Apple is in talks with Comcast about using the Apple TV as a cable box that streams video, according to a new report from the Wall Street Journal.
The talks are still in preliminary stages at this point, and as such are uncertain to come to fruition.
However, Apple’s intention is to allow users to stream live and on-demand TV programming and digital video recordings in the cloud, effectively taking the place of a traditional cable set-top box. The goal would be to ensure that uses don’t encounter hiccups in the service, making its video the same quality as Comcast’s TV transmissions to normal set-top boxes.
Apple and Comcast share a common goal in this race: advancing set-top box technology to help TV catch up to the easy-to-use apps and streaming-video services to which consumers have become accustomed. Traditional cable subscriptions are suffering, and content owners and operators feat that a younger generation of consumers will stop paying for TV altogether.
Despite common objectives, Apple and Comcast aren’t yet close to an agreement. Providing Apple with the service quality it desires would require Comcast to make significant investments in the realm of network equipment and other technology, so they are naturally reluctant.
The companies also aren’t on the same page in terms of how deep a relationship Apple should have with Comcast’s customers. Apple has proposed that users would sign into the device with their Apple IDs, and it is interested in controlling customer data, according to the report. Apple has also asked for a percentage of the monthly subscription fees paid by customers.
Comcast, on the other hand, wants to retain control over the relationship with customers and the data.
Apple would also have to acquire significant TV programming rights from media companies, and Comcast doesn’t want that to increase the price consumers have to pay for the service.
Apple has had similar discussions since at least mid-2012 with Time Warner Cable. Those talks, internally referred to as “Project Jupiter,” came to a halt when TWC became a takeover target of Comcast.
According to the plan Apple proposed to Comcast, Apple’s video streams would be treated as a “managed service” traveling in an Internet protocol format—similar to cable video-on-demand or phone service. Those services travel on a special portion of the cable pipe that is separate from the more congested portion reserved for public Internet access.
Comcast could find value in forming a partnership with Apple to add and retain customers. Further, the Apple device would likely be sold at retail to customers rather than leased through the cable operator like a traditional set-top box—something that could reduce Comcast’s capital expenditures over time.
However, Comcast has been aggressively working on its own Internet-connected set-top box—dubbed “X1″—that far surpasses the capabilities of its old boxes.
There is somewhat of a precedent to the kind of deal Apple is trying to land with Comcast. The cable company has a years-old relationship with TiVo, the DVR pioneer, which allows subscribers to receive Comcast TV service through TiVo boxes bought at retail stores and, in some markets, access Comcast’s on-demand library.
Apple’s proposal is different, though, because it has sought profit sharing and a deeper relationship with Comcast’s customers.[WSJ]