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Here’s some cold water for those who love the anticipation for a new Apple (NASDAQ:AAPL) product. Eddy Cue, Apple’s chief of Internet software and services, has told one analyst it would be impossible for the company to launch the rumored full-fledged television set unless it also managed deals for content. Cue told Pacific Crest’s Andy Hargreaves that Apple could create a better television user interface by delivering “content in a way that is different from the current multichannel pay TV model,” but that it would be an “incomplete solution” without the right partnerships.
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“Unfortunately for Apple and for consumers, acquiring rights for traditional broadcast and cable network content outside of the current bundled model is virtually impossible because the content is owned by a relatively small group of companies that have little interest in alternative models for their most valuable content,” Hargreaves wrote in his research note. “The differences in regional broadcast content and the lack of scale internationally also create significant hurdles that do not seem possible to cross at this point,” he added.
Of course, the deals, when they come, may actually be a win-win or content providers and Apple. Barclays Capital analyst Ben A. Reitzes said media companies may be forced to strike a deal with Apple as consumers move away from traditional cable TV subscriptions.
“Apple may hold the cards in being the only company that can fully monetize the small screens for big media companies,” Reitzes wrote. “The risk of not partnering with Apple is that as young people may ‘cut the cord’ given the cost of cable that a screen connected to an Apple TV with AirPlay can provide a substantial array of content.”
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