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For HBO and Apple, a long process to partner on TV

For HBO and Apple, a long process to partner on TV


HBO built the Apple TV app in-house for the first time ever

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To some, Apple TV seems like a laggard.

The web TV box that Apple has referred to for years as a "hobby" is only now offering access to shows and events from HBO and ESPN — long after Roku and Xbox. The truth, however, is that the process of acquiring and delivering episodes of True Blood and SportsCenter isn't as easy as flicking a switch.

"Affiliates are always initially hesitant about things connected to the TV." Why this matters, of course, is because of the growing number of consumers who are searching for alternative ways to watch TV and film. The traditional TV set has given ground to computer tablets, mobile phones, and set-top boxes which stream video from the web to a TV. The market for these devices is expected to be huge and Apple is after its share.

Since Apple, ESPN, and HBO won't discuss specifics, we don't know exactly why Apple TV took so long to get the cable networks. What we do know are some of the factors that typically hold up the process. Nothing is more time consuming than writing all the code involved and encoding HBO's massive video library, said Otto Berkes, HBO's chief technology officer, in an exclusive interview with The Verge. He said "optimizing the compression formula to deliver the high-quality video to the lowest bandwidth" is a massive undertaking. The company does this so the streaming video looks good even on slow web connections.

Getting HBO Go on the Apple TV might have taken longer had HBO not begun to boost the number of engineers working at the company's new development center in Seattle. Apple TV was the first app that HBO created completely in-house, said Berkes, a former Microsoft executive who started at HBO two years ago. Prior to Apple TV, HBO teamed with third parties on its apps, but "this was 100 percent created by our software and design staff," Berkes said. "It marks a turning point. I would say we're two times faster than just a year ago, and that will increase over time."

"I would say we're two times faster than just a year ago, and that will increase over time." In February, Berkes promised that HBO would match the best efforts of other video delivery services, such as Netflix.

The cable and satellite companies that carry ESPN and HBO's shows also contribute to keeping content off devices like the Apple TV. Lest we forget, before HBO or ESPN fans can watch on their devices, they are required to subscribe to a participating cable or satellite TV provider. The rub is that not every cable and satellite affiliate of HBO and ESPN agrees to authenticate every mobile or set-top box.

For instance, Charter Communications has refused to authenticate HBO Go for Apple TV. Comcast blocks subscribers from receiving HBO fare on the Roku, according to HBO's site. Dish won't authenticate ESPN but it does authenticate HBO Go for the Apple TV as well as many other gadgets. Yesterday morning, when Apple announced it would offer HBO and ESPN, DirecTV wasn't authenticating the device. By late afternoon, however, the satellite TV provider had reversed itself.

Charter Communications has refused to authenticate HBO Go for Apple TV The refusal to authenticate can sometimes be traced to an affiliate not liking the business terms, or having an isolated problem with a specific device maker, according to multiple industry sources. Other times, the block can be traced to lingering suspicions among some cable and satellite TV providers that mobile and set-top boxes are competitors.

"Affiliates are always initially hesitant about things connected to the TV," said one cable industry source. "They were nervous."

But those fears are evaporating, largely because HBO Go showed that these devices and increased internet distribution could help cable and satellite TV retain subscribers, the sources said. HBO has won accolades for providing high-quality streams and for offering subscribers its entire video library online. Customers love it and the authentication works. It may have also helped convince the cable and satellite guys that Jeff Bewkes, CEO of Time Warner, HBO's parent company, was one of the biggest boosters for distributing cable programming over the internet — as long as it was offered to paying subscribers.

One more reason that Apple may have appeared to dawdle getting content for Apple TV is that Cupertino was focused first to supply content for the iPhone and iPad. It stands to reason that those devices would go first, since a lot more people own those than they do Apple TVs. They were also likely an easier sell to cable and satellite TV providers, who were a lot less afraid of mobile devices initially than over-the-top boxes like the Apple TV.

Finally, maybe we shouldn't expect more from the Apple TV. After all, for a long time, it was just a hobby.