Talk of an Apple TV has stirred again lately with financial analyst Gene Munster predicting Apple will release in the 2012-2013 timeframe. Many arguing against an Apple TV point to the significant margins they have commanded in the industries they traditionally operate, and that these margins would not be attainable without Apple charging a significant premium over cheaper sets. The TV industry has been in a race to the bottom on price, or so the argument goes.

Nathan Safran heads the Research Department at Conductor, a New York based startup that makes an SEO technology platform. Formerly, he was an analyst at Forrester Research where he covered the Digital Home.
I agree.

Specifically, I agree that Apple will be challenged to persuade consumers to pay a premium for an Apple TV. Apple knows that and knows it's no simple task. That's why if they do come out with a TV they'll look to persuade consumers across multiple fronts.

Aesthetics

The new Apple TV will be a gorgeous piece of hardware with the classic brushed aluminum, thin profile and edge to edge screen. Could you imagine a white, pulsing Apple logo at the bottom of the TV - the kind of drool factor that would generate to be the centerpiece of every red-blooded male's living room?

Content

Apple will rewrite the content game. I expect them to negotiate a subscription-based plan with content providers that will undercut whatever consumers are currently paying for subscription-based content. What this will do is make the purchase of the TV not just about the consumer paying a premium for a sweet new TV, which can be far harder to justify than say a $200 iPhone. It's that the consumer's content experience is going to change with it. This makes the purchase easier to justify in the mind of the consumer.

Sexy Integration with iOS Devices

Apple will rewrite the content game. What this will do is make the purchase of the TV not just about the consumer paying a premium for a sweet new TV, which can be far harder to justify than say a $200 iPhone. It's that the consumer's content experience is going to change with it. This makes the purchase easier to justify in the mind of the consumer.
Consumer electronics remote controls leave a great deal to be desired. They are clunky, generally not enjoyable to use and have line of sight limitations. Apple will change all that and make the TV remote an enjoyable experience by turning every iOs device into a remote. The devices and television will talk via wifi eliminating line of sight limitations. You'll be able to flick content from one screen to another as you move from room to room.

Video Conferencing

With the launch of a new TV, Apple will finally make the long promised video conferencing in the living room a reality. And, they'll do it right. Video conference to/from any Apple device (iPhone, iPod, iPad, Mac notebook, desktop...), the ability to leave messages, and high definition video (imagine how demoing that will play at the launch event)

Extend the iOS/Mac Screen

The TV will become an extension of every iOS/Mac computing device screen; every device with a screen will be able to project its content onto the TV screen.

New Gaming Experiences

Apple will push further into Nintendo and Sony's turf with new gaming experiences that leverage the iOs ecosystem. Imaging playing head to head against your buddy on a driving game on the big screen while you steer using your iphone as the steering wheel and he does the same on his iPod Touch. Or playing a family round of Scrabble on the big screen from your iOs device. Apple will release developer tools that enable vendors to develop for the new Apple TV-iOs interaction ecosystem.

A (Free) DVR to End All DVRs

I expect a DVR built into the new Apple TV that is a pleasure to use. And, Apple will undercut the MSO's and make it free (no monthly fee). They wikll build in new ways to discover content (social, recommendation engine...) the ability to easily program the DVR from any web enabled, or iOS device. And, as an added bonus 'sling' like functionality to send your content to any web enabled or iOs device.

Social Integration

I wouldn't be surprised to see Apple turn television watching completely on its head by building social into TV watching in an elegant and usable way. Things like seeing what your friends are watching, true integration with social networks, comment and discussion while watching programming (and no, it hasn't been done before--slapping a twitter app into an internet connected TV doesn't count as social enabled TV.)

It is true of the development process for all Apple products, but it is particularly true of the Apple TV: the features and functionality that will go into any Apple TV will be guided by "how will this feature contribute to the persuasive argument to consumers to pay a premium over cheaper options?"

App Ecosystem

We've mentioned gaming and social but Apple will also likely enable an app ecosystem for its new TV. I think the way to think about this is not that Apple will enable consumers to slap a bunch of apps designed for a phone or IPad up on their big screen, but that they will create an environment for developers to create experiences and applications designed for a TV experience--one that leverages the big screen and leverages the tie in to other iOs devices we mentioned earlier.

Building the Apple TV with an Eye Towards Persuasion

It is true of the development process for all Apple products, but it is particularly true of the Apple TV: the features and functionality that will go into any Apple TV will be guided by "how will this feature contribute to the persuasive argument to consumers to pay a premium over cheaper options?" And, knowing Apple, much of the thought process that will go into the design and development of the features will require that they demo well in a launch event and post launch advertising.

Hopefully this exercise has shown that despite what some assert, there is plenty of room for innovation in the living room. If Apple ever decides to treat it as more than a hobby they will rewrite the experience for consumers in much the same way they did for mobile.