Based on one story from The Globe And Mail, there are a lot of interesting new thoughts about the supposed Apple Television today. The big question: will Apple partner with any of the cable companies for the product?
Based on everything we’ve seen in the space the past several years, I think they have to. The question is: will it be more like the initial iPhone partnerships (exclusive to one carrier in the U.S.) or the early iPad partnerships (multiple carrier options or the option to do no carrier at all)?
The only real problem for Apple in getting into the game would be the cable companies’ monopolies on the local level. Unlike the carriers, which are nationwide, the cable companies dominate their regions and there’s often little competition (which is, of course, bullshit and the government are cowards for allowing this to continue).
Let’s say Apple teamed up with one of the cable companies, like Comcast. They would likely have to do an exclusive deal with them to get them to bend to some of their demands (like getting rid of their shitty cable boxes in favor of a built-in Apple control guide). This is why Apple was exclusively with AT&T all that time. But not everyone can get Comcast. So the market would be limited.
The lack of nationwide cable providers is an issue. Even the big ones like Comcast don’t have full reach. So Apple would probably have to do a variety of regional deals. Or maybe they’d go with AT&T (which has U-Verse) or Verizon (which has FiOS). Or maybe one of the satellite providers (which Google TV did to little effect).
But I do think they’ll have to do some sort of deals with a selection of these guys. Apple simply doesn’t have the leverage they need yet to sell a television with access to all the content in the way that they want to offer it.
Think of it this way: when Apple first offered the iPhone, did they want to offer it only through AT&T in the U.S.? Undoubtedly no, but that’s the company that would agree to their terms at the time. But they still weren’t fully ideal terms for Apple. In their ideal world, Apple probably would have bought the spectrum themselves and controlled every aspect of the service, but that wasn’t feasible. So they partnered in a frustrating, but ultimately smart way.
I imagine we may see the same thing here. The first partnerships will be limited in reach, which will frustrate many, but the device will be so good that it will build Apple’s leverage. Slowly.
I do also wonder about the cost structure for all of this. Remember that when the iPhone first went on sale, AT&T was giving Apple a piece of each contract. This model was extremely unique for the industry and ultimately yielded to the more standard subsidy model. But such a model could work with the cable industry — again, if Apple did some exclusive deals at first to provide some leverage.
Or perhaps the Apple television will be sold at full price (read: nice margin for Apple) with extremely attractive cable packages offered from their exclusive partners (the iPad model).
That could work if the cable partners thought the device would lead to significant new sign-ups. Or if Apple scrapped their iTunes video content in favor of a cable providers’ pay-per-view system integrated right into the television. But would Apple ever do that? It doesn’t sound like them.
Cable partnerships of some sort sound likely to me. But there are still a lot of question marks around the details.
One key — which Apple undoubtedly knows — will be to keep the options as simple as possible. They’ve done well in this regard in both the phone and tablet space despite having to deal with the carriers. The phone space in particular is a feat given how complicated things were before the iPhone. Creating simple options in the cable space may prove to be even more challenging given the regional fragmentation. We’ll see.