Apple TVs for a cable-free “over the top” service, the result would be the same: Consumers would have to pay a big monthly fee for a big package of TV channels, most of which they wouldn’t use.