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Thursday, April 17, 2014

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  • Apple Looks Like the First Casualty of Comcast-TWC Deal

    It looks like Apple will be the first casualty of the Comcast-TWC deal. Just yesterday Bloomberg reported that Apple was negotiating with TWC for it to become the first pay-TV operator to make its programming accessible in a new, upgraded Apple TV device. Assuming the report is accurate (and who knows, given the spin game TWC was playing to rebuff Charter's bid), it's pretty fair to say that Comcast will have no interest in Apple getting its nose under the TWC tent.

    There's a raging debate these days about whether pay-TV operators need to keep owning and maintaining set-top boxes or whether they should cede the role to consumer electronics companies. Some believe that with consumers showing a willingness to buy their own devices and the cost of set-top boxes increasing due to more processing power, pay-TV operators should happily back away from providing set-tops.

    The flip side of this argument is that with video becoming more accessible than ever, pay-TV operators need to invest in set-tops to develop and deploy their own new services. In this line of thinking, the set-top is a strategic differentiator in the home.

    To date, Comcast has fallen squarely in the latter camp. It has invested aggressively in its X1 and X2 platforms, and, by adding subscribers in Q4 '13 for the first time in 6+ years, has early evidence on its side that advanced set-tops/services are worth the investment. Comcast has only allowed access to VOD content on devices like Xbox to date. Time Warner was in the other camp, with a bent toward making its full video service available on connected devices, starting with Roku.

    When it comes to Apple specifically, as I noted way back in August, 2012, I think operators would wise to be wary. My main concern is that Apple's track record of superior user experiences could easily swamp most operators and diminish their control. This anxiety, plus the tangled web of rights, are the main reasons why Apple has had such a hard time making headway in the pay-TV industry.

    With Comcast soon calling the plays at TWC, Apple has likely lost its best shot at getting a foothold in the industry. 

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