American analysts were ready to bet everything they had on the fact that Apple would release a TV this year, and they would have won if Apple's plans had not been upside down by the companies that produce the multimedia content that the CATV service providers offer us. Apple would be in tough negotiations with these companies and the discussions would have reached a deadlock because the companies would like to control the software based on which the TVs would work, but there are also problems regarding the companies that would distribute the TV.
Apple is vying with the likes of Google Inc., Microsoft Corp. and Amazon.com Inc. to make TVs the digital hub of people's lives in an industry projected to reach $200 billion worldwide by 2017. Whoever wins must first strike deals with media companies or cable providers who have little incentive to cede valuable revenue streams. The result: Apple won't be releasing a new TV product this year, as analysts had predicted, said a person familiar with the company's plans. In recent negotiations, the main stumbling blocks with cable companies have included a tussle for control over the software that determines the screen interface — the look and feel of the viewer's experience, said people familiar with the discussions.
In practice, the future partners of Apple want to control the software on the basis of which the televisions work, something that the mobile phone operators also wanted to do in the case of the iPhone, but we know that there Apple won the case. However, the problems do not stop there, because Apple has been trying for several years to conclude agreements with the big media companies in the US, but it has no luck and there could be something more in the middle than the simple refusal to offer mutual control over the software/ multimedia content.
Apple Inc. (AAPL) engineers have been working since 2005 to reinvent TV viewing. Designing the gadget may prove easy compared with convincing media and cable companies to loosen their grip on the television industry. Since the middle of the last decade, Apple's engineers have been working on a more advanced product to allow viewers to quickly find shows and movies, blending both live and recorded material, the people said. It would recommend content based on interests and work seamlessly with Apple's family of other devices. An iPhone or iPad would double as a remote control, the people said.
The big CATV service providers would like to rent a possible Apple television, or an Apple TV, for a monthly subscription, while Apple would like to sell it directly to the consumer and then ask for money for viewing the content. In addition to this different business strategy, it seems that Apple's potential partners fear that a company product could affect their entire existing product line, something that no one wants and of course that is where the negotiations begin to stop going as it should. Apple wants to get as much profit as possible, media companies and CATV service providers want the same thing, and for a collaboration to be concluded, everyone has to give up something and reach a common point.
In some of its most recent negotiations, Apple has focused on cable companies that would give it access to live broadcasting without needing new content agreements. Under such a deal, Apple would release a new product for customers to access their set of channels, paid with a cable subscription, instead of leasing a set-top box from pay-TV operators for a monthly fee, a person familiar with the discussions said. Walter Price, an investor with RCM Capital Management (NLY) in San Francisco who met with Apple executives recently to discuss their television efforts, said cable and media companies are concerned that a better-designed Apple product will undermine their business model. Cable companies are also concerned about losing their link to customers in the same way Apple overhauled the relationship between wireless carriers and their customers after the iPhone debuted.
In short, the big US media companies are afraid of Apple, they want to control almost everything and for these reasons we will not see an Apple TV or a new Apple TV in 2012.
