What it is: Apple TV is a box that connects to the Internet to provide streaming video and audio to your current TV set.
For years Apple has called their Apple TV product a hobby, yet it sells fairly well and generates millions of dollars for the company. The problem right now is that Apple TV doesn’t do anything better or different than other rival products such as the Fire TV or the Nexus Player. When you just sell a device that duplicates everyone else, there’s little compelling reason for anyone to choose any one product over another.
Apple is trying to make the Apple TV different in three ways. First, Apple’s HomeKit initiative is designed to make it easy to control lights, doors, windows, and appliances through iOS. This will let you control your home form an iPhone or iPad when you’re in the house, or over the Internet when you’re away from the house. Apple hopes to make Apple TV the hub of the automated home. Now if you want to use devices designed to work with HomeKit, you’ll have no choice but to use Apple TV.
A second way Apple hopes to differentiate Apple TV is through deals with content providers such as the big three networks (CBS, ABC, and NBC) along with ESPN, HBO, and the NFL. If the best deal for watching the Super Bowl and other NFL games is through an Apple TV, you can be sure many people will buy an Apple TV just for that purpose. Exclusive or unique deals with the networks can make Apple TV better than its rivals.
Perhaps the third way Apple might make Apple TV unique is through the same approach that Netflix, Hulu, and Yahoo are attempting to offer: make exclusive content only available to subscribers. Already HBO, Amazon, and Netflix have shows exclusive to their subscribers. If you want to watch one of these shows, you have to subscribe. That means Apple will need to get into the content creation business at some level.
Since Apple already has close ties with Disney, it seems logical that Disney could offer exclusive content through Apple TV. Independent studios could come up with shows and broadcast them through Apple TV. If Apple TV becomes the most popular streaming video accessory for TV sets, you can be certain content providers will want to be part of this growing market.
You can see the hints of Apple’s TV vision coming to life through their Beats Music acquisition. Apple is trying to get exclusive content from recording artists and get limited exclusivity on albums to capture most of the major sales of new music. If Apple provides the best royalty rate, then artists will have an incentive to offer exclusive content to Apple TV at the expense of rivals.
If Apple just pursues one of these (HomeKit, exclusive network deals, or exclusive content deals), they’ll separate themselves from their rivals. If they can support two or more of these options, they’ll crush any streaming video rivals before they even get started.
To make matters even more interesting, rumors hint that Apple’s TV will also double up as a gaming console. Rather than buy a separate gaming console (Xbox or PlayStation) and a separate streaming video box, you could just buy an Apple TV and get gaming from a dedicated Apple TV app store. Now the Apple TV won’t just be a dumb streaming video device but a smart computer in its own way. You won’t do word processing or photo editing on an Apple TV, but you may play games, browse the Internet, and check your e-mail.
With so many ways to make Apple TV unique, it’s likely Apple will pursue one or more of these simultaneously. Today’s Apple TV is just a hint of what’s to come. If you can wait, don’t get an Apple TV until the coming model arrives possibly before the end of the year. If not, keep waiting unless you really need streaming video (and that’s it) right now. Tomorrow’s Apple TV promises to be a major media hub of your entire house, so don’t settle for a dumb rival product when Apple TV has the chance to define a new market all over again.