updated 09:42 pm EDT, Tue August 21, 2012
Company expected to focus on software ecosystem
Apple may be relying on the popularity of its iPad, iPhone and Mac hardware to help monetize a "fully integrated TV ecosystem," according to an investor note circulated by Barclays analyst Ben Reitzes. Amid rampant rumors surrounding a new Apple set-top box, the analyst emphasizes that the company is likely aiming to create a software-driven ecosystem, "not just hardware," even if necessary partnerships with content providers have yet to be inked.
"We believe consumers would welcome such a product from Apple as well given that many younger customers seem to be watching content on demand on smaller screens (iPads, laptops) in private places – and only Apple seems to be the company that can redirect that content back to the big screen," Reitzes wrote in the note.
Reitzes admits that "small screen" viewing has yet to match the advertising income from the traditional cable TV model, however Apple's dominance in the smartphone and tablet arenas may give it the opportunity to demonstrate how mobile devices can fetch revenue for large media companies.
"The risk of not partnering with Apple is that as young people may “cut the cord” given the cost of cable and that a screen connected to an Apple TV with AirPlay can provide a substantial array of content," Reitzes added.
Apple is rumored to be involved in negotiations with cable companies and content providers, though it remains unclear if the parties have come to agreement. Cable companies and content providers are believed to be wary of ceding ground to Apple, fearful of losing subscribers to any alternative business models.
The analysis echoes recent rumors that suggest Apple is attempting to eliminate the distinction between live and on-demand content, using a cloud-based DVR system that would enable users to view content at any time without the need for local storage. The ecosystem is said to be geared for access from mobile devices, such as an iPhone or iPad.
Apple has yet to officially confirm any details surrounding the reports, though some reports claim an Apple TV set or set-top box may already be in production. [via AppleInsider and Barrons]