A mixed signal is coming as dissident accounts surface regarding Apple’s negotiations with cable and satellite providers over the rumored “Apple TV”. Bloomberg reported this morning that talks with TV content providers have stalled due in large part to the fact that content providers are unwilling to relinquish any control to Apple. Striking a deal to offer TV service in the way that Apple would like to is proving much more difficult than it was to convince the major record labels that a deal with Apple was in their best interest.
Content providers are in a much different position than the record labels were around the turn of the century (we can say turn of the century now, right?). Record labels were in the middle of watching their entire business model crumble before their very eyes. Their industry was in free-fall, and as a result, they were willing to cave to Apple’s demands. Unlike the recording industry, the TV industry has arguably done a sufficient job of keeping their content locked down in the face of new technology. Record executives, frightened of the internet, didn’t take measures on their own to secure their own distribution model online, which left an opportunity for Apple to swoop in and literally save the industry from collapse. TV executives and distribution channels got the opportunity to learn from the mistakes of the recording industry. They have found moderate success with distributing content through Netflix and Hulu.
It is worth noting that Apple faced opposition from wireless carriers when it wanted to break into the phone business with the iPhone. Apple wanted to have a direct relationship with iPhone customers, and it didn’t want to have any carrier logos on its devices. It found an initial partner in AT&T, which was all it took to get the iPhone to market. The iPhone was wildly successful, and wireless providers who initially shunned the revolutionary device now clamored to be the next one to be able to offer it to customers.
There is a good chance that history will repeat its self as Apple progresses further into the TV market. So far, content providers are holding fast to what they already have; ugly and inconvenient user interfaces and ho-hum service. They want to be the ones who control the boxes that are used to access their services, and they want to control the customer relationship. The problem is that the content providers are terrible at all of this. Their equipment, service, and customer service are abysmal, especially when compared to Apple. This entire scenario sounds so much like the opposition that the iPhone initially faced that it’s almost comical.
However, it only takes one.
It only takes one cable provider who is willing to “bet the farm” on Cupertino. According to recent reports, that one provider may very well be Time Warner, who is reportedly inching closer to inking a deal with Apple. If Time Warner partners with Apple, it is highly likely that users will abandon their current cable or satellite provider to further integrate the Apple device paradigm into their digital lives. If that happens, the iPhone scenario is likely to play out once again, with content providers clamoring to offer Apple’s set-top box, because customers will demand it.