Can Apple Wipe Out the TV Industry?
Apple (NASDAQ:AAPL) is rumored to be working on a new Internet television set that could be released this year, cutting into cable and satellite earnings like no other online service has been able to do. But Phil Cusick — an analyst from JP Morgan Chase — doubts whether the rumored TV would replace paid television subscribers, and says there’s little chance the TV will be out this year.
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If Apple was interested in taking the aggressive route, said Cusick, it should offer iTunes as well as Netflix (NASDAQ:NFLX) and Hulu (NASDAQ:CMCSA) on its TV service, in addition to regular broadcast television. However, Cusick asserts that since media content owners have no incentive to allow this to happen, they would likely block any attempt.
Cusick claims that Apple has two real options. The first is to create a set-top box for cable companies, giving paid TV customers access to both broadcast and Internet content. The second option is for Apple to slowly expand its Apple TV platform without turning it into a full-fledged set top box like TiVo. Cusick believes the latter is the more likely choice.
The rumor that Apple is looking to eventually design a television set dates back to an interview with former Apple CEO Steve Jobs. Jobs indicated that Apple had finally cracked the secret to creating a simple and elegantly designed television set. But that concept does not yet seem to have materialized.
For now, it seems unlikely any Internet TV provider could replace cable or satellite providers. Services offered by Netflix and Hulu — a joint venture between Comcast (NASDAQ:CMCSA), Disney (NYSE:DIS), and News Corp. (NASDAQ:NWS) — are very limited in comparison to what cable providers have to offer.
Meanwhile, iTunes and Amazon (NASDAQ:AMZN) have a wider variety of options, but the pay-per-show model ends up making their services much more costly than a cable subscription with DVR. Unless iTunes and other Internet TV providers offer more for less, it is highly unlikely cable providers will wake up to an industry in ruins any time soon.
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