How Apple Could Change The TV Forever

One of the things I have been thinking about since I wrote this monster piece on the Future of Television, is how Apple should approach this space. I know all the rumors and speculation points to them doing an actual TV set, but I don't know if that is actually the best play here. First we have to think about what's wrong with television as it is. Is it the actual hardware, is it the software, or is it the content? I honestly think that the latter two problems are what keeps the Television experience from advancing (and I think most people agree with me there). The software is really bad for the most part, and there is only one way you can get all the content, which is through your TV provider be it cable or satellite. So what we need from Apple isn't another $1000 dollar TV set that does everything the others already do, but a better software experience that can bring us the content we want.

How can they do this?

One solution to this is actually pretty simple, and has been rumored for a long time: bring an AppStore to the current AppleTV. Why or how does this solve the problem? It solves it by allowing 3rd party developers and the major content distribution companies to bring their apps to the AppleTV. This would, hopefully, include apps like Hulu and HBO Go. This would also keep Apple from having to get all the content deals they are rumored to be having a hard time getting. There are, of course, problems with this solution. It still relies on the content distributors fully. If they don't create an app, users are out of luck. Apple would have to put some pressure on the studios to get them to develop apps for the store.

There's another solution too

They could solve all those problems by using CableCARD, which is the industry standard way for 3rd parties to tap into the cable content. Of course the use of CableCARD introduces a whole slew of new problems. First, it still relies on the cable companies, so users would still have to have cable subscriptions. Second, this is a US only standard so it wouldn't help the rest of the world out at all. Third, in order to use CableCARD, they would have to get it approved by Cable Labs, which is controlled by the cable companies, who may not want Apple entering into their space.

What's the best solution?

The best solution is actually a bigger, and harder solution. First they would introduce apps, this would provide a stop-gap solution of having at least some apps on the AppleTV that allow for getting content in other places. Second, they would have to secure deals with the major content studios so that Apple could offer the content in an innovative fashion. Third, they would have to come up with an innovative fashion to distribute the content. Be it a subscription style service or A-la-carte, they would need something that was cheaper than what users can get cable for. They wouldn't be able to charge very much because then it wouldn't be successful. In order for it to work, it has to be a great experience that costs less than cable. That's an awfully big order to fill, since the content companies will go into it kicking and screaming, if they go at all.

An Added Benefit of Apps

As a side note, if Apple introduces an AppStore for AppleTV at their next event this fall, they could seriously hurt Microsoft, Sony and Nintendo. Imagine the games that could be brought to the TV using the iPhone and iPad as controllers. Apple would have a huge benefit with customers who already own iDevices. This would mean users can buy a $99 dollar puck and get a full game console, where the games only cost $10 compared to $70. It'd be slightly harder to penetrate the market of gamers who don't have iOS devices, since they would have to buy both the AppleTV ($99) and an iOS device (at least $250 if you don't want a service contract). This means people would seriously want to use the AppleTV as their console instead of buying a $199 Xbox 360. Granted they would save serious money on the games, so eventually the Apple way would save them money. If there were lots of games, which I expect eventually there would be.

Why an Actual TV doesn't make sense

I know Apple is technically a hardware company. So it makes sense that they would want some new hardware. However, the TV space isn't an area where Apple would find it easy to find a profit. For one thing, the margins are exceptionally low. Over the last few years LCDs have gone down incredible amounts to the point where you can get a decent size TV for $400. There isn't any chance Apple could make a TV for this price.

Second, the TV manufacturer space is already pretty full. There isn't much space for innovation in the hardware space (TVs are already pretty thin), and even if Apple could bring about the 4K or OLED revolutions faster, the cost of those TVs would price Apple right out of competition. That's why it makes much more sense for Apple to focus on the TV industry's weakness: software and content.

Conclusions

It makes more sense for Apple to focus on bringing content to their AppleTV than to make an iTV. At least for now. It could help them to make an actual TV set in the future, but they have to have the real problem solved first.

What do you think? Will Apple rule the TV forever like they did with music? Talk back in the comments below!