Apple Wants to Upend the TV Business: Will Big Content Play Ball?

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Eduardo Munoz / Reuters

Over the course of his career, Steve Jobs revolutionized three industries: personal computing, digital music and mobile communication. Before his death last fall, he had turned his attention to a fourth — television — according to Walter Isaacson’s biography of the Apple co-founder. Jobs’ vision was an integrated device that would combine Apple’s famously intuitive design interface with seamless access to a user’s media library. “I finally cracked it,” Jobs told Isaacson. By the end of 2012, we may see the fruit of Jobs’ vision.

Of course, Apple has had a TV product for years — a small set-top box that allows users to download movies from the iTunes store. But a company executive has referred to that initiative as “a hobby.” Now it appears that Apple is accelerating work on a more comprehensive TV solution, according to a recent report in the New York Post. Specifically, the company is aiming to introduce a streaming TV service by Christmas, says the report.

Working off the success of the application-based software model that has been so popular for the iPhone, Apple is exploring the possibility of offering TV channels as apps. The chief stumbling block is getting the big content companies to play ball, according to the paper. The large entertainment companies appear reluctant to turn over their goods to an Apple distribution system as the major record labels did a decade ago with iTunes. Per the Post:

For months, Apple’s point man, Eddie Cue, has been leading talks with content providers, which have largely balked at the tech giant’s efforts to exert control over all aspects of the video service, including pricing, sources said.

Apple’s negotiating stance can be summed up as “we decide the price, we decide what content,” according to one source familiar with the talks.

“They want everything for nothing,” said another media executive, echoing the similar tense negotiations Apple has had in the past with magazine publishers and music companies.

If Apple’s new TV effort can repeat the company’s success in the music and mobile spaces, it could drive the company’s share price to new heights — possibly even $1,000 per share, according to Apple co-founder Steve Wozniak. Industry analysts are bullish on the prospect. In a Bloomberg interview last week, Piper Jaffray’s Gene Munster predicted that Apple TV could be “the biggest thing in consumer electronics since the smart phone.”

According to Munster, the new product could be a quantum leap forward for TV design — simply a “sheet of glass, no edges or bevels” — and could be voice-controlled with technology like Siri, Apple’s iPhone virtual assistant. It’s also possible that Apple will take an incremental step and update the Apple TV set-top box this week when it launches the new iPad 3, saving the actual launch of a new TV monitor until the fall.

Of course, Apple is not the only big company, or even the only big tech company, jockeying for position in the growing battle for the digital living room. Google appears to be assembling the pieces of its own TV offering, which could leverage the company’s newly acquired Motorola Mobility division to offer a new set-top box for Google TV. The company is already experimenting with its own pay-TV service, which it plans to roll out as part of its Kansas City, Kans., high-speed Internet network.

And then there are the big broadband companies, like Comcast and Verizon, that are working on their own streaming services to rival Netflix, the streaming leader. Comcast just inked deals with NBC Universal as well as Disney–ABC Television Group, Sony Pictures and Warner Bros., to offer the company’s 20 million–plus cable subscribers access to popular movies and TV shows.

For Apple, the challenge will be to secure the content rights from the big entertainment companies. If it can do so and combine those TV shows and movies with its world-famous hardware design and user interface, Jobs’ vision of disrupting yet another industry may well come to pass.

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