Twist in the Cable

Posted on June 7, 2012 by Gene

There’s been a lot of discussion in the tech punditry community of late regarding a rumored Apple-branded television. And as pointed out by Jim Dalrymple, it is mostly centered around Siri integration or a built-in AppleTV unit — rather than the obvious pattern Apple has shown us over and over. Apple makes gorgeous hardware and elegant software, but the way they make lasting impact is by changing industries.

iTunes and iPod changed forever the way we buy music — and changed an industry. It’s been a very long time since I bought a CD. iPhone upended the way mobile telecoms do business by wrenching control of the hardware and software away. And while that was happening, the iPhone changed the way we think of a phone and ushered in an era of mobile connectivity that the industry is still trying to wrap their heads around, and hastened the end of the land line telephone.

So what could an Apple TV do to the media and broadcasting industry? Here’s what I think: cable television will disappear, slowly but surely. The broadcast model is dying. I almost never watch live, broadcast television — I don’t have cable TV, and there’s nothing on over-the-air broadcasts I’m interested in. I get my television through the Internet, often long after the fact. No one I know gathers around a water cooler to talk about last night’s television anymore. We live in the era of DVR, where television no longer requires immediate attention.

Now, an Apple television isn’t going to bring down cable giants like Comcast and Time Warner — in fact, it will probably bolster their high-speed Internet business as the industry moves to IPTV services. But where it will hurt them most is in two places: first, people will be dumping those set-top boxes and clunky cable-company DVRs. Second, and far more importantly, there will be disruption in the carriage model.

Imagine this: a media company, say, A&E, now has to negotiate with cable and satellite companies to be carried. What if instead they create an app for the Apple television. You just click on that A&E logo on your set, and access any programming you want, any time. It’s streamed from the cloud directly to you. Everything becomes Video on Demand — but it doesn’t require the cable company (other than the high-speed connection). Sounds pretty disruptive to me.

Still, this won’t happen overnight. After all, despite the fact that people pay for cable to watch channels that broadcast over the air, the local stations are still pumping that free signal out just as they have been since the 1940s. Change takes time, and Apple is playing a long game.