3:30 AM EDT, March 24, 2014
The mere prospect that Apple and Comcast could be joining forces for a new joint TV service, as the Wall Street Journal first reported Sunday, has revived a fresh round of hyperventilation.
But grab brown bags and start breathing into them, folks. Because while this deal isn't impossible, it is improbable.
Sure, there's a few key reasons to believe Apple really needs to reach agreement here. Though the WSJ piece curiously doesn't mention it, there have been recent reports that Apple and Time Warner Cable were negotiating a deal to get the cable operator on a new upgraded version of Apple TV set to be unveiled later this year.
But with TW Cable's pending $45 billion merger with Comcast seemingly putting that pact on ice, Apple needs something huge to get the hype going on that device (though having broken the $1 billion barrier last year on the existing Apple TV is evidence Apple isn't exactly desperate).
Also not mentioned in the piece is that if ever there was a time to fire a flare into the marketplace that Apple has Something Big coming, it's right now given the likelihood that Amazon seems on the verge of launching its own set-top box.
But there's even more reasons to doubt this deal is going to happen.
The issue here isn't the veracity of the WSJ report; there's no reason to question whether Apple and Comcast are actually talking. Apple has been in talks with media companies constantly since its breakthrough deal in 2005 that first put Disney movies and TV shows on iTunes.
But what has happened since then? Lots of talk, little action.
Our breathless anticipation over the prospect of Apple throwing off the yoke of tyranny that is the average pay-TV subscription has induced a curious mass amnesia: We forget Apple and media companies just don't get a lot of deals done.
Think back to 2009, when Apple and various studios discussed a $30 TV subscription plan that went nowhere. Or the 99-cent-per-episode TV rental plan that only won over some of the studios a year later.
By 2011, in the wake of the death of Steve Jobs, Apple's TV ambitions morphed into its creation of an actual Apple-branded TV set, dubbed iTV. But yet another round of talks with media companies yielded nothing, as CBS Corp. CEO Leslie Moonves is fond of recounting. Then came a more realistic shift to the one device that seemed a logical foothold in U.S. living rooms: Apple TV, courtesy of an Airplay-propelled service that would work on all screens. Still, nothing.
By 2013, the focus had shifted again, this time from getting the programmers to make a separate set of deals apart from their pay-TV partners to making deals with the pay-TV partners themselves in the form of some authentication layer that came in the form of the mythical iTV or Apple TV, as in one instance was reported to be in the offing with Time Warner Cable.
This was a vision perfect for the post-Jobs, more sensible Tim Cook era: Apple would give up on trying to revolutionize TV and simply wrap its beautiful user experience around the existing rotten core of TV. Which isn't to say 2013 was entirely without whiz-bang-iness: In one fanciful version floated midyear, Apple would even pay the programmers to allow viewers to do ad-skipping.
Perhaps the jig should have seemed up when one last report came in last year suggesting that Apple had actually reversed course and went back to wooing programmers again instead of the distributors. Oh, come on!
But the 2014 edition of Apple's TV dream has a very au courant vibe to it: The new twist is that Comcast will reserve a special "managed services" lane of the so-called "last mile" of its broadband network to ensure that the video stream comes into U.S. homes without interruption. Coming just weeks after Comcast struck a somewhat similar deal to protect Netflix's own content, give Apple points for putting a fresh spin on yet another TV proposition that feels very of-the-moment.
But haven't we been down this road too many times before not to suspect a dead end again?
Fool me once, shame on you. Fool me umpteen times, shame on me. This feels like the deal that cried wolf.
Leave it to a company called Apple to think it has so many bites at the proverbial apple. All this flailing is indicative of huge error Apple made way back in 2005 when they added video content to iTunes: they picked the wrong business model.
Restricting users to download-to-own when viewers were far more likely to rent movies and TV episodes (even though the latter is a lower-margin business) was a misstep that opened the door for Netflix and its SVOD rivals; opening up rentals years later on an a limited a la carte basis didn't do much to keep video content from being anything more than a loss leader that helped sell hardware.
Still, Apple knows it missed out on a tremendous opportunity. But instead of just acquiring an SVOD service, it is hunting down even bigger game by trying to find its way into the pay-TV world. (Even on the music side of its iTunes business, Apple may be getting subscription fever given recent reports that it is readying a rival to Spotify.)
Even without TW Cable yet in its belly, Comcast has the clout to stare down Apple. Brian Roberts & Co. are highly disciplined dealmakers. But it's not so much their willingness to do a deal that needs to be questioned here as much as it is their motivation.
Comcast doesn't need to do a deal with Apple because Comcast is so busy trying to be Apple, and doing a pretty good job at it. The X1 and X2 set-top boxes are quantum leaps from the current awful technology; deployed widely, they have the promise of being whatever device Apple hopes to launch with them (instead of X3, how about Xi? iX?). Comcast is even turning its Xfinity platform into iTunes, having recently added an EST platform for movies that is doing well in the early going.
Yes, 2013 marked a troubling milestone for the pay-TV business for its first-recorded year-over-year drop in subscriptions, but that was still less than 1%. And don't forget that Comcast defied gravity in Q4 by actually adding video subs for the first time in seven years. Desperate, they ain't.
Despite all this interest from Apple, the studios haven't budged. Can you blame them? Hollywood is terrified by the prospect of being disemboweled by Apple the way the music business was. So the dealmaking is incredibly circumspect.
Maybe in the long term, that defensive posture will prove Hollywood's undoing just as much as being unguarded destroyed the music business. But for now, that means Apple and Hollywood walk away from the table so often that it's hard to see this time being any different.