Apple in talks with U.S. cable operators over transforming Apple TV into set-top box for live television

“Apple Inc. is in talks with some of the biggest U.S. cable operators about letting consumers use an Apple device as a set-top box for live television and other content, according to people familiar with the matte,” Jessica E. Vascellaro and Shalini Ramachandran report for The Wall Street Journal. “Apple doesn’t appear to have reached a deal with any cable operators. One obstacle may be the reluctance of operators to let Apple establish a foothold in the television business.”

“Apple would also need to persuade significant numbers of consumers to buy a set-top box for what could be hundreds of dollars rather than rent one from their cable operators for $10 to $15 a month,” Vascellaro and Ramachandran report. “By building a set-top box that could be used with cable operators, Apple would be following a similar playbook that it used to transform the mobile-phone industry: convincing existing service providers to marry their service with Apple’s hardware and software.”

Vascellaro and Ramachandran report, “Apple sells a $99 Apple TV box that lets users access some Internet video on their television sets, but not live channels supplied by cable operators. Whether the device under discussion is an iteration of that hardware or a more sophisticated box is unclear. Two people briefed on the matter said the technology involved could ultimately be embedded in a television.”

Much more in the full article here.

“Apple keeps poking at the TV industrial complex, and keeps concluding that it’s better off playing along than playing a new game,” Peter Kafka writes for AllThingsD. “To spell that out: If Apple really wanted to change the way people watched TV, it would change the way people paid for TV. And that would involve setting up new arrangements with the people who make TV content.”

“But Apple can’t do that — either because the content guys don’t want to change the way their business works, or Apple isn’t willing to pay enough to make them change. Or both,” Kafka writes. “The result is the same: If you want to use a theoretical Apple TV of the future, you’re still going to end up paying someone a monthly fee for a bundle of channels, the majority of which you don’t watch… You can argue that this is terrible for consumers (because they subsidize waste), or that it’s great for consumers (because all the other consumers subsidize their favorite programs). But it’s a model that has proven very hard to dislodge.”

Kafka writes, “It’s fun to imagine a world where Apple helps get you your TV, and it’s very likely that an Apple TV experience would be much better than the cable TV experience you have now. Imagine ditching that craptastic TV guide for a sleek one designed by Jony Ive!”

Much more in the full article here.

[Thanks to MacDailyNews readers too numerous to mention individually for the heads up.]


    1. Wrong – Steve clearly said that his successors at Apple should not double guess themselves by trying to think what he would have done.
      Those in charge at Apple are a large part of what have made them the best in world at designing products. Steve’s legacy is about building that team and the collective desire to not compromise. Do you really think that will disappear overnight?

      People criticize Cook for not being a charismatic as SJ. They conveniently forget that it is Cook’s organizational skill that has allow Apple to convert its ideals into high volume and high quality products.

  1. “Apple would also need to persuade significant numbers of consumers to buy a set-top box for what could be hundreds of dollars rather than rent one from their cable operators for $10 to $15 a month”

    According to these rates a rented box would cost a viewer $120.00 – $180.00 a year; now that’s expensive verses spending a couple hundred dollars, once. My cable provider now gives you one set top box included with the service. In the past they charged for it. Any additional boxes cost about $7.95 a month or you can get a small converter box for no charge but it can’t give you movie channels. Of course this is just marketing as these SOB’s are almost always raising prices. If you want HD channels you have to pay the HD box no matter what and an additional monthly fee for the service.

  2. This is simple, Apple.

    Don’t go to the cable companies at all. There are too many spread across way too many regions/local markets.

    Instead, approach either Dish Network or DirectTV. They play nationally. Sell the Apple TV box as to television what the iPhone was to AT&T — a differentiator. It’s a win for Apple because they only have to deal with one company’s infrastructure in the beginning and it’s a win for the satellite company because they will get several million new customers virtually overnight (count me in).

    One seamless solution that will account for virtually every channel and even local stations in every market (at least in the US, I don’t know what these companies do across borders).

      1. I think you could have a hybrid system where ATV pulls some information via the net and some via the satellite service (live content) . . . Cable companies will never let you view netflix or Hulu through their box without also buying Internet from them anyway. This isn’t going to save us money as consumers, but at least we’ll get the “apple solution” to the software side of the interface.

        As long as it’s a system I can get access to, I’m happy. Living in rural America as I do I’m always afraid my particular cable company won’t be part of the party. But I guess as long as the satellite companies are involved at least it’s an option for me.

  3. > Apple would be following a similar playbook that it used to transform the mobile-phone industry: convincing existing service providers to marry their service with Apple’s hardware and software.

    I commend the writer of this article for seeing that this approach mirrors what Apple did with iPhone. When iPhone was released in 2007, Apple did not seek to re-invent the device AND the services it provided. What Apple did was provide customers with exactly THE SAME services they already had through their wireless carriers, but vastly improve their user experience when accessing those services. That is what made iPhone initially successful. Then, over time, Apple added services that where unique to the iPhone, such as the App Store and Siri.

    The equivalent strategy for TV is NOT to reproduce what the cable industry currently provides to customers. That would be nearly impossible, even for Apple. Instead, Apple needs to give customers exactly what they already have (through cable), but vastly improve their user experience in accessing that content. The current horrendous user interface is provided by the “cable box,” which is equivalent to mobile phones before iPhone. In one way, Apple will have a big head start, compared to iPhone, because the existing Apple TV mini-box already provides the starting point for the services that will be unique to Apple. When iPhone started, there wasn’t even an App Store yet.

    Where the article has it wrong, I believe, is in thinking that Apple will produce a “set top box” to replace the cable box. This is what I believe will happen instead. The customer will have two options:

    (1) Use your existing HDTV and cable box. The cable box continues to be on Input A of HDTV. The $99 Apple TV mini-box connects to Input B of HDTV, to provide Apple-supplied content and services. The user switches between Input A and Input B as desired. This option is available today.

    (2) Buy a COMPLETE Apple TV for $999, and transform your entire TV user experience. No separate remote controls for the HDTV, cable box, and Apple TV. Everything related to watching TV is integrated into ONE user experience, designed by Apple. The user can seamlessly switch between watching cable content and using Apple-supplied services, using one elegant interface.

    And THAT will be what makes the complete Apple TV (“iTV”), into a success on the scale of iPhone and iPad.

  4. I do not think that Apple is going into the set top box market. Steve was against this because he said what we are all saying: Who would spend a lot of money on a set top box when you can get it at a cable provider for $9.99 a month instead? I hope our new CEO sees this as well. I think he does. For now I believe that Apple will stick with their box for now and for those who does not have a DVR will sell another box with DVR abilities. Apple, I feel, is asking the cable operators to make apps for the ATV to subcribe to a cable operator and to pick channels from their line up a-la-cart. To make it simpler for the consumer. The way it is now we pay for channels that we never watch. This new way will be better so that we can pick and choose what we want to watch. Another thing if we can get sports that is normally blocked because of area on the ATV. Apple is working on things that is easier for the consumer not harder.

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