Last Monday, Apple TV owners woke up to a bright green icon in the middle of their home screens. After much Machiavellian strategizing, Apple relented and allowed Hulu Plus into the walled bonsai garden that Apple TV has been.
In a possibly unrelated, though highly synchronistic, development, Amazon Instant Video got the green light to stream onto Apple's iPad the following day. And as Brian Barrett points out in Gizmodo, the trend line is filled out by Apple making Sky Now TV available on iOS devices in the U.K.
What's going on here? Doesn't Hulu Plus' $8 a month subscription undercut the prices Apple charges to watch individual TV shows? Doesn't Amazon compete directly with, and often undercuts, the iTunes Store?
Yes, yes, they are competitors—unless they are competing within a platform that Apple owns. This seems to be the strategy that led it to bring Netflix on to the Apple TV in 2010 with the release of the 2nd generation of the product, after which sales of the $99 unit really started to take off.
In March, Apple upped the resolution to 1080p for it's 3rd generation and sales are projected to double from the previous year to around 5 million units. Movies and TV in full HD on your big screen, including Netflix and Hulu, all mediated by the convenience of your iTunes account? That's a killer platform.
So it is no wonder that Apple is loosening up with its competitors. "Keep your friends close and your enemies closer," wrote Machiavelli in "The Prince," and Tim Cook would seem to be following the Renaissance treatise on how to rule. (Michael Corelone used the quote as well in "The Godfather Part II." )
The point is that Apple is in the best position to create a popular platform for connected TV. Sorry Google, Roku and Boxee. As OS X and iOS begin to merge, there are software components ready at hand to build out a really robust application platform that works for all manner of streaming media.
Looking at it this way, it is clear that there are loads of ways for Apple to make money here, even if they give up a portion of their lucrative iTunes store revenues. Based on this scenario, these are the things that I would expect to happen soon, roughly in order, many of which have been rumored for quite a while:
- The next generation of Apple TV will be based on iOS 6
- The next Apple TV will allow users to add, delete and move apps around on the home screen just like any iOS device
- Apple will release an SDK for Apple TV apps to facilitate rapid development
- Apple will create an App Store for Apple TV apps
- There will be a lot of action from publishers and marketers in dual-screen apps
- Apple will make deals with cable companies to pick up individual or bundles of channels—and perhaps pay-per-view events like the Olympics—for Apple TV
- Apple will make deals with select TV manufactures to create premium integrations with their hardware
And all of this will be better for consumers than the situation they face now. Instead of the relative monopoly of the cable companies, the Apple TV platform will be a monopoly of monopolies. Apple will still call a lot of the shots, but more as a wrangler of wild beasts than as an absolute dictator (apologies to Machiavelli.)
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