Blog Post

AirPlay Licensing Deal Could Be Apple’s Real Living Room Play

Apple (s aapl) is considering offering AirPlay video streaming to third-party device manufacturers via licensing, Bloomberg reports. It’s an idea that could provide a greater presence for Apple in the living room, but also potentially cost the Apple TV its tentative foothold there.

Bloomberg cites “two people familiar with the project” as describing a new plan Apple is considering whereby it would license AirPlay to makers of televisions, receivers and other consumer electronics that allow for video playback. Currently, AirPlay tech is available for licensed use, but only for audio streaming, as in the Denon receiver Geoffrey recently checked out. Adding the ability to stream video would mean users could potentially stream content from their iOS devices or iTunes libraries directly to their TV or home entertainment setup, without the need for an Apple TV or tethered iOS device to act as a receiver.

Were the deal to go through, it could potentially allow Apple to expand its living room presence. Apple so far hasn’t been able to succeed with digital video distribution the way it has with online music sales, and a recent study found it trailing the industry leader Netflix (s nflx) by a wide margin. Part of that gap has to do with how Netflix is available on such a wide selection of devices, including Internet-connected televisions, home gaming consoles, computers, mobile devices and even Apple TV. Licensing AirPlay video streaming would unlock it from the confines of Apple’s own products, allowing it to begin to compete with Netflix in terms of consumer platform choice.

Greater availability of AirPlay devices would also better leverage the impressive iOS user base Apple has managed to accumulate. Right now, AirPlay is really only a value-added feature if you have an entire ecosystem of Apple products. If you only own one iPhone or an iPad, there’s very little that AirPlay brings to the table. Licensing would heighten the value of AirPlay as a selling feature for all iOS devices.

Of course, the trade-off is that consumers would have one less reason to buy Apple TV. Right now, much of the appeal of the device comes from just two of its features. First, it’s a great Netflix client. Second, it works flawlessly and without much effort for users who want to stream video from iOS device to TV. Sales would almost certainly fall if Apple made AirPlay more available from other sources.

But that could be a loss Apple is willing to accept. At last known count, the Apple TV had sold just over a million units in late December. It’s a good number, especially when compared to the sales of its predecessor, but by no means is the Apple TV the sales star that the iPhone or iPad is, and Apple hasn’t seen fit to crow about any other sales milestones for the device since, which isn’t a great sign regarding its fortunes. If the Apple TV dies but in exchange, Apple gains a broader foothold in the living room that it can use as leverage in negotiations with film and television content providers, it might be a worthwhile bargain for the Mac-maker.

What do you think? Would “AirPlay Video-enabled” stickers on TVs and home theatre receivers affect your buying decision? Does the Apple TV have legs without AirPlay exclusivity?

11 Responses to “AirPlay Licensing Deal Could Be Apple’s Real Living Room Play”

  1. Ian Kemmish

    What’s in it for the manufacturers? My TV already handles both WAN Internet TV and local DLNA servers. Why should Matsushita pay a big fat fee to Apple for doing something it already does, and does better than Apple? (I can at least watch in 1080p, for example.) It would make much more sense for Apple to stop being being the only manufacturer not to be a member of the DLNA alliance. It _might_ mean that the next computer I buy is still a Mac.

    • You got that right. Add to that Apple’s lousy inventory and equally lousy pricing and who would pay the premium for an Apple equipped TV?

      If Apple wants to compete with the likes of Roku etc, Then Apple needs to come up with a reason for the makers of Roku and the game consoles to include Apple in their repertoire, something Apple has not done.

  2. I see it differently, I believe apple tv has a huge potential. Apple will never go joint ventures. Instead I believe one day, they will introduce completely own TV set.

    Their wifi and entire compatibility with OS and all devices is impressive. Sony tried that, but the hardware – software doesn’t work.
    Philips is way behind. None of the companies have the edge and Apple’s Know-How

  3. My thesis on this rumor is that it’s the beginning of an Apple Inside strategy, whereby Apple licenses the skin, bones and brain of Apple TV to TV set makers as part of their ubiquity play in the living room.

    Why? The alternative for Apple is building their own TV, which has lots of downside; namely, a commodity product in an entrenched ecosystem (cable/sat, set-top box, broadcast, HBO, movies, CE) on a device that lacks the product obsolescence lifecycle that Apple tunes its R&D for (i.e., people keep TVs 10+ years).

    At the same time, Apple can not NOT own the living room, given the piece parts they have assembled to fuel the digital media lifestyle. It’s too strategic for them.

    I ruminate on this thesis further here:

    The Magic Adapter: Apple TV and the Battle for the Living Room

    Check it out, if interested.



  4. Eduardo

    Yes, I think it would be a great idea for Apple in order to achieve a higher market share on video. Taking into consideration how easy is the Apple tv system to use together with all other iOS devices it would be a huge success for Apple.

  5. I want content. I own two Apple TV’s and the addition of the MLB package was great. I need more though. So if they liscense airplay thats fine. I’d like to see additional apps for my Apple TV though. I definitly don’t want to have to buy a new device.

  6. There is no way on this earth that a Jobs-run Apple is EVER going to let its stuff run on someone else’s hardware. That opportunity was there when the company was struggling, and he’s not going to Never. Ever. Ever.

    • Lucian Armasu

      Unless they finally realized that the best strategy to capture market share is a strategy like the one used by Android and Windows, and not by keeping the tech all for themselves.

      • Show me one instance in which Apple has ever allowed complete control of the software experience to rely on other companies’ hardware tech, even if it meant not gaining control of that segment of the market. Even when the company was on the skids. It’s not the Apple way, and I can’t see them changing tack, now.

    • Michael

      I can see Apple license this technology on the AirPlay “receiving” end. So that not “any” product can AirPlay from. Apple currently has the audio of this technology already open to third party. Case in point: Pioneer and a few other receivers have AirPlay (audio only) enabled on them. So NO, I can not see why Apple would not go all the way with this since they already open up the audio side of it, also the video streaming of AirPlay is new to there own products as well . But like I said I believe only opening up the “receiving” side of the technology. Otherwise, Android and the likes will be more than happy to take that technology from Apple and run with it!