Home Apple’s Brilliant TV Strategy: Speak Softly And Carry A Big Content Stick

Apple’s Brilliant TV Strategy: Speak Softly And Carry A Big Content Stick

Apple has said little and shown even less regarding its future plans for streaming content to your television, and that’s precisely why they’ve got a competitive advantage in the space. Where Google faltered by putting the tech before the content, Apple knows the tech is worthless without the content.

Cable operators’ days of ruling our TV sets are drawing slowly to a close, but the power brokers who hold the distribution rights to your favorite shows are loathe to give up control of how and where programming flows. Where Google and Boxee failed, and upstarts like Fanhattan face a monumental battle, is in getting cable operators and content studios to play ball with them. Conversely, getting the biggest content providers to play ball is precisely how iTunes-era Apple has excelled. Both under Steve Jobs and Tim Cook, Apple has shown it knows better than to publicly tout disruptive mainstream media technology without talking to the media studios first.

That’s why Cook’s keeping his mouth shut in public until the licensing deals with cable operators and content studios are worked out in private.

(See also: Google Has A Trojan Horse To Disrupt TV: Really, Really Big Data)

Learning From Google’s Failings

Google TV shipped with nary a cable operator or content studio content deal in sight, relying instead on an NBA.com app and Web browser that supported Flash video. Heck, Netflix didn’t even work when the first Logitech Revue GTV box hit store shelves. The Google TV Web browser was technologically capable of display full-screen HD video streamed through television networks’ websites, enabling users to view at least some cable content on their big screen TVs without actually subscribing to a cable service. But the networks and content studios quickly took umbrage with Google’s approach and blocked the GTV browser from accessing their video content. Initially hyped by Google and its OEM partners, the platform quickly failed.

Meantime, Apple has slowly grown their Apple TV “hobby” into a $1.3-billion business, shipping six million of the $99 devices in the past twelve months alone. Apple surely could have built their television box to grab video from network web sites, but they instead chose the high road, business-wise. The closest thing to network TV Apple TV offers is downloadable content for purchase via the iTunes store. Relegating Apple TV to hobby status has allowed the company to build a user base, refine their technology and wait for the cable companies and studios to come around to the inevitable Internet video revolution without upsetting the status quo.

Which brings us to Glenn Britt.

The Writing Is On The (Video Screen) Wall

Time Warner Cable CEO Glenn Britt made news Tuesday when he told investors to “assume we’re talking to everyone who makes devices [that stream online video], whether it’s Samsung smart TVs, Apple, Microsoft.” Britt’s comments are newsworthy because TWC is just about the only cable operator willing to play ball with the makers of these Internet video devices. Cable companies by and large want control of everything, including the boxes that connect to subscribers’ televisions and the user interfaces those boxes display along side programming.

The forthcoming Microsoft Xbox One and Fanhattan Fan TV devices both promise to integrate TV content from cable companies with their own user interface and functionality. In other words, they’re hacking the cable box to offer a (presumably) better user experience than what the cable companies themselves provide.

(See also: Xbox One: Microsoft’s Big Bid To Pwn The Living Room)

Problem is, neither Microsoft nor Fan TV announced any cable partnerships when they trotted out their fancy new gear. Great as both products may be – and they do both look great – they’re not going to do much for your TV experience without TV shows. And for the time being, TV shows means cable companies. Maybe Fanhattan and Microsoft are sitting on unannounced agreements with Comcast and Cox, but if they’re not, then both companies just set some pretty high user experience expectations they simply cannot meet without inking a few deals.

Which brings us back to Apple.

Speak Softly and Carry Consumer Data

Apple has shown that it knows consumer technology (iPod, iPhone and iPad), and Apple has shown it knows how to disrupt old media (iTunes). And if the rumors prove correct, Apple is about to embark on showing they know how to leverage consumer data to sell targeted advertising (iRadio).

Sure, TV studios are acutely aware of how iTunes ate the music biz’ lunch when mp3s sent vinyl the way of the dinosaur. But TV studios also know that internet upstarts like Netflix are already leading a similar charge in the realm of video. It stands to reason that they’d rather play ball with a proven winner than go kicking and screaming into the night while Amazon, HBO Go, and Netflix make hay on a new generation of Internet-only cable cutters. Not to mention that unlike Amazon and Netflix, Apple isn’t producing their own programming and so poses less of a competitive threat to the studios and cable operators.

The odds that Apple starts manufacturing and selling their own big screen HDTVs are pretty small. Margins on televisions aren’t that big anymore, and Apple is built on high margins. Expect instead to see a revamped Apple TV box when Tim Cook & co. unveil their grand vision for television. The next-generation Apple TV might take the place of your current cable box, or it might be sold to you by the cable company themselves. And it might be controllable from your iPhone, with your voice, or simply gesturing through the air with your hands. Nobody outside of Apple knows, if those inside the company are yet sure themselves.

But one thing’s certain about Apple’s television strategy: We won’t see any grand new technologies in public until content deals have been done in private. Apple knows content is king, and that’s why they’re better poised than anyone to thrive in the new age of online TV.

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The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

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