Re/code has reported that Apple is talking to TV content providers about offering to its own customers custom programming packages. These would be smaller subsets of the packages typically offered by the major cable and satellite providers. What hints does this provide about the state of Apple and the future of TV?
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By carving out small packages of available programming, Apple customers would avoid what they've hated for years: large, expensive packages that include channels they don't want. Ala carte is the preferred mode. Plus, Apple would receive the opportunity to provide cord cutters with its own vision of how to search, select and watch TV content.
Not mentioned was whether these packages include conventional, in-line ad content, requiring (for most customers) a DVR or whether the shows would be ad-free, as single TV shows are now on Apple TV. Either would be financed via the monthly subscription fee. Also, not explored, is whether an ad-free monthly subscription of channels would be priced competitively with the current packages available from cable and satellite. Customers have shown a tendency to go with ad-supported content, combined with subsidized DVRs, to keep costs down.
Presumably these subscription packages would be delivered via a 4th generation Apple TV box. While an integrated 4K TV isn't ruled out in this scenario, the discussion at re/code suggests that there may be nothing to be gained by selling an integrated, whole-widget, 60-inch 5K UHDTV with 4K embedded. (Even though that's what I'd like to see.) That, in turn suggests that everything Apple wants to achieve in next generation television can be achieved with a black box that connects to the customer's own 1080p/4K TV set.
Also, it appears that there is not much opportunity for Apple to build the DVR-box for some carriers, as we saw in Apple's previous discussion with Time Warner. Comcast put a stop to that because it wants to control the user interface.
Xfinity likes its own evolving User Interface (with voice control).
TV Still Sucks
As Peter Kafka reminded us, Tim Cook thinks "the TV experience sucks." Mr. Cook probably means the archaic, physical mechanism of search/select/watch/manage. It's long been believed that Siri is going to be the intermediary for search, select and control, and voice control is also an avenue that Xfinity is also taking. (See link above.) It's probably a preemptive strike against Apple.
Apple's perpetual, unsuccessful pursuits in the TV industry suggest that content holders have been historically successful keeping Apple at bay, offering only a small piece of the larger experiences offered by the industry and retaining their conventional relationships with carriers. The carriers, in turn want their own fine-tuned user interface that's often full of agenda.
However, lately, things are starting to change. So far, it's been the case, generally, that delivering direct to customers on the Internet via apps has been tied to authenticating against a currently active cable/satellite account. But that model is breaking down, because providers like HBO and Netflix want a close relationship with their viewers. And now Apple looks to be exploiting that trend. It may be Apple's only avenue.
Apple's Entry Point
If Apple can offer small, desirable programing packages with its next Apple TV and wrap a better viewing experience around it, all the while delivering the images to the customer's TV of choice, then that may well be a good enough start. Flash memory prices are low enough that Apple could include a (licensed) virtual DVR, but that gets tricky and expensive.
I suspect that's part of the negotiations right now. Apple doesn't need its own next generation Apple TV to be excessively expensive. It won't be subsidized like the carrier's own DVRs. On the other hand, ad-free content could price Apple's own monthly subscription fee right out of the market. Each side in this negotiation is maneuvering to get what it wants: control and profits.