Rumours abound that Apple is planning to take on the television market, either with a screen or through a new streaming service. “What will Apple do in the television space?” is a question that informitv is often asked. A number of analysts have suggested that Apple could launch an internet-connected high-definition television screen. If it does, which is by far from clear, it will not be television as we know it. Apple tends to enter new markets by redefining them.
The Apple TV adapter device has failed to make the same impact as the iPod, iPhone, or iPad and is still apparently regarded by Steve Jobs, the chief executive of Apple, as a hobby.
Compared to other media markets, television is a tough one to crack. The global market for television sets is very fragmented, with different standards and minor variations in specification between countries, and differences in regulation.
The structure of the television market differs from country to country, dominated by different operators and broadcasters, and programme rights have historically been territorial.
Even where other countries use similar standards there are typically local variations. Major television manufacturers typically produce a standard chassis with country specific models.
The United Kingdom, for instance, has its own profile for broadcast television, as documented by the Digital Television Group, which specifies various aspects of signalling, from programme information and subtitles to interactivity.
Why would Apple want to deal with this geographic complexity in what it might regard as the legacy television market, when the potential for network-connected television is global?
Apple prefers to develop products for the global retail market. It may be necessary to do deals with carriers for mobile products, but they remain essentially the same worldwide, which is a major marketing advantage.
We should distinguish between the high-definition display and a television receiver. In many homes, high-definition screens are already connected to some other form of receiver or signal source, such as a satellite, cable, internet protocol or terrestrial tuner or digital video recorder, not to mention a games console or disc player.
A next-generation display therefore only needs digital connections in the form of internationally standardised digital inputs. It does not need to deal directly with legacy radio-frequency inputs and co-axial cables. As such, it will not be a television receiver, but simply a high-resolution digital display.
Apple has long since sold rather nice screens, at a premium price point. It currently sells a 27-inch 2560×1440 pixel resolution Cinema Display for $999. In terms of resolution it far exceeds high-definition television, but Apple does not currently compete in the intensely competitive, high volume, low margin market for television screens.
The real opportunity for Apple lies in integrating the large living room screen with its ecosystem of computers, tablets and mobile devices, and with applications and services delivered over the internet.
The Apple TV adapter, now in its second generation, has so far failed to gain much traction, selling just over a million units by the end of 2010. Its profile could be raised if, as anticipated, Apple extends its successful app store model to the television. That could be through the latest Apple TV device, or an entirely new product.
However, Apple has already introduced a key innovation in the form of AirPlay, which allows audio, video and images to be streamed directly from its current products to any television screen connected to the latest Apple TV device.
It has been reported that Apple is considering licensing its AirPlay technology to other television manufacturers, much as it already does for audio products. Product managers with whom informitv has spoken seem open to this possibility.
By building Airplay into televisions and other displays, mainstream consumer electronics manufacturers can benefit from the entire Apple ecosystem and its leadership position with the iTunes digital media store. That extends the reach of Apple into the living room and the mass market of connected television at relatively low risk and cost.
There have long been suggestions that Apple aspires to launch a cloud based subscription video service, possibly powered by a massive new data centre it has been building at Maiden in North Carolina, with more planned.
This seems much more likely than Apple getting into the television display market, assuming that it can reach deals with rights holders. The recent addition of live MLB and NBA baseball and basketball coverage on Apple TV could be an indication of what is possible. Whether major studios will be prepared to offer their precious premium programming is another matter.
The television market is ripe for disruption. Existing connected television propositions are simply tinkering with the established medium. As Steve Jobs said at the D8 conference last year: “The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it”. If Steve Jobs can deliver one more thing, it could be to change the way we view television.