The Apple TV Hobby Carries On

At Apple’s earnings call earlier today, COO Tim Cook reiterated the second class citizenry of AppleTV. As paraphrased by Macworld:

Apple TV market isn’t that large, so that’s why we classify it as a hobby, so nobody gets the wrong impression that it’s anywhere close to the other markets. A number of us use the product, love the product, so we’ll invest in it.

In my mind, there are three developments that individually or collectively could thrust ATV into the spotlight.

First and foremost, Apple TV cannot be a primary television device as long as we receive the majority of our television programming through mostly locked down cable and satellite providers. CableCARDs, in their current form, stifle innovation and competition. But the FCC is pushing for some sort of home television gateway prior to 2013. That could dramatically change the landscape. Then again, by 2013 we may all be watching Hulu online from our iPads. Leading to point number 2…

Apple’s got a proven app store business model. As soon as they migrate it to the Apple TV, they’ll simultaneously stimulate development and sales. And, of course, they’ll take their cut of app revenue. We’ve already got a number of decent video-centric iPhone apps that could work well in a lean-back environment, such as Showtime, Slingbox, and Netflix. However, significant work would need to be done to support the various resolutions, aspect ratios, and entirely different form of (remote) interaction.

Lastly, if Apple’s unfortunately named iAd platform proves successful in the mobile space, it’s not inconceivable to envision them pumping an ad-infused ATV (in conjunction with the enhanced functionality noted above) to generate additional revenue. But it’s not going to happen in 2010. As CFO Peter Oppenheimer described their new advertising initiative today,

We’re putting our toes in the water, so don’t expect much from us this calendar year. We think we’ll learn a lot for the future.

17 thoughts on “The Apple TV Hobby Carries On”

  1. At this point, Apple TV needs a big time hardware boost if it wants to be anything more than a hobby.

    Also, Apple TV runs 10.4 not iPhone OS so there would need to be behind the scenes changes to apps as well to make them compatible.

  2. How about a hardware refresh Apple? The ATV has been out for three years this month and it’s P3 was under powered when it came out. I suspect one of the reasons it doesn’t support 3rd party apps is because it’d expose how slow the thing is. I mean there have been like 4 generations of Blu-ray players since then that play media from all types of places.

    For the record, I bought mine on day 1 and sold it last week while it was still worth something. No, I don’t miss it, although it was pretty good for pictures and music.

  3. I’m not paying twice for content and I require seeing live sports….therefore the Apple TV is a complete joke to me.

  4. Dana, If niche players like Boxee and Roku can work deals with MLB and NHL, imagine what an Apple could do if they got serious. (Not to mention that MLB.TV iPhone app…)

  5. Eventually aTV will get some investment and some focus. I think they are waiting for the infrastructure to catch up and to figure out how to cut deals with cable operators. They are a cartel and will not bend over easily. The really killer idea is an actual physical TV from Apple with the aTV built-in. Or Apple will cut a deal to integrate aTV into every major TV manufacturer. No more one off widgets or unsupported ‘net integration like most of the internet connected tv’s shipped today come with. If Apple could extract $200+ on every TV sold in the US as the trojan horse; and have the app store and itunes store as perpetual revenue generators….. forgetaboutit…

  6. Put a web browser on it and allow it to stream from Hulu,, ESPN3, etc… and it’ll become more than a hobby really quick. It doesn’t need aps, just better ways to access content.

  7. Just way too much competition on the STB business along with TV vendors embedding IP TV/Movie VOD in their panels. Plus do you really want Apple vetting your TV apps and content?

  8. Good article, but here’s my answer: Add WiDi to both the iPad and the Apple TV. Let me broadcast the screen from my iPad to the TV through my Apple TV. Its just a software layer on top of 802.11n after all, so its doable with enough horsepower on both ends. Is the CPU/GPU in the iPad up to it? The Apple TV? No idea.

    What would this get you? Instantly you’d have web browsing on the TV using the iPad in your hands. Without Flash I’m not sure there are a lot of web sites you’d need to share with the entire room, but hey who knows? The more obvious reason is the apps–you would suddenly be able to stream audio and video from Netflix, ABC, CBS and presumably more onto your TV using the apps on the iPad. You could play games on the iPad while others watched. You could stream Pandora. Or whatever else, all without doing a lot more. And none of it restricted to interacting through that little white remote control…

  9. It needs a bit more internet based media, but it can’t because the GPU doesn’t fully decode h.264 and the CPU is only a 1ghz P3. An app store for internet media would certainly be interesting if it could handle the load.

    Simply updating the GPU to a 9400 would solve the problem. Adding the CULV Intel Celeron would speed it up a bit and let them keep producing it. All the old software would run fine with that setup and new software could be added by an app store. With those fixes, it could do everything I could ask of it. As it stands now, mine has been retired for everything but a video rental once every few months.

  10. Love my AppleTV. But it can be so much more. Create more partnerships with content providers like the networks or Hulu that provide time-limited programs (continue to sell full seasons on iTunes), add links to key social media and email sites so that I can do more from my TV rather than having to go to my PC, add support for a real keyboard and mouse (wireless). Those types of things would make AppleTV more “must have” technology that gets used every day. It saves us from having to pay through the nose for a new “internet ready” TV. And Apple can certainly tout the new partnerships as revenue streams by getting more viewers to those sites. It supports YouTube already. I’m asking more sites that are more important to me than that.

  11. AppleTV has a lot of promise, but I’m afraid that’s all it is. The reality is that there is so much more (free) content from other providers along with Netflix’s $8.99 a month deal that Apple just can’t compete with until they actually start working with other companies like Netflix. I would more than love Apple to lead the digital internet TV revolution!

  12. Dave, to that, I would add that Roku just added NBA Game Time – a live scoring and multimedia app – to their lineup. I definitely agree that if Apple got a little more serious with the AppleTV, it would do quite well. Roku, a company with considerably less heft, has done a great job in striking partnership deals with Netflix, Amazon, Pandora, MLB and now the NBA. Imagine the kind of deals Apple could strike if they focused a little bit more on the OTT/streaming market.

  13. I suspect the main reason Apple hasn’t done more with Apple TV already is the massive disruption it would cause.

    Most ISPs are also TV service providers, and they would push back on this because of A.) the number of TV subscribers they would potentially lose to Apple, and B.) the sudden influx of video filling their pipes. Apple would either have to cut deals with a LOT of big companies — Comcast, Time Warner, AT&T, Verizon, etc. — to appease them, or it would have to fight a huge net neutrality battle in the courts.

    The loss of cable/sat subscribers to Apple TV would also upset the media companies, because they get a ton of revenue from cable TV subscribers that never watch their channels. ESPN alone makes more than $4 billion/year from cable and satellite subscribers. Given its Disney/Jobs connections, ESPN could probably handle the transition — which would only piss of those big ISPs even more — but a lot of smaller networks would have to make huge decisions about their futures in order to survive. Do they create their own apps? Do they cut deals with Netflix or Hulu? Do they take a closer look at the Revision3 model?

    Once Apple TV becomes more than a hobby, it becomes a huge game-changer. I have a feeling Apple isn’t quite ready to shake things up quite that much just yet.

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