Apple TV: a seed whose time has finally come?
Steve Jobs told his biographer in 2011 that Apple had "finally cracked" a winning formula for TV. But eight years later, his successor Tim Cook is still trying to win a place in his customers' living rooms.
For more than a decade, Apple has toyed with the idea of making its own TV sets and pitched cable companies on various kinds of software integrations and bundled services.
Now, after several false starts, Apple is ready to unveil its latest vision for TV, with an event at its Cupertino headquarters this week titled: "It's show time."
Cook's latest bet is that an acceleration in cord-cutting and the proliferation of streaming services has created a new role for Apple as aggregator. Apple wants to reinvent the TV guide with a personalised slate of programming drawn from a wide range of sources - including a few shows of its own.
Even getting as far as launching a new service would be an achievement for Apple. Unlike the music and telecoms industries, which have been forced to cede control to Apple through the iPod and iPhone eras, pay-TV operators have proven able to cling on to their direct relationship with customers.
Instead of trying to reorient the TV experience around an iPhone-like grid of apps from the likes of Netflix, Disney or HBO, Apple's new TV platform is likely to put the focus on individual shows.
Its existing "TV" app, already available on iPhones and iPads as well as the Apple TV box itself, is designed around individual viewers' favourite series, with personalised recommendations for other TV and movies drawn from a range of providers. Until now, however, shows from key providers such as Netflix have been absent from its TV guide.
With Hollywood still on the fence about teaming with the iPhone maker, Apple embarked on a radical change in its TV strategy two years ago.
It hired two well-regarded executives, Jamie Erlicht and Zack Van Amburg, from Sony Pictures TV. Armed with a billion-dollar budget, they began to commission its own original TV shows and it now has more than 30 series in the works from big-name talent including Oprah Winfrey and Steven Spielberg.
Apple just needs one of those original shows to become a hit - perhaps its new drama starring Reese Witherspoon and Jennifer Aniston, a sci-fi epic based on Isaac Asimov's Foundation novels, or a mystery thriller from Sixth Sense director M Night Shyamalan - to pull in viewers to its TV app.
As it scouted for shows, Hollywood executives say that Apple has sought out high-quality content at a time when Netflix is chasing the mass market with a huge volume of original shows. However, some in Hollywood have struggled to adjust to the secrecy and exacting standards with which Apple typically approaches all its products.
Analysts estimate Apple could charge $10-$15 (R145-R217) a month for a subscription video service that includes its original shows. The company needs new sources of income to counteract the iPhone's recent declines and meet its $50bn services revenue target by 2020.
Some on Wall Street are sceptical that a video service can make a meaningful impact. Analysts at Goldman Sachs said this week that even if 20-million people sign up to a $15 monthly fee, by 2020 it would generate only $3.6bn in annual revenues - barely 1% of Apple's $265.6bn total sales last year.
To bolster the income from its own shows, the iPhone maker has also been negotiating deals with TV networks and film studios to offer their content too. Viacom and CBS are in advanced talks to license programmes to Apple, while HBO has also held talks, said people familiar with the matter.
The pricing would mirror the structure of Amazon's "Channels", in which Prime customers can pay an additional fee for subscriptions to other streaming services.
Hollywood executives are tempted to team up with Apple because of its massive reach but are also wary of the potential costs of further ceding control of their content to tech giants. Within Apple's ecosystem, they may not be privy to information about who their customers are or what they are watching. TV groups fear losing their longstanding control over pricing or user interface design, with their channel brands submerged behind a list of programmes and Apple acting as gatekeeper.
For smaller companies such as Viacom and CBS, this is an easier decision. Viacom is not trying to build its own streaming service and is making good money by selling shows to tech companies, such as a reboot of MTV's "The Real World" reality show for Facebook.
The decision is more complicated for AT&T and Disney, which have made mega-acquisitions to build their content libraries and take on Netflix.
Disney is gearing up to reveal plans for its own streaming service just two weeks after Apple's event. The media group has been outspoken about its plans, with CEO Bob Iger dropping details during earnings calls through the past year.
By contrast, Apple has provided little information about its event, even to the studios whose shows will appear as part of its new video bundle. After waiting so long for the big unveiling, many in the TV business still feel Apple has a lot to prove.
"They haven't illustrated a strategy," said one TV network executive. "It's Apple, but at the same time there are other places to go."
© The Financial Times..