Apple TV: Nibbling at the Edges

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Apple and Google assume that their success in one area — for Apple, that’s music downloads on iTunes; for Google, it’s Web searches — will carry over to TV.

But it’s hard to see either of them making a huge dent on the TV business.

What does the new Apple TV bring to the table? It’s smaller and cheaper than the first iterations (that can’t be bad), but it doesn’t really offer a compelling new way to get TV shows or movies (see Apple Takes Another Crack At The TV).

The Netflix streaming feature is available in literally more than 100 different devices, and movie rentals over broadband aren’t new either.

Apple figured out most people don’t want to own an episode of a TV show (unlike music, which you listen to repeatedly), which is why subscription TV services have been successful (cable, satellite, Netflix).

Apple failed to pull a TV subscription service together, and instead is trying to push a-la-carte rentals of shows from Fox and Disney/ABC. And these are, what, intended for people who don’t have a DVR? Or don’t have a provider with a decent VOD selection? Or don’t know that you can watch a lot of that stuff for free on Hulu?

Note that most content owners aren’t sold on this idea for wringing digital pennies out of their TV content. Even Disney/ABC and Fox reportedly have committed only to a six-month trial on the 99-cent show rentals.

“Apple’s 99 cents offering squarely positions the service as an occasional-use supplement to existing consumption patterns rather than a replacement to the cable system,” Sanford Bernstein analyst Craig Moffett told DJ Newswires.

In other words: still a hobby.

Now, some analysts see the latest Apple TV as a stalking horse for a bigger play. “We continue to expect Apple to launch an all-in-one Apple television in CY12,” Piper Jaffray analyst Gene Munster wrote in a research note. “As consumers gain comfort with connected TVs and apps on their TVs, we believe Apple will eventually take its all-in-one philosophy to the digital living room like it has with the iMac and the iTunes ecosystem.”

Which would be a more ambitious plan along the lines of Google TV (see Google TV: Up to $300 Price Premium?).

The problem here is that Google wants to be “input one,” and “will never get it,” as Altimeter Group analyst Michael Gartenburg aptly put it, whereas Apple TV “wants input two and might.”

There’s been a company trying to get input one, and wrap itself around the entire TV “experience,” for more than 10 years: TiVo (see Google TV: Following TiVo’s Footsteps). And TiVo has been losing subscribers for the last several years, once cable and satellite TV operators co-opted DVRs.

Assume the same scenario will play out on Internet-on-the-TV features. If anything gets real traction, the pay-TV providers will introduce it themselves.

And they already have input one, and own the guide for doing the only thing most people want to do with their big-screen TVs: watch TV.

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