Cable Technology Feature Article
Will Apple, Microsoft Get into Cable Business?
By Gary Kim, Contributing Editor
U.S. cable operators are famously clannish, with an unusual sense of “us versus them” that makes the industry hesitant to admit “outsiders,” especially outsiders that might acquire too much sway in the business.
Microsoft (News - Alert) notably encountered that wall when it proposed to supply advanced decoders to the U.S. cable industry back in the 1980s. But cable operators at the time clearly had no intention of allowing Microsoft to gain control of the business, and decoders were at that time seen as strategic elements of that control.
More recently, Microsoft has been talking with cable operators about ways an Xbox can be used in conjunction with a cable TV service to deliver streaming content. The difference this time around is the perception of market conditions.
In the 1980s, cable was a virtual monopoly service, as satellite TV had not yet begun to disrupt cable dominance and telcos had not yet entered the business either. There was no Netflix, no digital video recorder and no World Wide Web.
In somewhat similar fashion, Apple (News - Alert) has talked to content owners and cable TV service providers about ways to use Apple devices in conjunction with cable TV service.
The carrot is Apple’s presumed ability to enhance the experience in some way, creating a revenue stream for Apple while providing more value for the cable subscription. When it ruled the market, cable companies might have refused such offers. But now that cable’s video market share is shrinking, with no end in sight, there might be serious motivation to consider such initiatives.
Presumably, Apple’s skills at customer interface and software engineering could be applied to such processes as navigation and programming guides or the integration of linear with streamed content, for example.
Apple reportedly also has talked to content owners about ways to enable ad skipping that also compensate rights holders for the lost revenue.
It remains to be seen how such initiatives might play out. At the same time, any number of significant entities, ranging from Intel (News - Alert) to Sony to Google, Amazon and others, continue to offer streaming services that license content directly from rights holders and networks, creating a new and rival distribution channel to cable operators.
In the long term, it is the rights holders who will determine much. Though today they are reluctant to disrupt their lucrative cable, satellite and telco channels, that might not always be the case.
Edited by Alisen Downey