Apple TV-YouTube Connection Advances Google, Challenges Cable

By Gary Arlen

San Diego — Of all the alliances Apple Inc. could create to deliver Internet video to the living room via its new Apple TV set-top box, the choice of YouTube was a typically audacious move.

At once, it signals that Apple clearly intends to deliver a wide range of Internet video directly to home TV sets. And, in the same stroke, it accelerates the TV presence of YouTube’s parent, Google, with its well-known voracious media appetite.

Sure, the deal further increases the “coolness” factor for Apple TV, as if that were needed. But it also enhances the credibility of Web-delivered TV as a video-on-demand competitor to existing providers, including cable companies.

In announcing the Apple TV-YouTube package, Apple CEO Steve Jobs made it clear that this is just one — for now, the biggest — of many alternative video packages that will be available via his new device to deliver Internet video to conventional TV receivers.

“We’ve wanted to do this for a few years,” Jobs said. “It’s amazing the variety of what you can get.”

COMPETITION FOR CABLE

To underscore his competitive attitude toward the cable industry, Jobs casually observed that cable providers “use that very strange software called 'OCAP.’ v” That, of course, is the OpenCable Applications Platform, designed to make it easy for developers to create cool interactive features and services that operate on TVs hooked to cable networks.

He said that Apple could “not see a go-to-market strategy” that makes use of such technology. Jobs suggested that Apple TV is comparable to the DVD player, which was the fastest-selling home video device in consumer-electronics history.

“We want to be the DVD player for the Internet age,” Jobs said.

As he demonstrated examples of short YouTube clips at The Wall Street Journal’s “D: All Things Digital” conference in suburban San Diego on Wednesday, the challenges of Internet video became clear — and, in some cases, blurry.

When displayed on a 100-inch screen, the often-fuzzy amateur videos occasionally became painful to watch. Although the content itself was compelling, many in the audience — including session moderator Walter Mossberg, the Journal’s host — wondered if viewers would tolerate the grainy, shaky visuals on their expensive, new digital monitors at home.

One of the videos, a “human slingshot” with a bungee cord-like launch from a lawn tractor, generated plenty of guffaws from the tech-savvy D: audience; but the production values, especially as seen on the huge screen, defined a watch-it-once experience.

But such nitpicking begs the question, since YouTube (and other emerging short-form video distributors) are looking for more professional content for their Internet video services. A D: speaker prior to Jobs, CBS Corp. CEO Les Moonves, pointed out that his company has hired a “band of kids” to create series of short-form programs. These, he said, are intended for distribution as Web video, although not necessarily for Apple TV. Plenty of other high-quality productions are in the pipeline from other professional sources, he said.

Jobs noted that Apple TV will be able to carry high-definition video, adding another competitive element to the set-top wars. He offered no details.

NO PREDICTIVE-NESS

In his demonstration, Jobs highlighted new features of Apple TV navigation, including software that will be available for download in June to access YouTube and future content.

A stylized version of the YouTube menu screen is available. An on-screen virtual keyboard (that is, an alphabet grid) requires users to move up, down, left or right via the remote control to type words when searching for a specific video.

Curiously, the demonstrated version did not include predictive typing, which would narrow the choices for the next letter in each sequence and bring up titles more easily. That may be a function of limited capability in the Apple TV processor, but Jobs did not address such technical details.

Jobs also skirted any discussion of revenue models for Apple TV and its new and future content partners.

PORTABLE PROSPECTS

Never in his remarks at D: did Jobs draw a connection between Apple TV and the even-more-highly-awaited iPhone. Apple’s CEO spent plenty of time discussing the new mobile phone, which will be exclusively offered in the U.S. on AT&T’s wireless system. Given the competitive nature of phone and cable companies — and AT&T’s U-Verse Internet-Protocol TV agenda — it appears likely that Apple and AT&T will devise arrangements that converge the applications of iPhone and Apple TV.

In particular, the vaunted ability to control a set-top box, including setting up access or even remote viewing (akin to a SlingBox’s capabilities) could become part of a multipurpose service.

Since Motorola’s “connected home” and various Cisco/Scientific Atlanta plans envision similar services for cable-system operators, the aggressive Apple agenda takes on greater competitive implications.

Jobs’ comment on a seemingly unrelated topic, the use of portable devices, certainly raised the prospect for such services.

“Video is here to stay on portable devices; it will grow,” said the man in the black turtleneck and jeans — an iconic prototype of the “Mac guy” in Apple’s TV commercials.