Apple ‘iTV’ will revolutionize content delivery and advertising

“Apple TV will completely revolutionize the cable TV and TV advertising markets as we know it,” Matt Chessen writes for Seeking Alpha. “How? Through TV apps. The revolutionary aspect of Apple TV will be the apps, and these will disrupt the cable industry just as much as Apple disrupted the music industry. Currently, cable subscribers have to subscribe to a set of packages, some of which are mandated by federal and local law. But why? Why can’t cable users subscribe to channels on an individual basis, or even to purchase individual shows as desired?”

Chessen writes, “With TV apps, they can. The new Apple TV will allow content producers to create apps which will be used to distribute content. For example, someone who wants to watch HBO could download the app and subscribe directly with HBO, obtaining the content through the internet and completely bypassing the cable provider. All of the revenue would be shifted from the cable provider to the content provider and Apple, and the cable provider would be reduced to a commodity provider of bandwidth.”

Chessen writes, “Oh, but there is more – Apple TV apps will revolutionize TV advertising. The current problem with cable TV advertising is that you have to broadcast the same commercials to all of your cable TV subscribers. When content migrates into apps, Apple can use its iAd platform to deliver customized advertisements based on the profile of the individual user. For content providers, this allows them to thin slice their target audience and deliver precisely targeted ads via apps rather than widely targeted ads via a cable channel. For Apple, they open up the possibility of controlling a large share of the TV advertising market. Consumers benefit by receiving ads more relevant to their interests, based on their search history, purchase history, etc. This revolution wont happen immediately – consumers are used to cable packages and it will take time for them to adopt the app model. When they do, the shift will be huge. Apple will be a huge winner in this revolution. Cable providers will be the big losers. They failed to innovate and they’ll pay the consequences.”

Read more in the full article here.

MacDailyNews Take:

“Content producers should get to work then on producing their own apps… We’ll make a folder of them on our iOS devices and it’ll look and act just like the channel lineup in the cable companies’ iPad apps.” – MacDailyNews Take, April 11, 2011

[Thanks to MacDailyNews Reader “Zanus” for the heads up.]

15 Comments

  1. There’s a paradox here. The direct contract with a production company model only works financially if you have the economies of scale that come from a huge guaranteed audience. But you can’t build that huge guaranteed audience unless you have a deal in place that motivates the production company to sign the contract and risk the wrath of existing distributors.

    This is why the cable companies probably will win this battle. Too many people are unwilling to go cold turkey and give up their overpriced programming packages and/or cable internet service, which are the profit sources that protects cable distribution of television programming.

  2. This article is dumb. All of this can be done now. Content creators do not wish to deliver content directly and even if they do, they are not in a hurry to offend cable and satellite providers.

    There are no state and federal laws prohibiting any content creator from providing their content direct to the consumer, via iTunes for instance. There is much incentive in the existing TV world to keep things as they are though.

    Consider Person of Interest on CBS. It’s a show I’d like to watch and would happily pay for. Warner Brothers doesn’t allow it to be shown on the Internet. They want to sell it first on DVD, then in syndication and in their opinion allowing it on legally on the Internet would diminish the value of those after market sales.

    HBO could easily create a website and allow their own original content to be purchased there, but they don’t. They are in a tightly bound relationship with service providers so they don’t rock the boat. Oh sure, you can watch it on your iPad… IF you subscribe to HBO via a service provider.

    It will take the consumer wising up to change things. I cut the cord a while back and haven’t looked back. I was paint $140 per month for cable TV and Internet service. By getting rid of the TV portion I was able to bump my Internet download speed up to 50Mb/s and acquire a 4GLTE WiFi device for the same total price. I’m much happier. Most people are still afraid to do this though. They’re rather pay $140 a month for 500 channels of absolute crap they aren’t interested in.

    Apps won’t change that any more than they made cell companies start treating people like human beings. If anything, things have gotten worse with data caps and throttling and what not.

    Nope, this article has it completely wrong.

  3. I’ve been thinking that as well. It will be sweet! I’m sure game developers will follow suit, bypassing gaming consoles.

    Bandwidth is the only issue I see.

  4. I have yet to see a prognosticator that wasn’t merely a regurgitator. Similarly, I have yet to see Apple enter a different market with regurgitated ideas.

    Perhaps I am older than dirt, but I have learned to go on with my life knowing Apple’s next best thing, whenever it is ready, will astound me, and not fall into these lame site-hit traps.

    Apple’s reality is a thousand times better than these twits’ fantasies.

  5. I might believe something like this happening, but it will be a few years “down the road.”

    I think the hurdle (for Apple) with the TV market is that the customer wants “everything” they already have right now over cable. For most people, an HDTV is just a “dumb” monitor that connects to the cable box. The cable box does all the content delivery. And the cable provider has “everything,” in terms of content choices.

    The current Apple TV box was a fine move to get into the market. Apple TV is connected as “Input B” to the HDTV, and customers still have “everything” they already had through the cable box on “Input A.” And Apple gradually builds up content choices through Apple TV. But this approach is just a “hobby” to Apple. A complete iTV that is just an HDTV with integrated Apple TV will just be a more expensive hobby, even with more content choices and “apps” (unless it has “everything” customers already have through cable). Maybe enough people will buy it (to be profitable), but it will not be a hit on the scale of iPhone and iPad.

    We only need to look at iPhone to see how Apple might “revolutionize” TV market. When iPhone was first released in 2007, it was primarily just a phone that did the same things as other smart phones. It accessed the same wireless carrier networks, same services, and same Internet. What made iPhone initially successful was significantly better user experience at accessing the same wireless carrier networks, same services, and same Internet. Customers had “everything” they had before, but the user experience was much better with an iPhone. That’s why iPhone became a success, not because Apple reinvented their own wireless carrier networks and services to match what was already available. Then over time, Apple then added unique features such as the App Store, Siri, and iCloud to make iPhone even more desirable.

    That’s how Apple needs to “revolutionize” the TV market. Apple should take the “everything” that customers already have through cable, but make the user experience in accessing that content significantly better. There are not that many cable providers in the U.S. Apple can work with them to make iTV access existing cable content with a far superior user interface, compared to the barely functional and hideous interface on current cable boxes. Why would the cable providers object to such a partnership with Apple? They would welcome it. After the first year in the U.S., expand to other worldwide markets.

    Over time, Apple can continue to provide and improve its own content choices, currently provided through the Apple TV box, and make it available as an integrated part of iTV. Over time, customers will (hopefully) rely more and more on content provided through Apple. When Apple’s content choices are considered to be “everything,” many cable customers will cancel their cable TV service.

    1. You’re absolutely right ken1w. Apple has no ability to change the television industry’s business model. It can, as you say, improve the experience of using a television.

      Television is also being revolutionized by the Internet. In response, much of the television industry is clinging to an archaic business model, literally refusing to innovate, and instead attempting to shield their largely mediocre content from the choice dictated world of The Internet.

      Apple can’t change that by themselves, they will need us, the consumers to demand what we want, where we want it, when we want it, and how we want it. When enough people demand to see a program with the flexibility that is possible, it will happen. As long as we are sheep and march mindlessly to the living room TV, it won’t.

      So cut the cable. Tell you friends to save money and cut the cable as well.

      Maybe someday we won’t utterly irrational conditions like being able to watch content on my computer, but not on my iPad sitting right next to it.

      1. Cutting the cord just isn’t a realistic option for a lot of people.

        I have 4 people in the household who watch a wide range of shows from iCarly to Spongebob, American Idol to Modern Family, Sports Center to MythBusters. You have to be able to obtain ALL content, including live sports, to ditch cable or dish.

        Secondly, many homeowners associations such as the one I live in have long-term contracts with cable companies. Ours is a 10-year contract and basic service is included in our HOA fees along with lawn service and security. The upside is that I am able to get HD channels (no premium) added and my bill is only $59/mo.

        Third, most people watch shows on DVRs. I have two Tivo units (I refuse to use the crappy DVRs that cable companies rent) on which I record at least 30 season passes. I only watch a few shows regularly, but I have extra recordings for when the family wants something else to watch.

        Lastly, most people get their internet service through cable or DSL. These companies will either throttle bandwidth or increase prices to make it very difficult to get all your content via the web. Same reason I don’t use many data-hungry apps on my iPhone if I’m not connected to WiFi – without “unlimited” data, I’d be charged to death.

    2. I’m a skeptic, but Apple does have the ability to pull it off. $100 billion + could buy a major Cable or Satellite service and Apple could then re-cast it with new technology, EULA and hardware.
      Instead of pissing the $ away with a dividend Apple could double down and show the cable cartel how it could be done.

  6. Doesn’t the whole ‘ad’ thing all sound a bit, well, Google? Apple has never been as overtly ad-centric as those guys, as it sounds here. Unless, of course, it’s a necessary evil in order to get everyone on board, as ads are so much more conspicuous in the television industry? Either way, no one will have any idea until Apple shows its hand…

  7. I hated commercials when they were called “commercials”. I’m not going to like it when they get repacked as iAds or Content enhancements or whatever. I don’t like green eggs and ham. Just let me watch my show uninterrupted.

    When do the Apple Tv’s go on sale.

  8. There is so much on cable that I don’t, and will never, watch. Why then must I pay for it? I want to mix and match what I do watch, and only pay for that. At this point, though, can’t live without HBO, Showtime, and a few other premium channels, and there is apparently no other legal way except through cable to get these channels. That’s a shame. I know Mr. Theolonious is correct. We have to speak with our wallets and cut the cord until the content providers give us what we want.

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