Apple aiming to take on Netflix?

Consumer electronics giant Apple (AAPL) and Comcast (CMCSA) are discussing a new television streaming venture, according to the Wall Street Journal. Customers would use an Apple set-top box, now called Apple TV, and get on-demand and live streaming with priority on Comcast's networks.

The potential significance of the rumored deal lies in a transformation of the traditional TV delivery model. It would open a door to the type of Internet "cloud"-delivered viewing, made popular by the likes of Netflix (NFLX) and YouTube (GOOG), that poses a threat to cable companies. Comcast is the largest cable operator in the country and is waiting for regulatory clearance to buy No. 2 Time Warner Cable (TWC).

Such a deal would also provide a boost to Apple. The company would win entry into a TV hardware market where it remains a minor player. Teaming with Comcast would likely boost the popularity of its Apple's set-top box standard, opening the way for a new market, with sales subsidized in a similar manner to the wireless industry.

Such an arrangement would give streaming programming through an Apple device priority on Comcast's network, potentially hurting Netflix, Hulu and others. Furthermore, a partnership with Comcast would bring along NBCUniversal, an important source of video programming.

For all the potential business importance, these early stage rumors are hardly new. Reports that Apple was in discussion with cable companies over a deal to use its technology date back at least to mid-2012. At the time, Apple CEO Tim Cook reportedly met with Time Warner CEO Glenn Britt.

There are hurdles to clear with any deal, including the cable company getting agreement from the various Hollywood studios that produce and own the material in question.

Given that Apple has also been rumored to be readying a new version of its Apple TV product, it could be that the timing is more than coincidence. As a former Apple senior marketing manager, John Martellaro, has explained, the usually secretive company uses controlled leaks to help set a public agenda more favorable to its interests.


Any deal between Apple and Comcast could find themselves in a different sort of trouble. The Federal Communications Commission has tried to enforce so called open Internet rules, which are intended to ensure equal speeds to everyone on the web and discourage carriers from giving preference to traffic from some sources.

The concern is that if cable, telecom and satellite TV providers use access quality as a way to obtain more money from large companies, smaller innovators could find themselves unable to compete. Netflix has already had to pay Comcast to keep the company from deliberately slowing its programming to their shared customers. A deal with Apple could effectively ice it out of the market.
  • Erik Sherman On Twitter»

    Erik Sherman is a widely published writer and editor who also does select ghosting and corporate work. The views expressed in this column belong to Sherman and do not represent the views of CBS Interactive. Follow him on Twitter at @ErikSherman or on Facebook.

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