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By now, we’ve all heard plenty of rumors about Apple (s AAPL) building an actual TV set — a rumor that was only fueled by the recent minor and somewhat underwhelming update to its existing Apple TV set-top-box. The question is: What kind of TV services would Apple offer on such a device? BTIG analyst Richard Greenfield examined a few theories in a very smart blog post (login required) Wednesday, and his conclusion may surprise you: Apple shouldn’t try to reinvent the wheel, he suggests, but instead partner with DirecTV (s DTV) or Dish (s DISH) to launch an Apple TV product with access to live TV feeds.
The speculations around a new Apple TV product were fueled by the Steve Jobs biography, which has Jobs saying that he “finally cracked” the challenge of building an integrated TV experience that’s easy to use. Greenfield notes in his blog post that Jobs essentially described the exact opposite of your typical cable TV experience, with its hundred-plus channel guide and its overwhelming remote controls. In other words: For Apple to revolutionize television, it would have to offer access to linear TV, with a new interface.
Ditch the cable UI
That’s something Google (s GOOG) has been trying with its Google TV platform, but the approach is still very cumbersome. Google TV set-top boxes require not one, but two HDMI cables to access pay TV, and the ugly face of the cable guide still resurfaces all too often. Apple’s only solution to the problem would be to either take an existing service and completely reinvent its UI, or create a whole new offering to compete with Comcast & Co.
Jobs reportedly tried the latter a few years back, but was rebuffed by the networks who didn’t want to endanger their lucrative deals with existing operators by unbundling their channels for an Apple TV offering. The company could try again, Greenfield argues, but this time offer to carry the whole bundle – and even charge customers more, not less, if it succeeded at making the bundle look sexier. Think integrating an iCloud DVR, piping live TV to your iPad, and so forth.
Cable partnerships are messy
Still, creating a virtual operator – essentially a cable company without cables in the ground – is complicated, expensive, and could take years. It would be much easier for Apple to partner with an existing operator, which is what my colleague Ryan Lawler has also been arguing, except for one important detail: Cable operators are regional, so Apple would have to partner with a bunch of them to get its Apple TV service off the ground.
And these kinds of partnerships are still pretty messy, and full of politics. Comcast, (s CMCSA) for example, wants to own the experience, which is why the company’s
isn’t allowing its customers to use the newly-launched HBO Go app(s twx) on the Xbox(s msft), forcing them to use its own Xfinity app instead. It’s unlikely that Comcast would treat Apple any differently. Correction: HBO Go went live on the Xbox for Comcast customers earlier this week, but is still not available to Comcast subscribers on the Roku or Samsung smart Tv platform.
The solution could be to partner with a TV provider with a national footprint that has little to lose, according to Greenfield. Someone like Dish or DirecTV. And once those guys rake in the big money, the cable boys will come to their senses and eagerly partner with Apple as well.
It’s an interesting argument, if only because it shows how difficult Apple’s foray into the TV space would be. The company surely has mulled over these issues as well. Now let’s see if it follows Greenfield’s advice.