5 reasons why Apple can’t disrupt TV, and one crazy way it could

“Dave Morgan has particular insight into the challenges Apple has in taking on such an established industry,” Robert Hof writes for Forbes. “As CEO of Simulmedia, a data-driven ad network for television, he works with the television powers-that-be who are trying to make sure Apple doesn’t do a number on their business like it did on the music business.”

“Morgan thinks it’s inevitable that Apple will make a television – eventually. Just not all that soon, at least not in a way that will set it apart from other TV makers,” Hof writes. “‘Clearly, Apple’s thing isn’t just to make money on the hardware,’ he says. ‘It sells the bundle–including content,’ like music on the iPod. And it hasn’t been able to do that with the TV industry. He lays out five reasons why [in the full article].

Hof writes, “But Morgan thinks Apple could bust into the elite club – and this is where the crazy idea comes in. He thinks Apple could buy a big producer of TV shows and movies. He suggests that it would take a third (by now, actually, a little more than that) of Apple’s $137 billion cash hoard to buy Time Warner.”

Read more in the full article here.

MacDailyNews Take: As we’ve already suggested, most recently here, when discussing reasons for Apple’s huge cash accumulation. It’s not that crazy. Money provides much leverage.


    1. His perspective is limited by a belief that Apple can’t do something because he has not witnessed it in the past. There are so many ways that the recorded visual entertainment delivery system can be disrupted that it would take volumes. Apple has to acquire content and then target ads at those who are receptive and willing to receive ad funded shows and also provide a billing method for those who don’t want ads. Content delivery when we want it is king. Channels are a thing of the past. Play lists are the new self built ‘channels’.

      1. Patience, young Padawan.
        That will all come in time. His explanations are why it can’t happen immediately.

        You have three big ‘ifs’.

        When you start saying ‘all they have to do’ you are overlooking some huge obstacles that I believe Apple will eventually overcome.

  1. This is exactly why Apple needs to have so much cash under the mattress and why that fool Einhorn needs to leave Apple alone. That idiot can disrupt Apple’s progress more than Samsung could ever try.

  2. I am getting tired of stupidity. Did VCR makers have to buy Time Warner to make VCRs for all around the world? Just put a cable jack on an AppleTV and store the media on one of several billion dollar server farms or modify the Mac mini (or offer a USB connecter for the cable line for $50). Apple told us about the 3rd and 4th server farms in Oregon and China. They haven’t shared about any others yet. However, Apple is developing the fuel cells and solar panels to power those where power isn’t stable.


    1. And just how does Apple get all of the media? That’s the problem – the content providers aren’t convinced of Apple’s plans yet, or Apple’s TV plans aren’t ready to get them on board.

  3. Apple’s NOT going to become a media content producer. Don’t forget, about half of Apple’s cash is offshore, and to bring it back to the U.S. would result in a 1/4 to 1/3 tax bill on that cash, which significantly reduces its value.

    Apple doesn’t want to produce content. If that was the case, it could have revised the music industry long, long ago.

      1. Apple didn’t revise or transform the music industry by changing how music is created, marketed, etc. beyond making it easy for consumers to put music onto digital devices. Very different from becoming a content producer, which is what the author is proposing.

    1. There are lots of very capable content production facilities that are not located in the US. New Zealand and Great Britain come immediately to mind, as well as Canada. Crossing the border with a product (i.e. TV shows) is a lot different story than bringing cash in.

      I think a more likely reason for them not to become a content producer is the risky nature of content acceptance. They are much more likely to become a content curator (like the App Store) or even a content conduit (like ITMS).

    2. Bizlaw… that tax bill is already accounted for – Apple stashes the repatriation taxes aside. Of course I’m sure they’d love to get a tax holiday and recover all that cash… And the taxes are US tax rate minus what they’ve already paid in whatever particular country. Apple accountants must have perpetual headaches trying to deal with all this crap 🙂

      Otherwise I agree with you… they have no interest in buying Time Warner or anyone else. It is not their core competency, nor do they want it to be.

  4. I suggest that it would take two thirds (by now, actually, a little more than that) of Apple’s $137 billion cash hoard to buy Disney (ABC, ESPN, Disney Channel, Pixar, Touchstone, Buena Vista, etc.).

  5. I mostly agree with Bizlaw, but would like to address the absurd notion of purchasing Time Warner.

    If Apple were looking to get into content production, why would it buy Time Warner?

    Lets suspend the disbelief, and entertain the thought that Apple wanted to produce content. Wouldn’t it be way farther ahead to partner with a semi-friendly entity like Disney/ABC or even hire talent away and form their own production company?

    1. They would have to divest the cable TV portion of Time/Warner to get regulatory approval. Disney, IFC, Sundance and a few other studios with deals for first rights for movies before DVDs would probably get their foot in the door.

  6. I think Apple’s strategy may be to let their competition spend the next year or so trying to out guess them. They will continue to keep improving their current offerings, but don’t look for anything big for a while. They will focus on keeping the rumor mill churning and the competition trying to keep up with the rumors. Then once the competition starts to grow tired of chasing ghosts and spending resources on stuff nobody wants, then Apple will strike again.

  7. Currently the cable systems use CableCards which incorporate Windows Media elements. If Apple wants to play they will have to accept CableCard and license Windows Media unless they want to spot conversion costs to every cable outfit in the country. Otherwise it is IPTV only.

      1. Cable Cards are needed for decryption. On Comcast and most other cable systems, everything except OTA is encrypted.
        Apple could go the route of IPTV, but that opens a whole litany of problems from the content owners.

        The cheapest way for Apple to get in the game nationwide would be to buy a satellite TV system and remake the hardware and software.

        1. I’ve postulated that Apple could work with cable companies in developing a standard delivery protocol to devices that want to take over the “front end” that cable boxes are currently used for.

          If Apple could design their own interface for accessing cable content, that would be a game changer in and of itself.

          1. I agree. This has gone from Apple making a product to sell content to Apple buying satellites, studios, cable companies, Jupiter….

            Also, I think PA has smart cards confused with CableCards.
            I use Comcast and have a CableCard TV. They had a hard time finding one, and then it took three cards before they found one that worked.

            Click to access 7015726.pdf

          2. Apple could redesign the Apple TV to take a cable card and market it to replace the crappy set top boxes currently marketed.
            The FCC requires all cable companies to offer Cable Cards on request. The boxes they distribute do, in fact, have Cable Cards in them.

            1. Maybe, it does, maybe not.

              I have an EyeTV 500 fully capable of handling unencrypted digital cable (OTA and community channels) and a TiVo with a CableCard that supports multiple channels. The CableCard is necessary according to Comcast and BTW, they use it in their own boxes.

              I have no doubts that they can turn encryption on or off, but also know many content providers require it. Locally when Comcast was prepping to shut down the analog service they kept reassigning channels and many formerly unscrambled channels popped up in the clear. For a couple of months it was like whack a mole with the digital channel lineup.

              I also know Comcast has petitioned the FCC to encrypt ALL channels- to include OTA retransmissions.

              The greater point is this:
              I can install the xFinity app on my XBox 360 and watch digital cable without the crappy Comcast box and the data will not apply to my cap. What deal Microsoft and Comcast have worked out has never been detailed to my knowledge. Apple could do the same with the Apple TV if they wanted to.

              As to CableCard, it is just a PCMCIA 2.0 card and could easily be internally mounted or replaced with circuitry on the mother board.


            2. Yes, I know what they are. Most of our boxes have a slot in the rear for them. None use one. The whole idea behind CableCard was to allow the consumer to pick the box. If you use a cable companies box, there is no need for the CableCard.

              The FCC requires all providers to offer them, but doesn’t require any manufacturers to accept them (try finding a TV that still uses one. My Pioneer is 6 years old).

              The other problem with CableCard was making them two-way for pay-per-vue. The newer design was supposed to do this, but again, few peripherals accept one.

              The newer/smaller all digital boxes are not much larger than an AppleTV and can take fully encrypted content and convert it on the fly. They are very cheap and designed to replace more expensive DVRs with dual channel inputs and boxes that have analog outputs.

              The higher grade boxes will offer video streaming to the entire house negating the need for a box at each set.

    1. Two years ago, Telus, a major telecommunications company in Canada rolled out Optik TV. IPTV delivered to your home. They have a huge amount of market share. Bandwidth ranges from 15MB/s to 25MB/s and sustains 3 HD TV streams without an issue. The hardware is the Cisco CIS430 DVR and the software is Microsoft Mediaroom.

      Obviously, Telus is just distributing content, but IPTV is not a negative. Apple already has a whole bunch of boxes in people’s living rooms. They can either makes deals with the networks to carry channels, or content.

      Netflix has recently taken on shows as well. They’re producing original content!

      Apple has to start buying original content.

    2. What the heck are you talking about? Cable cards are just the key that unlocks the channels. Tuners (QAM) are what actually show you the content.

      There are other devices, e.g. Tivo and other DVRs, that take cablecards so you don’t have to use the crappy cable boxes.

    1. No, but they DID make it easy for independent artists to publish directly on iTunes. Why not do the same for TV? Start buying exclusive content. The only question is, do they have a network of AppleTVs large enough yet or can they land a killer series?

  8. One reason I don’t think Apple will jump into broadcast television production like Netflix: have you seen “House if Cards”? Gah! What tripe. What trash..

    Hey, it just might work then!

  9. Buying a network company is like buying a empty warehouse. You may see a lot of stuff inside it, but it’s somebody else’s stuff. Sony did just that many years ago, didn’t help them much. ABC-Disney had to buy Pixar to get some content as they found them self out of stuff in the “warehouse” to earn money from.

  10. Buying a network or TimeWarner or Dish could work, but it’s a very expensive way to go. Meanwhile, as someone mentioned above, VCR makers didn’t have to buy any content producers/distributors in order for them to disrupt the traditional way we all used to watch TV (the original Time Shifting device was the VCR).

    Apple is in a similar position today. It’s a hardware company that SHOULD be making the hardware that allows us to do what we want with content we’ve already purchased (cable, dish), or get over the air for free. Federal cases brought against the VCR makers in the 70s & 80s have already decided this issue – Fair Use Rights are the law of the land.

    The problem is that Apple has began identifying with these content producers (Stockholm Syndrome? Jobs’ experience as head of Pixar?). They are trying to make something that satisfies them, instead of something that satisfies us. It’s that simple.

    I’ve said it before, a million times: Apple needs to out TiVo TiVo, allow us to rip our DVDs the same way it empowered us ripping CDs when the iPod was the thing, and push said stored content to any Mac or iDevice we want to watch it on via the AppleTV. Essentially make it a local, Uber Media Server.

    They do that, they win. and so do we.

    1. DVD Ripping is illegal. The DMCA says so.. I forget what the company name is, but the company that tried to do a “legit” DVD ripper shut down IIRC, because they lost their suits.

  11. This guy is a blabbering fool. It’s really simple: Apple would never dump billions into a TV network. It wouldn’t get them anywhere.

    They want as much content as they can get to give the consumer choice. Apple is totally indifferent to TV networks.

    What will happen is Apple will release a super thin, clear 4 k TV with Apple TV interface with a TV channel App Store. This will solve the complicated user interface problem and crap hardware problem. Consumers can then shop and subscribe to which channels they want. This will solve the problem of being forced to subscribe to programming you don’t want and allow you to watch what u want when u want.

    Combine this with Siri to ask your TV what u feel like watching and iOS connected devices and you have exactly what Apple will do. A compelling product that solves a ton of problems.

    This blabbering idiot should stay inside a board room and never come out.

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