Analyst: Apple TV will change the TV business

Apple Store“Technically, the Apple TV may be simple, but its effect on the TV industry will be anything but,” Blackfriars Communications’ Carl Howe writes for SeekingAlpha. “Why? Because TV business models that have thrived for the past thirty to fifty years that relied on:

• Advertising-supported TV
• Prime-time programming
• Bundled content

Howe writes, “Apple TV is about to attack the fundamental assumptions underpinning the TV business just as the iPod cut the legs out from under CDs and radio stations. How? Because with Apple TV combining the flexibility of the Internet with a living-room, big-screen experience, consumers now will:

• Vote for programming with consumer dollars
• Watch what they want, when and where they want it
• Enjoy TV programming a la carte

Howe writes, “In my view, cable companies like Comcast and Time Warner and TV-deploying telcos like Verizon and AT&T are going to be hurt the most by this Apple’s new entry into the living room. Their entire business models are predicated on ever-rising average revenues per subscriber (ARPUs). But with average cable bills rising past the $100 mark and actual TV watching declining due to the flood of too many channels, consumers will defect to Apple’s a la carte pricing model where they can control their monthly bill.”

“Will we see these business changes overnight? Not a chance. The iPod took five years before it was an international phenomenon. I expect Apple TV to have a similarly long gestation period before it becomes a icon in living rooms and a part of the American consumer lifestyle… Apple TV may be a simple consumer electronics device, but it is one that will, nonetheless change the TV business… Cable and telco executives will be asking themselves, “How did we let this happen?” The answer to that is simple: they gave the customer everything they could think of, while Apple TV gave customers what they wanted. And in business, that’s a huge difference.”

Much more in the full article, including discussion of each of the bullet points listed above, here.

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23 Comments

  1. I agree with the article, along with a lot of similiar articles, BUT, this is in its infancy, the model has been built, and it will take time for all of this to happen. Kind of like how the iPod just exploded a couple years after it was already around, the aTV will prob do the same.

  2. What prevents aTV streaming across the intarweb to my iPhone, ala slingbox? A: Probably nothing. So an 8 GB cap on internal storage doesn’t mean a thing. aTV + iPhone == killing eleventy birds with 2 lickable stones.

  3. and actual TV watching declining due to the flood of too many channels

    Actual TV watching is declining:

    1. Because there isn’t shit to watch, and:

    2. Nobody has time to gather around the TV at the appointed hour anymore.

    FWIW Apple TV also has the potential to kill the movie theater (cinema for you Brits <g>). Who wants to pay extortion to sit in slimy seats, where you’re always next to some asshole who ruins the show? I’d rather wait for the home release. ” width=”19″ height=”19″ alt=”raspberry” style=”border:0;” />

    Cable and telco executives will be asking themselves, “How did we let this happen?” The answer to that is simple: they gave the customer everything they could think of, while Apple TV gave customers what they wanted.

    Great closing, but let’s clarify it a little:

    The cable/telco executives offered everything their companies wanted to sell, while Apple TV offered everything the customer wanted to buy.

    Big difference.

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