Rumors that Apple (s AAPL) is cooperating with TiVo (s TIVO) on the next generation of its Apple TV device caused TiVo’s shares to spike earlier this week, going up as high as $9.24, only to fall back down to $8.51 in after-hours trading today. The rumors were prominently picked up by the Barron’s blog Tech Trader Daily, but short on details, and there’s a lot to be skeptical about:
- Apple’s upcoming TV device is supposedly all about streaming, foregoing a hard drive for very little Flash memory, but TiVo DVRs are still local content devices at heart. The whole notion of DVR time-shifting is built around the idea that you save shows and movies on your local hard drive.
- Steve Jobs doesn’t like broadcasting. The iPod was initially built on chips that made it possible to receive FM radio, but Apple never embraced this functionality.
- Apple would have to support CableCARD to make it possible for its users to record cable TV programming – which could turn the Apple user experience into the same nightmare that everyone else is facing. Not going to happen.
However, there’s still hope for TiVo fans: From everything we know so far, it looks like the next-generation Apple TV device will be based on iOS, essentially bringing iOS apps to the TV screen. Now what if TiVo was working with Apple on an app that made it possible to stream content from your DVR straight to your TV? This would enable TiVo users to easily enable multi-room DVR capability by just popping an Apple TV next to every other set they own. Want to watch TiVo in your entire house? There’s an app for that.
The idea isn’t as far-fetched as it might seem. TiVo is already in the business of selling software that allows you to watch your recordings on your computer, so adding the Apple TV to the mix would make sense — and it could bring in some additional revenue, provided that the app isn’t given away for free. It could also help the company to stay relevant in an age where over-the-top devices and cheap no-name DVRs provided by pay TV operators are eating its lunch.
So why should Apple do this? After all, isn’t the company planing to make money with $0.99 streams of TV shows? Again, it’s helpful to take a look at the iPod. 99-cent pricing helped to popularize the iPod, but it’s not paying the bills for Apple, which only keeps only a few cents on the dollar. And the iPod wouldn’t have been a huge success if it weren’t for the availability of free content. I’m not even talking about piracy for once, but about consumers ripping their own CDs. Well, the same can’t legally be done with DVDs, which is why it doesn’t hurt Apple to have another legal avenue to get content on its device.
Apple is betting that people will eventually buy all their media à la carte. But so far, some 90 percent of all U.S. TV viewers still subscribe to pay TV. The company needs to offer those 90 percent some way to ease into the Apple TV ecosystem. An app strategy might just be the right way to do so.
Related content on GigaOm Pro: Connected Consumer Market Overview, Q2 2010 (subscription required)