When Steve Jobs introduced a major revision of the Apple TV streaming media device in 2010, he started by talking about what the company had learned about video from its customers since launching the first Apple TV three years earlier.
“The first thing is: The number one, two, and three thing they want, is they want Hollywood movies and TV shows whenever they want them,” Jobs said. “It’s that’s simple. It’s not really complicated. They want Hollywood movies and TV shows. They don’t want amateur hour. They want professional content.”
Apple’s big move that day was to add Netflix support to a new, smaller, cheaper Apple TV device. Over time, it has added a handful of additional streaming partners, such as major sports leagues, TV networks, and digital-media companies.
The newest Apple TV, which the company unveiled yesterday (Sept. 9), goes another step forward: It adds an app store, so anyone can now build an app and potentially reach millions of people in their living rooms. Apple thinks this will dramatically change how people watch television at home. “We believe the future of television is apps,” Apple CEO Tim Cook proclaimed.
Perhaps that’s true. But don’t expect a living-room app store to lead to some great, rapid democratization of content, or an indie-video renaissance. What you watch probably won’t change much. And, bigger-picture, this feels like a “plan b” move on Apple’s behalf. While a bunch of apps and the ability to search across them could eventually piece together Hollywood’s TV shows and movies, whenever—what Jobs said people wanted five years ago—it’s hardly the most elegant solution to an admittedly complex problem.
For one reason, Apple is still keeping a tight grip on an important discovery mechanism, its Siri-powered universal search tool, which is billed as a major new feature. Apple will initially support only a small number of services: its iTunes store, Netflix, Hulu, HBO, and Showtime. (“And we’ll be adding even more over time,” iTunes boss Eddy Cue said.)
What does that mean? Apple could plausibly open search to all apps someday—it’s doing that on mobile devices with iOS 9 this year. Or it also could restrict search to partners indefinitely. Today, the service seems to significantly favor iTunes and closely kept Hollywood partners.
Meanwhile, new forms of video content have had more than a decade to erupt on the web. And while some interesting new categories have emerged—such as watching people play video games—the heavy majority of streaming bandwidth is still going to Netflix, which is as mainstream Hollywood as it gets. (YouTube places high, but a lot of YouTube “video” consumption is simply free music streaming.)
It’s hard to see Apple TV changing this dramatically. For more evidence, look at the list of the most popular iPhone apps of all time. Most of them—Facebook, YouTube, Skype, Google Maps, Pandora, MLB.TV—are old, huge incumbents that took off in the desktop era.
What’s more likely, if “apps as channels” takes off, is a shuffling of business models. One important question is what will happen to the current television bundle, which is sold primarily through cable and satellite providers. But that’s nothing new, and smarter networks have been preparing for that future for years.
“All of this technology means you can choose more and be dictated less by a bunch of people who work in television programming,” AMC Networks CEO Josh Sapan said at a Recode event in New York yesterday evening. “I think that world is largely upon us pre- the Apple announcement. And if you look at the amount of viewing that occurs…it’s already the case that a substantial amount of television consumption is stuff you go find.”
For large, legacy networks like CBS, these new devices may even be opportunities, Deutsche Bank analyst Bryan Kraft writes in a research note today.
CBS is a “must-have” network that should be included in all so-called “skinny bundles” of streaming TV that companies like Apple are trying to put together, Kraft writes. He thinks new entrants, “particularly Apple,” could even grow the number of pay TV subscribers. And new streaming providers won’t offer physical DVRs, “which means advertising will be protected during time-shifted viewing.”