The Internet is abuzz tonight with a report from the Wall Street Journal that Apple and Comcast have been talking about a streaming, over-the-top video service. Reportedly, those streams would be delivered as a managed service over Comcast’s network, solving the so-called last-mile problem while also ensuring a high quality of service.
I have no special knowledge of these talks in particular, and my contacts at Comcast have declined to comment. But I’ve been following the online video ecosystem for longer than I care to remember, so these are just my initial thoughts on what’s discussed in the report:
On The Introduction Of A New Managed Streaming Service
Much of the report is centered around how the video streams would be delivered to consumers. On that front, the talks center around delivery that is separated from the public Internet but travel instead over Comcast’s private network.
Over the years, Comcast has invested heavily in its own content delivery network, which it uses to deliver streaming videos to a growing number of mobile and connected TV apps. The plan is to also use that network to deliver on-demand (and eventually) live streams to its own set-top boxes.
Already, Comcast has introduced a managed service for streaming videos that it delivers through its streaming Xbox Live app. That means that those streams don’t travel over the broader Internet, but to work they require a subscriber to be a Comcast broadband subscriber as well as a TV subscriber.
All of which is to say, the type of deal that Apple and Comcast are talking about isn’t without precedent. And a whole lot of how it is delivered will be dependent on who exactly owns the customer relationship and what the service entails.
On Content Rights And Customer Control
This is where the WSJ report gets a little iffy, but most of whether or not a deal gets done will depend on the details. The devil is in the details, and the report acknowledges that Comcast and Apple aren’t exactly “close to an agreement.”
On the one hand, Apple wants to create a service in which users would log on with their Apple IDs and control customer data. It would also ask for a cut of the subscription cost, according to the report. Meanwhile, Comcast would want to “retain significant control over the relationship with customers and the data.”
It’s difficult to imagine a world in which Comcast would give up its network and control of customers that are streaming data through such a service.
Then there’s the part about content rights. The report claims that Apple would need to acquire content rights, but that Comcast “would want to ensure that the price Apple has to pay to acquire rights wouldn’t cause the service to be priced higher than traditional pay-TV service,” according to one person.
If customer data seems like a sticking point, content rights seem like an even tougher hurdle to overcome. After all, there’s been no shortage of tech companies seeking TV content rights… and failing.
Over the years Intel, Microsoft, Sony, and yes, even Apple, have all tried to strike deals to roll out their own over-the-top TV services. To date, none has been successful in getting all the deals they need, although last year Sony reached a deal with Viacom for such a service.
For Apple to quickly strike the deals it needs for its own service and also come in with a price that’s lower than existing pay TV services seems like a long shot.
Apple TV And The X1
Comcast has been working to build its own next-generation set-top boxes to replace the old and busted DVRs most customers have today. By relying on the cloud and IP distribution, these set-top boxes are designed to go beyond what most customers have come to expect.
That said, there are still costs associated with rolling out set-top boxes and DVRs to customers. With a growing number of mobile devices out there, as well as Internet-connected TVs, cable companies like Comcast are developing apps to bypass those devices and allowing customers to connect through devices they buy themselves. The next Apple TV, like the Microsoft Xbox, could give Comcast another way to connect to consumers.
So What’s It All Mean?
For all of the above reasons, I think it’s doubtful Apple would roll out its own TV service or license content to create a streaming TV service. To roll out a Comcast app on the next-generation Apple TV box seems a lot more likely. And to make those Comcast streams a managed service on that box in the same way that they’re a managed service on Xbox seems like a no-brainer.