Jeff Kagan: Not Excited About Apple TV Yet

Jeff Kagan |

Apple_TV.jpgSo many people have gotten all excited about Apple TV, the Apple Inc. TV (AAPL) entry into the very crowded television marketplace.
I say, hold your horses. Will Apple TV be a hit? What other television competitors will be winners? What will the entire television marketplace look like, going forward? There are a lot of questions to be answered.

To start, the TV space is changing so much that the consumer is starting to get very confused. All the new competitors and technologies over the last couple years are creating a very chaotic marketplace...and chaos keeps all consumers asided from the few early adopters from jumping in.

The problem is, we are throwing so many new ideas into the mix that it is confusing the customer. Consumers want, and in fact, need simplicity. And that is not what we have today.

Let’s take a quick look at how television has changed, and what we can expect going forward.

From Broadcast to Netflix

Television used to be predictable. First, it was broadcast TV. We all got three or four stations over the air, and it seemed miraculous.

Next was cable television, featuring tons of smaller cable TV providers, offering a dozen or more channels. All these smaller cable TV companies started to merge, creating fewer, yet larger competitors, and offering even more channels.

Cable TV was the only game in town, and that lack of competition created a playing field where providers couldn’t care less about customer satisfaction. After all, the customer had no other place to go, so why should they care?

That self-made problem saddled the cable TV industry with a heavy weight around their neck going forward, making it very difficult to swim, especially as the marketplace started to see more competition.

Next, Satellite TV entered the marketplace and that was the first pinch of competition cable TV ever had to deal with. These are companies like DISH Network Corp. (DISH) and DirecTV (DTV) and they have carved out a successful segment of the marketplace.

Cable TV competitors kept merging and kept getting larger. Today Comcast Corporation (CMCSA) , Time Warner Cable Inc. (TWC) , Cox Communications ($COX), Cablevision Systems Corporation (CVC) and others are some of the largest players.

Then, the telephone companies entered the space offering IPTV. This was a new idea to offer television over the Internet. AT&T Inc.  (T)  uVerse, Verizon Communication Inc. (VZ) FiOS and CenturyLink Inc. (CTL) are the big three.

While this did not really reduce prices, customers nevertheless really seemed to like it. They have been winning customers over from traditional cable TV over the last several years. We have seen many other companies jump into this space as well with their IPTV services. Telephone company services are a full service comparison to cable TV, so customers generally choose one and say goodbye to the other.

However, these new TV services are generally additional to the core package. These are services like Netflix, Inc. (NFLX), Inc.  (AMZN) , HULU ($HULU) and many others.

So this is the chaotic and fast changing world that Apple TV is jumping into. This is much different from the music space, when they launched the iPod, or the wireless space, when they launched the iPhone, or when they launched iPad a few short years ago.

Apple Dives into a Crowded Pool

Apple created the new space in each of these areas. They may not have created the technology, but they took it to the next level, and they found success and leadership within the field.

However, there are already many other competitors in the television space today. That means Apple cannot create the rules going forward for the industry, or perhaps they can, since it’s so early in this new space, with no real leader. We’ll have to wait and see.

I think Apple TV will work. However it will not be the only competitor that works and it will not happen all at once. When the Apple iPhone was launched, it did not grow rapidly for a few years. Now that it has been with us for seven or eight years, it seems like the king of the castle. I think Apple TV will take a similar path. Apple will introduce their TV, but it will take some time to catch on. It will be quicker than with the iPod or the iPhone, because they already have a vast marketplace of Apple users ready for the next big thing.

However, like with the iPad tablet, not everyone who has an Apple iPhone will be interested in a tablet or TV for that matter. So why will it take some time? Simply put, the world of TV is changing.

Television's Evolving Landscape

We are now watching TV in many new and different ways compared to a few short years ago. Today, we can watch on our laptops, tablets, smartphones and smartwatches in addition to our televisions. This is thanks to the world of IPTV, and it is only growing. IPTV sends television over the Internet rather than the air or over a cable television network. This can reach devices over the hard wire Internet or the wireless Internet.

This is the world that the telephone company IPTV television service was born into. This is the world that cable television companies like Comcast are moving into with their Xfinity services in order to stay competitive. This is the world that Netflix and many others are using, as well. And this IPTV is the world that Apple TV will use going forward.

Bottom line, the rules of television are changing. That is an opportunity, and it leaves the entire industry wide open for new leadership...something no company has dominated yet. Apple is a heavy hitter with lots of customers, and because of that, I think Apple will become successful with TV. However, TV is seeing lots of new ideas and technologies enter the space and confuse the marketplace. So who will lead? Don’t be surprised when I say no one will lead this space for a while. The reason is simple: The consumer is confused with today’s crazy and fast changing television space. So, except for the early adopters, the majority of the television marketplace will be frozen in the headlights, like deer on the road ahead.


DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:


Symbol Name Price Change % Volume
AAPL Apple Inc. 117.47 0.87 0.75 4,144,064
AMZN Inc. 831.25 12.26 1.50 865,983
CMCSA Comcast Corporation Class A Common Stock 64.82 0.76 1.19 1,503,858
CTL CenturyLink Inc. 28.44 0.23 0.82 392,976
CVC Cablevision Systems Corp. n/a n/a n/a 0
DISH DISH Network Corporation 58.10 0.70 1.22 189,322
NFLX Netflix Inc. 129.12 1.62 1.27 3,418,249
TWC Time Warner Cable Inc n/a n/a n/a 0
VZ Verizon Communications Inc. 48.46 0.26 0.54 3,450,331


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