Backing Into Apple Television
We’re probably approaching a decade waiting for the Apple Television at this point. Not the Apple TV, mind you — that’s just a “hobby” after all. A real television. Or, at the very least, a real television service.
Of all the rumored Apple products of years past, this has to be the most on-again/off-again one. And that’s not just Gene Munster’s fault. No less than Steve Jobs himself said to Walter Isaacson in interviews for his biography that Apple had “finally cracked it” with regard to what they wanted to do in television.
That was six years ago. We’re still waiting to see the fruits of that labor. It’s starting to feel like we may never see them.
Instead, Apple has released a few half-hearted updates to the Apple TV product. How’s that going? Not too well. From a Bloomberg report by Mark Gurman earlier this year on Apple’s television tactics:
Apple doesn’t disclose how many Apple TVs it sells, but Chief Financial Officer Luca Maestri acknowledged in a recent interview that sales decreased year-over-year from the 2015 holiday season to this past 2016 holiday period. The research firm eMarketer says the fourth-generation Apple TV has steadily lost market share since its release in the fall of 2015; in January just 11.9 percent of connected television customers were using it, the research firm says, down from 12.5 percent in September. In part, the slide reflects competition from Amazon and Roku, whose boxes do the same and more for less money.
The only thing more ho-hum than the hardware updates have been the software ones. (And let’s not even start on that remote control…) The recently rolled out “TV” app for the Apple TV is almost comically useless. You get what they’re trying to do with it: unify all the content you can get on an Apple TV in one place, offer up smart suggestions, etc — from the same Bloomberg piece:
The current model was originally supposed to replace the cable box altogether. Early prototypes had connectors for a coaxial port, which sends the live cable TV signal to televisions. Under this plan, Apple was to control the interface, collect fees from viewers and then share most of the revenue with the cable and media companies.
A new TV app was to be the main interface for accessing live shows and sports. But when the app was finally launched in December, it merely let viewers access their iTunes video library and the iTunes Store, functions that already existed on the Apple TV. The key new element is a “Watch Now” panel, a Netflix-style repository of favorite movies or shows and recommendations for new ones. Some Apple engineers now regret not making it possible to tailor the opening screen to viewer preferences — classic movies for the family film buff, say, or food shows for the budding teenage chef. The idea never made it onto the engineering roadmap, and adding it now would require a lot of resources.
The problem is that Apple doesn’t have the required content partnerships to make this area of Apple TV actually compelling. If they did, I could see this working: a newfangled TV Guide for the streaming generation. The networks, in a mad dash to stay relevant may buy into that to varying degrees, but good luck getting Netflix, Amazon, and the like to fully buy in. Cui bono?
And so instead we’re now seeing what Apple thinks it must do: compete with Netflix, Amazon, Hulu, etc. Apple spent a bunch of time suggesting they would not take this approach. Their original content was all about promoting Apple Music or whatnot. But you don’t hire these two guys if you’re not going all-in on content.
This is at least the third or fourth attempt Apple has taken in trying to get Hollywood to play ball with their television aspirations. And this one would seem to be much more stick than carrot. You don’t want to partner with us on Apple Television? Fine, we’ll do it the hard way…
If Apple can build a viable Netflix competitor, they’ll have decidedly more leverage. But they also run the risk of alienating the powers-that-be in Hollywood, just as Netflix turned from friend (licensing their old content) to foe (bidding for the first-run premium content).
The difference, of course, is that Apple is still primarily a device maker. If an Apple Television service (I refuse to call it “Apple Music” because at some point, we’re all going to agree that such a name simply makes no sense — see also: iTunes) helps move even more devices, Apple has leverage Netflix does not.¹ If Apple ever decided to fully embrace gaming on the device, it would be more leverage still.
I’m not sure the plan will work.² I do believe a full-on war is brewing in Hollywood between the newer tech entrants and the established guys. But the other plays Apple has tried haven’t worked. And so we’re left with the neutered Apple TV. As we wait for Apple Television.
¹ Interesting to think now if they had gone through with building and owning Roku outright…
² At which point, attempt five may well be buying Netflix. Attempt six may be buying a cable company…
