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Did Apple preview their TV strategy for the Presidential Debate?

Sections: Apple TV, Features, Macintosh/Apple Hardware, Opinions and Editorials, Originals

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Sharp-eyed Apple TV users last night noticed that the WSJ icon on the Apple TV home screen changed from its usual appearance to a special Presidential Debate 2012 icon. Apple has also confirmed that its iPad mini event will be livestreamed to Apple TVs via a new Apple Events app that appeared today.

The Apple TV has not received a large amount of attention (it is still just a hobby, after all), and this minor occurrence will no doubt be eclipsed by the iPad mini announcement. But it deserves both a brief review and an answer to one question: Does the AppleTV exist as an entertainment app hub, an extension of the iPhone/iPad, and does this new app-streaming model preview Apple’s go-to-market strategy for conquering the television market?

To Market, To Market

Steve Jobs, in response to a question regarding Apple entering the television business, identified the lack of a viable go-to-market strategy as one of the biggest challenges preventing Apple from making such a move. Regional monopoly cable carriers with incompatible technologies make it challenging to deliver anything functional—just look at the universal cable card boondoggle. Despite the existence of a defined standard, most of us still use a set top box that is provided by a cable provider, rather than a single card we can easily swap between multiple televisions/devices. Moving to a different cable company requires a different box and a new monthly rental—a steady revenue stream for the Time Warners and Comcasts.

Convergence

The fact that the AppleTV runs iOS instead of Mac OS X (as it once did) is no coincidence. Three factors are converging which could allow Apple to provide a revolutionary television experience, and all point to the fact that cable companies might have reason to be very scared. If Apple can repeat their iTunes play and cut out the middle man (cable providers instead of record stores, in this situation), apps controlled through the App Store could become the main way most of us watch TV in the future. The critical pieces of this disruption are:

  • Critical mass of app developers, apps, and user familiarity with apps: Almost all major studios/networks provide some kind of app access to their online offerings, though many require some form of subscription to a cable service to use the app. The popularity of the Netflix, Hulu Plus, and Amazon Prime apps prove viewers are comfortable using these apps to access their media, and developing/deploying smartphone apps is now a standard part of doing business. No company can complain that hiring an iOS developer is too difficult/expensive.
  • A large installed base of iOS devices: This provides an attractive market for content providers, as they will need to make up revenue they currently generate from cable companies in this new direct-to-consumer world. Rather than large payments from a few partners, content providers may have to shift their business models to accommodate subscription-based revenue. They should, however, get used to some budget cuts, as the pricing structure of television content has grown way out of proportion.
  • The Death of Flash: True, this format is not completely dead, but it sure ain’t what it used to be. The official discontinuation of Flash for mobile Android devices highlights the fact that H.264 has won, and at this point it is rare to find a video site that supports only Flash and has a large viewing base. With a global standard supported by a majority of modern smartphones and media streaming devices like the AppleTV, there is little argument to be made about the burden of encoding media files into multiple formats.

The App is the New Channel

Rather than trying to provide a service to a disparate group of cable set top boxes with their own unique software requirements, Apple has been quietly building a global fleet of standardized content delivery mechanisms: iOS devices. The biggest challenge they have in pushing content out to millions of screens worldwide is picking the right size for the video. Getting that content onto big screens relies on two truly global standards—HDMI and the Internet—completely cutting out cable operators, proprietary cable box OSes, and even skipping the vagary of television formatting (though the move to digital TV has greatly reduced that challenge).

Apps in this new entertainment world would act as content hubs/subscriptions to a particular provider, and would be chosen a la carte. A direct-to-consumer subscription (through iTunes, obviously) rather than bundled as a cable package could be the wave of the future. Apps are on-demand, and the rise of the DVR and day-after streaming has shown that people really want to watch their shows, but at the time and place of their choosing. The apps also provide a real interface; if you think about it, old school cable TV really had no “interface” as such. You either flip through channels sequentially or hop through your favorites, but browsing TV channels is not a simple task. Those cable boxes that do offer a user interface serve up something that is either straight out of the 8-bit 1980s or is graphically beautiful but confounding, and the whole experience is further muddled by overly complex remotes.

An app interface to television gives you the ability to choose content the same way you interact with music on your iPod. Pick a genre, pick from your favorites, do a text-based search…best of all, if everything is on demand, you can watch whatever you want when you are ready, or choose to watch live streams if your schedule aligns with the event. Curated apps and recommendation engines could do for TV watching what Flipboard has done for news, offering up shows you might be interested in based on your past viewing history, which is less burdensome than Netflix’s rating system. Sadly for the cable companies, Apple may render them little more than dumb pipes just as they did to the cell carriers. Still, given the massive improvement the iPhone ushered in compared to “smartphones” available previously, maybe that would be a big win for us as consumers.

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