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Cable Technology Feature Article

August 28, 2012

The Biggest Hurdle to Apple TV Could be Cable Companies Themselves

By Steve Anderson, Contributing TMCnet Writer

The rumor of an Apple (News - Alert)-branded television set, with any of a host of different capabilities included with it, is one of the biggest in the entire tech sphere these days. But given that the so-called "iTV", whether that's what it's finally called when it emerges, is indeed on the way, the problem now becomes one of content. Apple, meanwhile, is likely discovering how difficult getting content can actually be.

To that end, Apple has been, based on reports from Andy Hargreaves, a Pacific Crest analyst who recently talked iTV with Apple itself, pursuing cable companies for distribution arrangements of their content to the massive audience of loyal users that Apple enjoys. But the negotiations have proven problematic, as much of the content is owned by a comparatively small group of companies. That small group of companies, meanwhile, is happy with the way things are--requiring viewers to buy bundle packages of channels for content they want to see--and thus sees no need to change.

Apple, meanwhile, is approaching this from the user's standpoint, where users see plenty of reason to change--they don't much care for having to buy access to a bunch of channels they don't want in order to get access to the ones they do--so that's leaving a significant problem on Apple's hands. Apple is going to have to do to television largely what it did to music. But doing that will be much harder than just repeating iTunes' success.

Given the success of online vendors, though, as well as the increasing popularity of cable cutting, the recent reductions in disposable income on the parts of individual households, and the overall market power Apple controls, we may well be approaching an era in which the individual content producers start turning their attention to Apple directly. In much the same way that YouTube has engaged content producers to produce content directly for YouTube (News - Alert) and YouTube alone, so too might Apple put its massive cash supplies and promises of impressive audiences to work in gaining content that might have formerly been meant for television.

The networks likely don't want to compete with an Apple network, but Apple needs content. It's likely the two sides will find common ground at some point, hopefully sooner rather than later.

Edited by Juliana Kenny

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