Apple TV Phones It In

Apple didn’t exactly “tear up the set-top box” to create the new Apple TV, as Steve Jobs once insisted was essential to any viable go-to-market strategy for any new entrant to the TV space. What it came up with instead is precisely what Jobs claimed no one would buy: another box, with another remote to clutter up the set-top and the coffee table.

Worse, as other commentators have noted, many if not most of the features and functionalities of Apple’s new set-top are already available on other devices from other manufacturers, generally at a lower price.

So, the new Apple TV is DOA? I wouldn’t write the obituary just yet.

The key is to think about Apple TV not as a standalone device but as an extension of Apple’s ecosystem, particularly the App Store, to the living room. As was first reported by 9to5Mac, the new Apple TV shares many internal components with the latest generation of iPhones, and runs a full iOS core optimized for a 50-inch Ooyala-q2-2015-mobile-video-trendsscreen. The Apple TV’s new touch and gesture-powered remote is clearly designed to echo and evoke the iPhone’s familiar touch-driven UI. From a hardware and OS perspective, the new Apple TV is essentially an iPhone for the TV, capable of doing most of what an iPhone can do short of making phone calls.

While that may seem incidental, it will allow developers to create tightly integrated mobile and set-top experiences to a degree that hasn’t really been possible up to now on other TV apps platforms. With 44 percent of video plays now occurring on mobile devices, according to Ooyala’s latest Global Video Index report, tying mobile and set-top video together in a single, seamless platform is obviously critical, for content owners and marketers, as well as for consumers. At the same time, the integration will allow Apple to tap the creativity of millions of developers already familiar with creating rich experiences in iOS to populate the new Apple TV App Store.

Many of the tweaks Apple made to iOS to create tvOS, moreover, are clearly aimed at ensuring Apple TV developers do not stray too far from the iOS reservation. Though some developers have complained about the lack of support in tvOS for Webkit and the removal of APIs for accessing various web-based applications, others see it as a boon to consumers. By cutting off web access, Apple is, in effect, forcing developers to write native code for Apple TV apps, ensuring that the user experience is tailored to the Apple platform.

“Website content…would allow developers to take the least-common-denominator approach to bring existing, awful, Web-based ‘smart TV’ apps or sites to tvOS,” Steven Troughton-Smith, CEO of iOS developer High Caffeine Content, told Wired. “They could just reuse anything they’ve built already, instead of putting care and attention into creating something appropriate for the platform.”

At a minimum, then, the new Apple TV is likely to deliver a superior user experience compared with most other TV app platforms, and provide a critical anchor for tying together mobile and set-top video into a unified user experience.

The one big thing Apple TV is not yet delivering, of course, is a bundle of linear TV channels that could replace traditional pay-TV service. Most analysts seem to believe an Apple TV streaming service is still coming, probably sometime in 2016. But I’m starting to wonder whether it’s still a priority for Apple.

“The future of TV is apps,” Apple CEO Tim Cook said last week at the Apple TV unveiling. From what we know so far, the new Apple TV isn’t exactly optimized for a bundle of linear TV channels. It apparently lacks, or at least has not yet had enabled, support for crucial functionalities for linear TV service, such as DVR capability, either locally or in the cloud.

Offering a bundle of channels that could move seamlessly between the set-top and mobile devices, moreover, would create an additional level of complexity to content rights negotiations, since fixed and mobile streaming rights are often licensed separately and can raise different clearance issues, around music and other elements in a broadcast. Given the effort Apple seems to have put into integrating Apple TV into its mobile ecosystem, it seems unlikely Apple would roll out any bundle of channels that could not move seamlessly between set-top and iPhone.

Apple_TV_4As BTIG Research analyst Rich Greenfield noted in a recent blog post, Apple still lacks the leverage with the networks to bend them to its designs because the networks are not yet in sufficient pain from the disruption of their business (although they’re getting there) to let go of their current business model.

Further, one of the major upgrades from previous generations of Apple TV in the new set-top is Siri-powered Proactive search that allows users to search across multiple apps and serves up deep links to relevant content from within individual apps. That’s a very different discover paradigm from the sort of UI you might develop if your ultimate goal was to offer a bundle of channels.

Finally, Apple’s greatest sources of leverage with the networks are mobility and time. Consumption of non-linear video is already trending inexorably toward mobile devices, and viewing of live and linear video is certain to follow. As the gatekeeper to the most profitable mobile ecosystem, Apple’s leverage can only grow as that process plays out. Moreover, the bundle is already starting to fray, and the centrifugal forces tugging at it are only growing stronger. The networks have already started embracing standalone, direct-to-consumer apps as they watch their distribution revenue erode in the face of cord-cutting.

The bundle is still important in the living room. But the living room is becoming less important as a venue for watching what we used to call television.

“The future of TV is apps,” Apple CEO Tim Cook declared last week at the new Apple TV’s unveiling. And time is on his side.

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