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Cable Technology Feature Article

March 02, 2012

Apple Wants to Launch Streaming Service in 2012

By Gary Kim, Contributing Editor

Apple (News - Alert) wants to launch a streaming TV service in 2012, but as you would expect, is meeting resistance from content owners and video distributors worried, for good reason, about Apple disintermediating them in the streaming video value chain and thereby disrupting the video entertainment business overall.

The New York Post  reports that content owners have resisted Apple’s pitches, and not for the first time. Apple, as is typically the case, wants control over all aspects of the user experience, and that includes pricing.

Traditionally, that has been a touchy area where content owners are concerned. Apple also wants to decide how to package video and that causes other key concerns. Apple might prefer to bundle a single branded network as an “app.”

But that also creates an unbundled channel environment that video distributors and content owners long have argued would provide less consumer value and lead to the demise of many smaller and niche networks.

Other content owners have had to face similar Apple desires before. Magazine publishers and music publishers, for example, have had to weigh their desire for a bigger online and device presence with fear about what such new modes will mean for their existing businesses.

There are other recurring themes. Apple apparently has been talking up the idea of using Apple TV appliances as substitute cable TV set top decoders. Apple has gotten nowhere with that approach and will not get anywhere.

Lots of other firms have had such ideas since the 1980s, including Microsoft (News - Alert). But there was never any serious consideration of such Microsoft set-tops for one reason. The cable TV industry fears giving control of substantial parts of its business to any “outside” firms perceived to have market power.

More recently, Microsoft has pitched the Xbox as a supplemental set-top box. In many ways, Xbox is an alternative decoder, but has not yet managed to convince leading cable, satellite or telco video providers they should embrace the Xbox as a primary decoder. But the Xbox likely will continue to gain ground as a device that is a gateway to more video programming.

Video distributors and content owners likely will keep trying their current licensing approach, essentially tying the availability of Xbox streaming services to purchases of other existing products, the classic case being purchase of a certain level of video subscription services to get the streaming features.

Apple already likely has hit that wall in its efforts to convince cable operators to use Apple TV as a primary decoder. There simply is no way cable TV executives are going to allow a firm such as Apple to gain power in the cable TV ecosystem, period. It arguably is different in the communications and mobile business. Video is a less-important revenue stream overall.

Nor does the telecom industry have the same concerns about supplier control as does the cable TV industry. It is simply a difference in industry culture.

Edited by Rich Steeves

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