Is overhauled Apple TV the future of television? Stay tuned

September 14, 2015

CUPERTINO, Calif. — It was overlooked amid a slew of wide-ranging product announcements, but the revamped Apple TV could be key to transforming the television-viewing experience — and give consumers the most compelling reason yet to cut the cable cord.

Apple Inc.’s diminutive digital streaming device has gotten a major overhaul, with Apple Chief Executive Tim Cook unveiling a more powerful version this week and declaring it "the future of television."

Industry analysts say it’s not quite the future, but it’s an important step.

It’s the first time a company has turned out a set-top box and a home entertainment system that could be considered comprehensive. The new Apple TV takes what competitors do in a piecemeal way, brings it all together and adds more functionality.

"With the Apple TV, I think they hit that dead on," said Angelo Zino, an analyst at S&P Capital IQ. "What they’re doing now is great in the form of them making greater penetration into living rooms. I think they nailed it."

At its core, the device is built around a belief that apps, not cable channels, will become instrumental to how television is consumed and lays the groundwork for a new age in big-screen at-home entertainment. It contains better hardware, a new operating system called tvOS, an improved remote control and the integration of a smarter Siri personal assistant that understands fairly complex voice commands.

"We need a new foundation for TV," Cook told the crowd during the company’s hardware event in San Francisco. "We know this is what it takes."

Television has been the laggard when it comes to the Internet-fueled modernization of screens: smartphones and tablets have changed the way people live, while TV has remained largely stagnant. An app-driven TV platform will bring the viewing experience in line with what consumers are used to on mobile devices: namely, the ability to choose what you want to watch, when you want to watch it.

With a starting price of $149 — significantly pricier than rival set-top boxes but not outrageously expensive — the Apple TV is poised to be a hit among consumers during the all-important holiday season (the device will be released in late October).

But analysts cautioned that although the set-top device helps diversify Apple’s product portfolio, Apple TV as a standalone product won’t make much of a dent on the bottom line. Zino estimated that over the next 12 months, the device will account for less than 1 percent of Apple’s revenue, "so it’s not going to move the needle."

What would make a substantial difference, they say, is if Apple uses Apple TV as a launching pad to more ambitious television plans down the line. There are already some early hints that that is what Apple intends to do; the company has been holding early talks with executives in Hollywood that could lead to a push into original video content to take on the likes of Netflix and Amazon.

There is a major hardware possibility as well.

"The growth potential is in TV, but it’s not in set-top boxes," Zino said. "By all accounts next year they’ll roll out a TV streaming service and thereafter it becomes interesting. … As they gain more traction, they can come out with a full-blown product offering in the sense of a large-scale TV."

The new Apple TV also has enhanced capabilities for light gaming, and games are likely to be a huge category of Apple TV apps.

"Unleashing Apple’s huge ecosystem of developers to TVs should not be underestimated," said Al Hilwa, program director of software development research at IDC. "This is what most of us thought Apple TV was going to be three years ago."

In perhaps a sign of how important Apple considers television to be, it gave Apple TV its own dedicated hands-on demo section after its event this week; all of its other products — iPhone 6s and 6s Plus, iPad Pro, Apple Pencil, Apple Watch and more — were grouped together in a separate section of the Bill Graham Civic Auditorium.

In darkened spaces designed to resemble sleek living rooms, Apple employees showed off the new functions of the set-top device. Siri expertly pulled up movies and television shows by category when directed, quickly fast-forwarded and rewound streaming content to specific locations ("fast forward three minutes," for instance) and displayed retroactive captions when the user asked, "What did he just say?" There were apps for sports and exercise, so "you’ll never have to work out alone," an Apple rep said.

He also touted the new remote, which comes with Touch Surface — a feature that does away with frequent button pushing in favor of swiping. Users use their thumbs on the Touch Surface of the Siri Remote to scroll, select and navigate on the TV screen.



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