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How HBO could provide new hope for an Apple TV set

How HBO could provide new hope for an Apple TV set

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This fall, Apple has debuted new iPhones, updated its iPads, touted new Macs and introduced a new operating system. But there's one product that wasn't even mentioned: the Apple TV.

For years, people have speculated that Apple is on the verge of releasing a revolutionary television set. In his 2011 biography of Steve Jobs, author Walter Isaacson said that the company's late co-founder had claimed to have "cracked" the way to bring the firm into the TV world. But so far? There's been no hint of a TV set, only the Apple TV set-top box that the company released in 2007.

From a pure hardware standpoint, it makes sense for Apple to stay out of the TV game. People don't buy televisions as often as they buy smartphones. Unlike the market for iPhones or iPads, selling TVs is just not a hugely profitable business. Competitors can quickly mimic each other. And they often discount to boost sales. That's good for consumers. Not so much for companies in the business.

Apple clearly has the technology to produce great screens. Last Thursday, Apple unveiled a 27-inch iMac with a "5K" display that far outstrips high-definition televisions of its size. Apple's chief worldwide marketing officer, Phil Schiller, even noted on stage that the $2,700 iMac compared favorably, price-wise, to your average ultra-HD television.

But without a breakthrough in how people get their TV shows -- something Jobs seemed to hint at in the Isaacson biography -- there would be little to distinguish Apple's television set from other high-end sets.

Some analysts and consumers hoped Apple would finally crack the cable bundle with a TV service, allowing people to buy only the shows they wanted to see, rather than pay $125 or $150 a month for hundreds of channels they would never watch.

Perhaps, then, in seeking to innovate the television experience, Apple met its match. The cable bundle is a product of some of the most powerful and well-heeled companies in corporate America. Hollywood studios, broadcasters and cable companies have collaborated for years to prevent any disruptions to the hugely profitable bundle.

But recent moves in the entertainment world may provide new hope for those who want an Apple TV. Streaming has become all the rage for the entertainment world. HBO kicked things off last week with the announcement that it would offer subscriptions to its programs without the need for a cable bundle. CBS followed soon after, saying that it, too, would offer live streaming television of some of its programs for a fee. And on Monday, Lionsgate and Tribeca Enterprises jumped in with a joint streaming service. The trend threatens to shake up the industry if more television and movie companies decide to follow suit.

The moves could also give Apple, as well as other set-top box makers such as Roku, a big opportunity. Think of it this way: Apple already carries HBO's streaming program on its set-top box, but watching it requires a traditional cable subscription. HBO's announcement could allow Apple to offer the network free from the bundle.

If more networks are willing to break free from the bundle and sell live or new shows through iTunes, Apple's set-top box -- or a future television set -- would be way more attractive to consumers. It would also be harder for, say, Vizio or other pure television manufacturers to imitate.

Apple faces other hurdles with developing a full-fledged TV that also provides shows on an a la carte basis. The U.S. government is mulling whether online video providers should be legally viewed in the same way as cable and satellite providers. That could impose regulations on Apple -- such as rules regarding emergency alerts and closed captioning -- but it also could mean Apple could negotiate to carry live TV.

"Apple's already got a TV [device] with a bunch of different apps on it," said Rich Greenfield, an analyst for BTIG. Until the government rules, he said, "Apple has no right to ABC in New York or NBC in DC."

Regardless of the government decision, Apple would be building on past experience, if it ever decided to revolutionize television.

When Apple released the iPod, many manufacturers tried to sell similar devices. But almost no one was able to deliver the songs legally through an iTunes-like service that seamlessly connected to players. In other words, much more went into the iPod than its design. Behind its success were agreements with major music companies that enabled the iTunes store to transform how music was sold to the masses.

Will a similar revolution come to television? Maybe. But the first cracks in the cable bundle are showing. And that may be all Apple needs.

(c) 2014, The Washington Post.


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