clock menu more-arrow no yes

The new Apple TV: Is Apple thinking bigger than Netflix?

Originally introduced as the iTV in 2006 and released under its current name in 2007, Apple TV has long felt like an afterthought in the company's product line.
Originally introduced as the iTV in 2006 and released under its current name in 2007, Apple TV has long felt like an afterthought in the company's product line.
David Paul Morris/Getty Images

It's hard to overestimate how seismic the debut of the iTunes marketplace was in terms of shifting the way people thought about their music collections. Napster and other file-sharing services had made it easier to think of a song as a collection of digital bits, but Apple came along and legitimized everything. Now there was little skeeviness to the idea of online music. It was something everybody could partake in.

It's also a high Apple has been chasing ever since.

That just might be behind the company's rumored entry into the enormously crowded streaming TV marketplace. Rumors suggest that Apple will unveil a new version of the Apple TV on Wednesday, and that sometime soon — in the next few months, if not on Wednesday — the company is expected to unveil a new streaming service. It may even include Apple-produced streaming content, to fill the gaps created by all of the studios that have already made exclusive deals with other streaming competitors.

But there's a distinct sense that this is a party Apple is crashing a little late. It's not so late that it can't take center stage, but the odds are stacked against it. Maybe that's not what Apple's up to, though. Maybe it has its eyes on a much bigger prize: being the company that finally sets up the iTunes of television.

There's a good reason this hasn't happened yet

Of course, iTunes' advantage was that it came first. It pioneered the online music marketplace, and it set the playing field everyone else was working with. Those who weren't on iTunes were considered the oddballs, and most of them (including the Beatles) were eventually brought under the service's umbrella.

Apple doesn't have a similar advantage for any sort of streaming video service. For better or worse, Netflix (for back-catalog programs) and Hulu (for currently airing programs) have set the expectations for that particular field, and both are making big strides. Netflix has ramped up its original programming development substantially, while Hulu has finally offered an ad-free subscription tier for almost all of its shows. Apple risks being seen as playing catch-up.

And that's all avoiding that Apple already has iTunes for TV, which is its iTunes video section, where users can purchase episodes and seasons, or rent or purchase films. The vast majority of programs make their way onto this marketplace sooner or later, yet it's never made the dent that iTunes for music did. Most video content providers skipped directly from a focus on DVDs a decade ago to the streaming market today. The prices for direct download are often steeper, which makes it harder to make impulse buys, one of the things that made iTunes so dominant.

Taking on Netflix, then, seems like a bit of a suicide mission, no matter how powerful Apple is as a corporation. (Honestly, simply acquiring the company might be easier.) But what if that's not what Apple is doing? What if it's betting on a hugely unlikely play, but one that would legitimately change everything if it happened?

Putting everything under the same roof

The thing that made iTunes so instantly accessible was the way it pulled the vast majority of recorded music from human history into one marketplace. With a click of a button, you could buy the complete discography of the Beach Boys or Beyoncé. You could buy that song you heard on the radio on the way into work on a whim, or take a hot new album for a stroll.

Apple TV has always been a bit of an afterthought for the company. It's a nicely designed piece of hardware, but there are better and cheaper competitors on the market. Apple TV, then, has always been a bit of an odd man out, unless you're an all-Apple household.

But Apple has kept it floating along. Why? Because somebody, somewhere, is going to figure out a way to make all content for all time available for a certain per-month subscription fee. And Apple wants in on that.

In an ideal world, the video market would work something like this. You'd have a set-top box attached to or built into your TV. For a monthly fee (possibly on a tiered structure, where different levels of payment get you different amounts of advertising), you'd have access to all movies and TV shows that have been digitized, in addition to new movies and TV shows as they become available. (In the case of big blockbusters, this would likely be after some sort of shortened theatrical window.)

The reasons this has yet to arrive are myriad — and at the center of the old "why isn't X on Netflix?" query. But the foremost hurdle is content providers, who own the shows and movies you watch and reap lucrative revenues from programs that have been in their vaults for decades. Why should the owner of the rights to any show sell to one service if another service will offer more for it?

That's the current streaming bonanza we're in, with bidding wars between Netflix and Hulu and Amazon filling the coffers of content companies. All three of these services try to sell the idea of being curated, on some level, of selecting the content that will best appeal to their customers. Yet the only rhyme or reason separating the brand of Netflix from that of the others is monetary. For Apple to get bogged down in the same war seems pointless, unless it's trying to carve out a different niche entirely.

So what is Apple up to anyway?

Customers have always shown a preference for having everything available in the same place, whether that's a digital music marketplace or a massive cable bundle. Somebody, somewhere, with access to the right Hollywood power players just might figure out how to make the scenario described above work out.

If any company is going to bring all of the Hollywood players to the same table, it will almost certainly have to be one of the country's largest, with its fingers in every branch of the entertainment empire. And that describes only a handful of players out there. But one of them is definitely Apple.

Is this what the company is up to? It's hard to say, and even if it is, managing the feat seems nearly impossible. But then, that's what people said about bringing all of the record labels into the same digital marketplace in the early 2000s, and look how that turned out.

Just the price point of Apple's new service (rumored to be $40 per month) suggests the company has something bigger in mind than a simple Netflix knockoff. What form that will take remains unknown, but it suggests the company shouldn't necessarily be seen as competing with the established players in this game. Its sights may not be set as high as all of the above, but they're clearly set on something different.