In TV, Apple Leaves Trailblazing to Others

Making several references to "people familiar with the matter," the Wall Street Journal reported today that CBS (CBS) and Disney (DIS) are interested in Apple's (AAPL) forthcoming push into web-based television subscriptions. Intended to compete with the cable giants, the service could allow complete access to a show or network for a flat monthly fee. Although no networks have announced attachment to the deal, unnamed sources say the service may premiere sometime in 2010.

While the move may present better opportunities for media companies and advertisers to monetize online content, in terms of innovation and pushing the envelope, this doesn't sound like the revolutionary technology Apple should be producing in the second decade of the twenty-first century.

In fact, this barely sounds cutting edge after TiVo (TIVO) debuted 10 years ago.

As it stands, Apple's iTunes Store already presents competition to cable and satellite companies like Comcast (CMCSA) and DirecTV (DTV) by selling films and TV shows -- by single episode or full season. It's not bringing those companies to their knees quite yet, but it's an attractive model and it certainly has a loyal base.

However, for convenience's sake, the service has already been improved upon.

Netflix (NFLX) allows unlimited streaming of its content via PS3 (SNE), Xbox (MSFT), or standalone boxes for a flat subscription fee. Even more convenient, streaming video sites like YouTube (GOOG) and Hulu -- which is backed by NBC (GE), Fox (NWS), and ABC -- offer a bevy of shows and movies for the simple cost of a wi-fi connection.

And that's not even counting nearly every official network website which hosts decent quality content of their network programming.

So where exactly is that famous Apple innovation in this new project?

Online video? Done. Streaming video? Done. Flat-fee subscription-based model? Done. And most importantly, free content? Done.

The Wall Street Journal also mentions that News Corp. (NWS) Viacom (VIA), Time Warner (TWX) and Discovery Communications (DISCA) are hesitant to sign on to the service, implying the media companies are worried about their share of the pie or conflicting with the existing deals that they have with cable and satellite providers.

Then again, what if that's not the case and these corporations can't see the viability of a service that, by all means, should be considered antiquated? When asked of the possible competition proposed by a subscription-based Apple TV service, a DirecTV spokesman told the Wall Street Journal, "It's difficult to gauge how competitive they will be without seeing the packaging, presentation, and execution." Surely, CBS and Disney have seen the working model, but what if the others just weren't impressed?

Granted, it's a hypothetical scenario. But it's astounding how Apple can revolutionize the computer, media player, and cell phone markets -- paving the way and practically presenting a step-by-step diagram on how to succeed in those fields -- and fail so dramatically on something like the Apple TV. (See How Apple Is Missing a Billion-Dollar Opportunity.) If Apple applied the same gumption and insight into the Apple TV as they did into the iPhone, they'd once again be the undeniable leader in an emerging technology.

Instead, like its new subscription service, it’s lackluster and sorely disappointing.