“From our understanding,” Mr. Wu told clients in a research note obtained by The Mac Observer, “what is holding back a ‘real’ Apple TV from shipping are content partnerships and licensing terms that still need to be ironed out.”
He noted that Apple has plenty of movies and TV shows available for download through iTunes, but, “What’s missing is live broadcast television.” He argues that if Apple could allow people to dump their satellite or cable TV service, the company would have yet another disruptive product on its hand.
In that getting those content deals has been tricky heretofore, Mr. Wu said that there was no way to pinpoint an exact date for when Apple might introduce a TV set. Apple has been negotiating with Hollywood for years on these things, and even with all of Apple’s massive iTunes exposure, content has come and gone from the iTunes Store regularly.
For instance, Apple introduced TV show rentals in September of 2010, but pulled them in August of 2011. Along the way, Fox and ABC were quick supporters, while Time Warner and NBC Universal both gave the service a thumbs down.
In November of 2009, another story had Apple trying to shop its Apple TV settop box as a TV service that would compete with cable companies. At the time, some network executives were reportedly interested in the idea, but they were all afraid of upsetting the apple cart (pun intended) when it came to their existing business models and licensing agreements with cable companies.
Mr. Wu wrote that, “According to industry sources, [Apple] would love to offer users the ability to choose their own customized programming, i.e., whichever channels/shows they want for a monthly subscription fee. This is obviously much more complicated from a licensing standpoint. And in our opinion, this would change the game for television and give AAPL a big leg- up against the competition.”
He added, “Because of the high dependence on content providers, we believe exact timing of a ‘real’ Apple TV shipping is difficult to pinpoint.”
The analyst maintained his “Buy” rating on shares in Apple, as well as his $500 price target.
AAPL ended the day lower at US$397.77, down $8.00 (-1.97%), on moderate volume of 15.4 million shares trading hands.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.