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Apple looks to shake up media landscape with new TV box

Wednesday 16 September 2015 | 15:38 CET | Background

The latest version of Apple TV offers innovations on a number of fronts compared to its predecessor. The remote control now includes a touch pad and the Siri platform for voice commands, and games can also be played over Apple TV. The new version also adds an app store compared to the simpler, older model (which will remain in production as an entry-level model). The beta version of the tvOS (Apple's new name for the operating system) is already available for developers of video, games and commerce apps to start work. 

At the recent launch of the new Apple TV in San Francisco, Apple said it sees apps as the future of TV. This is not exactly new, as TV is increasingly consumed with the help of apps on smart TVs, tablets and smartphones. In that sense we’re already living in the future as seen by Apple. 

Nevertheless, its new media player may bring a number of changes. The announced prices of USD 149 for the 32GB version of Apple TV and USD 199 for the 64 GB version are already lower than the average smart TV. We consider below the impact the new Apple TV could have on a range of players in the video market. 

Lower barrier to cord cutting

Cable and IPTV providers could face difficulties if major broadcasters introduce apps for Apply TV. Viewers can then use the touch pad on the new remote control to scroll easily through channels, no longer needing to connect an iPad or iPhone over AirPlay to stream TV. 

TV providers could soften the pain by launching their own online TV services, as KPN is doing now with its Play OTT service. This can be extended with a suitable app for delivery over Apple TV. Other providers that have linked their TV Everywhere apps to the main TV susbcription will have to rethink their strategy if they want to gain distribution via Apple TV. 

The new Apple TV also introduces another distribution channel for independent online TV platforms offering consumers relatively cheap packages of TV channels. Providers such as Zattoo and Magine may be encouraged to expand their footprint to more markets. 

Telecompaper research in July found that far from all consumers are interested in canceling their TV subscription for an OTT service. However, the new Apple TV in combination with propositions like the above-mentioned services and a good user interface could convince more people to ‘cut the cord’ and abandon the old-fashioned way of consuming TV. 

Apple TV for sports

The Apple platform also offers an interesting new platform for showing live events, such as sports matches. American sports leagues are already doing this over Apple TV and this could spread to Europe, for example FIFA could show the World Cup via Apple TV. This would offer viewers new options such as split screens in order to follow more than one match at a time. 

Broadcasters of popular sports such as the Champions League could also offer the matches over apps on Apple TV, while viewers of online platforms showing live events would be able to watch the matches on traditional TV screens rather than a computer. Many content producers and distributors could see their OTT strategies enhanced by using Apple TV and its app store. 

Pressure on smart TVs

Apple was long-rumoured to be working on its own TV set, with Apple TV considered more a side project. Apple appears to have shelved the plans for a TV set in favour of getting serious about ‘TV without a screen’. With the addition of the app store, this upgraded platform offers a more dynamic approach than a pre-determined, select group of apps, as Apple TV (and many smart TVs) have offered to date. 

The app store may form a threat to many of the existing smart TV ecosystems on the market. The new device costs much less than the average smart TV, and consumers not yet owning a connected TV may be tempted to go directly to Apple TV. According to research by Telecompaper, only a third of Dutch consumers use a smart TV to bring internet content to their screen, while 45 percent did not have their TV connected in any way to the internet. This represents a considerable potential market for new devices like Apple TV. 

Game consoles no competition

Another important element of the new Apple TV is gaming. This includes both casual games (such as Angry Birds) as well as games designed for consoles, such as Guitar Hero. The remote control for Apple TV is designed to support gaming through motion sensors, similar to Nintendo’s Wii. This means Apple will be able to take a share of the home gaming market as well. 

Will the established console makers - Microsoft (Xbox), Sony (Playstation), Nintendo (Wii) – see Apple TV as a direct competitor? These devices have their own games and already a fairly large, loyal base of customers. The new Apple TV is unlikely to form a significant threat for them, as the consoles mainly target more avid gamers. 

More competition for Netflix and YouTube

Video services such as YouTube, Netflix, Vimeo and Vevo already have a place on the existing version of Apple TV. The app store on the new Apple TV means they will face more competition, from both local providers in each country as well as emerging international players. More broadcasters can also be expected to follow HBO and start offering an online-only subscriptions, separate from their TV channels.

Conclusion: Apple TV shaking up the media landscape

The new Apple TV is expected to shake up certain segments of the media sector, accelerating the migration to OTT TV and intensifying competition among OTT services. The extent of its disruption will depend to a large extent on content producers and distributors taking Apple TV seriously and developing apps for the platform. While Apple has proven itself in the mobile market, it has yet to build the sales figures in the TV market. If its platform is embraced by the media sector, TV manufacturers can expect to see their volumes decline, as consumers opt for the cheaper box over a more expensive connected TV set. 

If the existing mobile app industry also adopts tvOS, there may be a further shift, of content originally designed for smartphones and tablets moving to the TV screen. Apple showed examples of this already in its presentation, such as searching for holiday lets on Airbnb, viewing homes for sale or shopping online over the TV. 



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