5 June 2013Brian White, via MacRumors:
We were told that carriers will be an important part of the go-to-market strategy for Apple’s TV ambitions and subsidize the $1,500-$2,500 “iTV”, offering customers a single bill that will include a wireless plan (i.e., iPhone, iPad), Internet connection services, an “iTV” plan and other services.
The main roadblock to revolutionising TV is access to content outside of a cable box. The ideal situation would be that the content providers license their shows for playback on the iTunes Store the same day as they air and, by proxy, their programming would be available on the iTV as well.
As has been discussed a million times, the cable providers don’t want to be commoditised. By offering premium tier services, these companies believe they can extract higher margins from customers. As the cable providers also hold rights over TV content, at least in the US, they currently block deals with Apple and other entrants to ensure they remain more than ‘only’1 dumb pipes.
Up to now, this has been the ultimate barrier. Google TV and the Xbox One try to get around this with passthrough video inputs and IR blasters, but this is known to be a sub-par experience.
To revolutionise TV, you need to control the UI. To control the UI, you have to have direct access to the content. Therefore, if Apple can appease the parties who have typically been seen as the “enemy” financially, it could get them onside and convince them to allow Apple free reign over their live channels and rich back-catalogue.
These financial incentives could come from a bundle deal which combines phone service, 3G tablet service, a subscription to TV content, home broadband and more. By making iTV a tenet of the proposal, Apple goes along way in coercing the incumbents into complying, because there is the potential for big profit margins for the service providers, if Apple gave the companies reduced prices on hardware. Essentially, Apple exploits the immense popularity of its iOS devices to make the idea more attractive and swing the bargaining power in their favour.
Rather than try to circumvent the TV providers, Apple embraces them via the draws of increased profitability. Obviously, this speculation has limitations (for instance, whilst it works in the US — where the carriers are also the cable providers — it might not apply so well internationally), at some level, it does solve the issues of content availability. I think the idea has merit.