Pondering an Apple entry to the TV market: Do you need live TV, sports?

Pondering an Apple entry to the TV market: Do you need live TV, sports?

Summary: An Apple HDTV could be powerful. However, live television and set-top boxes would pose a big hurdle for Apple as it tries to be the hub of your digital living room.

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TOPICS: Apple, Hardware, Mobility
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Apple could launch an Internet connected HDTV in the next two to four years, according to Piper Jaffray analyst Gene Munster. On paper, an Apple HDTV could be powerful. However, live television and set-top boxes would pose a big hurdle for an Apple TV.

Thoughts of an Apple TV have the tech industry buzzing a bit. Here's what Munster said in a research note:

As part of our "Internet TV White Paper" published on 8/16 we estimate that of the 220m flat panel TVs sold in 2012, 65% or 143m units will be internet-connected, of which Apple could sell 1.4m units. We believe an Apple Television could add 3% to revenue in 2012, 5% to 2012 and 7% to 2013. Recent developments in Apple's strategy bolster our confidence that the company remains serious about the connected living room, and we see 2012 as the most likely timeframe for the launch of an Apple Television.

This move would put Apple CEO Steve Jobs, who has noted previously that no one wants to buy a new set-top box, at the center of your living room. This Apple TV would naturally be integrated with iTunes, your iPad, iPhone, Mac and iPod touch. If Apple pulls off a good entry into the TV market it could be a halo effect bonanza. Munster's theory is that Apple could be a cloud-based media provider and portable content would be a key differentiator.

Munster's note sounds very interesting from a business perspective. Apple could charge for an Internet-based iTunes TV pass for $50 to $90 a month. Apple also has the content to make a connected TV work:

I could almost be interested in this Apple TV if I could get past all the key acronyms that get me to watch television: NFL, MLB, NHL and every-once-in-a-while, the NBA. Any connected Apple TV will have to get me live sporting events. Local news and live television is a must too, but its importance is diminishing. On-demand TV is nice, but there's no way a consumer is going to forgo the live stuff. Meanwhile, if the consumer still has to pay the cable company it's highly unlikely that you'll pay for an iTunes TV pass. Munster seems to imply that Apple could find away to boot your cable provider.

As an aside, I'd love to see Apple try the live TV thing to usurp cable just as a spectator sport. The main event: Apple and the NFL negotiating over broadcast rights.

Munster argues that Apple could hurdle the set-top box and live TV conundrum by offering Apps. Munster said:

(The cable, live TV) hurdle could be solved with the addition of an App Store for the TV, offering apps like games, Netflix, and Hulu Plus (currently available for iPhone and iPad) with current TV content through Hulu for $10/month.

You'd be foolish to discount Apple's potential in the TV market, but the company will have to change the discussion. Munster said:

History shows that Apple can succeed by redefining mature markets (portable music, mobile phone). Home entertainment systems are typically combinations of an expensive HDTV, complicated A/V components, and a monthly service fee often with a total sticker price of $2,000+. CE manufacturers, service providers, and digital content distributors have loosely combined disparate parts that are too confusing and costly for consumers. But as connected TVs proliferate and IPTV content becomes available the integration of hardware, software and content will become a key selling point for TVs. We believe Apple is uniquely positioned to combine these elements and charge a premium ($1,800 to $2,000) for an Apple-branded television at a sticker price that would be competitive with most home entertainment systems.

Here's the ROI case in a graphic:

The issue: That graphic assumes you won't have to pay for cable. Apple has the ecosystem to make a run at the TV market, but it's going to be extremely difficult to be the one-stop entertainment shop unless it gets live TV going. You just don't watch the Super Bowl on demand.

Topics: Apple, Hardware, Mobility

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20 comments
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  • Thanks but no thanks

    Could Apple pull this off in a niche market? Probably. Do I want Apple controlling my TV? Over my dead body.
    Economister
    • After all,

      @Economister <br><br>What Steve Jobs doesn't like... ;)
      The one and only, Cylon Centurion
      • RE: After all,

        @NStalnecker He doesn't like adult-oriented apps, soooo yeah, don't expect any adult channels on this.
        rjsec4ever
  • I just don't see it.

    Why Apple would give up its usual business of selling small electronics as very high margins to enter the much lower margin "appliance" arena is beyond me. Even if it was within the realm of possibility, a reasonable assumption would be that Apple try to make a go at it through their existing Apple TV devices first. As an avid Apple TV user myself I can tell you it is nowhere near having the available library or functionality to pull it off.
    oncall
    • RE: Pondering an Apple entry to the TV market: Do you need live TV, sports?

      @oncall
      "...to enter the much lower margin "appliance" arena..."

      I can see Apple as a new B&O of the audio/video arena. I would happily pay $5000 (or more) for an integrated Apple television (I have payed more for B&O TVs).
      kisap
  • live sports, ppv sports is a problem.. local HD you can get out of the air.

    i agree with you about live sports.. i've dumped my cable for digital downloads.. my only problems is live sports and live events that are not on local over the air stations... i don't think people realize what is available over the air now.. almost all my local channels are now available over the air in really good quality HD.. local live is not a problem..
    doctorSpoc
    • We get TV via antenna too, which leads to some thoughts...

      First, the totals for TV devices vs an integrated Apple TV could use an update. We spent $90 for an antenna to pull in distant stations (we live in Napa, get broadcast from SF towers), so I'd add that to the list of expenses for a TV. I'd also add the cost of a decent soundbar or surround system, which is $250 and up. The antenna is the size & shape of a sheet of typing paper, so it should be able to be integrated somehow. Regardless, I agree that all I need is a TV antenna and hi-speed internet.

      Second, speaking of soundbars, there was a company that had a really good speaker system that used the flat screen of a PC monitor as the speaker. Are they still around? Did APPL buy them? Could the sound be greatly improved via integrating the sound into the TV using the screen as a diaphragm? If so, that would be hugely attractive. For a TV you want to keep for 5+ years it would be cool.

      Third, most of the devices on the pile of components that make up today's tv system have a remote. Right now we have a remote for the TV, the soundbar, the AppleTV, and a cable set-top box we never use but took anyway cuz it was cheaper than hi-speed internet alone. Where AAPL can really help consumers is by doing away with the basket of remotes I sort through to adjust something. Maybe include an iPad mini as a universal remote?
      ko_murphy@...
  • yes, steve jobs said that this is all leading to connected TVs..

    but he also said the apple is going going to enter the commodity TV business.. apple doesn't do low margin devices and that's what it would be.. this might just lead to apple providing a service that's available on TV but jobs has made it pretty clear apple is not getting into the TV business.. low margin devices is not something that apple is interested in..
    doctorSpoc
  • Why can't Apple do deals with media providers?

    Seems to work very well with the iPhone, why not get with cable companies for a package that includes to the home and a monthly fee for your Apple TV? Shift some of the costs to the cable company while allowing them to sell you movie channels like HBO.

    I guess it depends on how you get your internet. We use cable (without movie or sport PPV channels) and I can see them wanting to work with Apple on this.
    Ken_z
    • Apple IS a media provider & have deals with every major content owner..

      @Ken_z - and many, many small content owners.. they do not need to go through cable companies for content that they are already licensed to sell, they will go directly to the content owners for those rights. they sell Movies, TV Shows, Music, Books etc, etc, etc.. they just need a technological solution for live sports and events is all.. they do everything on-demand, but the need a solution for live events.. that's the big gaping hole in their portfolio.. "iTunes Live"
      doctorSpoc
  • Apple bidding on sports

    would make Google's half-hearted bid on the 700Mhz spectrum look positively ho-hum. Apple has the money (that $45 <b>billion</b> in liquid assets) to afford it, the iAd network to sponsor it, and all those credit card numbers on file in iTunes to cash in on it. An Apple iTunes NFL Season Pass would scare the Hell out of the networks, and probably AT&T as well.</b>
    matthew_maurice
    • RE: Pondering an Apple entry to the TV market: Do you need live TV, sports?

      @matthew_maurice

      [i]An Apple iTunes NFL Season Pass would scare the Hell out of the networks, and probably AT&T as well. [/i]

      More likely, DirecTV. For years people have begged the NFL to allow someone, ANYONE, in addition to DirecTV, to do PPV NFL games.

      And it sucks. Using PPV or a "season ticket" plan, I can watch ANY MLB game I want. I can watch ANY NHL game I want. I could watch any NBA game I wanted to, if I didn't think basketball sucks, but I digress. I can watch ANY MLS game I want. But when it comes to the NFL, I'm screwed because I don't use DirecTV.

      DirecTV's contract with the NFL is up in 2014, I believe.

      If Apple can break DirecTV's hold on the NFL, I say bring it on Steve, I'll happily pay.
      Hallowed are the Ori
  • RE: Pondering an Apple entry to the TV market: Do you need live TV, sports?

    The channels as "apps" model is definitely intriguing and would be the a la carte experience that so many people would love. The NFL, MLB, NBA, and NHL could create their own apps that delivers live broadcasting (and choose your announcers!) as well as all the goodies that an app like MLB at bat offers.

    Couple that with Hulu, Netflix, and HBO as the article mentions (and other premium channels), you may have something.

    I don't think we would be saving on our monthly bill even if we dropped cable as these separate subscriptions, although billed once per month through Apple or whomever, would more than likely cost just as much. Not to mention our internet bill going up as most cable providers offer you a deal on Internet if you subscribe to cable and/or phone.

    The idea is solid and would be great for consumers. That's why it has no chance of coming to fruition.
    M.James
    • that makes sense.. the app model ...

      @M.James - content producers will have direct access to an existing channel of users ready to purchase content directly from them through the iTunes Marketplace.. apps.. yup that makes sense.. they can watch on iTV, iPod, iPhone, iPad etc..
      doctorSpoc
    • Such plans to "dump cable"

      @M.James

      Besides being "consumer friendly" also require the cable companies continued delivery of cheap and unlimited broadband services. I noticed the bundled Verizon FIOS deal for phone, internet and TV is only a little more expensive than buying broadband internet alone. So yeah, the cable companies have this game figured and they will make their money from you, one way or another.
      oncall
  • RE: Pondering an Apple entry to the TV market: Do you need live TV, sports?

    Why is this "news" ?

    This isn't an announcement from Apple... it's some guy who basically made up a feature list and threw an imaginary price tag on top of it. I could just as easily come up with a set of specifications for a new Apple TV and they'd have every bit as much of a chance of being accurate.
    mikefulton
  • RE: Pondering an Apple entry to the TV market: Do you need live TV, sports?

    I'v not been watching TV for six month. I get the information for internet by pc, although the content of internet maybe conveyed via different way to TV. I want apple attract me by APPLE TV with interesting movies without dvd player for the reason it cann't offer live tv, if they cann't why should we pay for it under the situation that you can enjoy every videos you can get in you pc, you know a video converter like ifunia is just $40 less than $50 to $90 per month, by the way, handbrake is even free.
    pennwarren
  • Apple PLEASE do TV! Comcast is a ripoff.

    Finally, a company that can stand up to Comcast cable! Apple could and SHOULD do TV. Comcast has been ripping up off for way too long now. Comcast charges $60. a month for extended cable (no hbo or sports) and $50. a month for internet. What a crime! If their internet goes out, (several times a week) or tv channels degrade, Comcast doesn't care at all. I would gladly pay Apple for this because Apple would do it right. Apple should offer TV for $25-$30 a month, and shut down Comcast for good. It would be even better if Apple also offered internet service for another $25. Apple could own this market. None of the other cable tv and internet companies will stand up to Comcast and offer a fair price. Apple are you listening? PLEASE DO THIS!!!!! Make Comcast cable a bad memory.
    nevertell
  • RE: Pondering an Apple entry to the TV market: Do you need live TV, sports?

    As somebody mentioned above the local live broadcasts are not an issue as the are now OTA in HD quality.

    Overall I like the idea but with some tweaking. I don't want to buy the actual TV. I know they are trying to get away from the setup box but we have three TVs in the house that are used on a daily basis so to move to this setup as described I would have to buy three of their systems. This doesn?t even include two other TVs that don?t get used very often and a projector which would pretty much become worthless if I went to this system as described. At that point it just becomes too expensive to be a true alternative. If the TVs were economical enough to have several in the house do I then have to buy the individual apps I want to use for each TV?

    If they offered a main hub that wirelessly connected to the TVs in the house and served the content and apps I would be all over this assuming the price was within reason. Maybe the individual content is limited to being served to one TV at a time to make the content owners happy but how often do you have more than one TV in the house watching the exact same thing?

    I really think the apps are the key if they can provide subscriptions to content via those apps. By using apps offer a la cart episodes or full seasons as they do with their current content on iTunes. Say you watch an original series on one of the premium channels like HBO. You don?t want to buy the app that offers everything on HBO for a monthly fee but you can buy a season pass for just that series. Offering options like this would be great and overall they (content owner, HBO in this example) could actually end up making more money than the monthly subscriptions through the cable/satellite providers since the a la cart option would be reasonably priced but probably more expensive on a percentage basis than the whole package. For sporting event such as the NFL, offer a season pass like Direct TV offers but also have the option of individual team season passes. You might not have any interest in watching every NFL game that you can but might want to make sure you can see every game for your favorite team or maybe a couple. Offer a pass specific to that team that would be cheaper than the total NFL pass but again on a percentage basis would probably cost a bit more.

    One of the areas I see this having trouble is the current service providers. Your cable company currently supplies you with all your viewing content as well as the internet connection. Since they would be facing the potential of losing a lot TV subscriptions they would be looking to make up that revenue in other ways. Of course the internet service will end up going up due to losing the package deal pricing but I could also see an increased move to bandwidth caps. You could sign up for a specific bandwidth level package or go with the base package and pay an increased price when you go into the next packages level. While I think the cable companies charge way too much for what they offer (I currently pay $150/mo) with bandwidth limits the Apple TV (or anybody else?s) offering could end up costing a lot more.
    non-biased
  • I'll stick to free public broadcast and DVDs, thanks.

    Closed iHDTV sounds more and more like a turn-off every day.
    HypnoToad72