Signaling the growing importance of both the over-the-top marketplace and the role of Netflix in Hollywood, Apple rebooted its TV strategy on Wednesday via deals to stream Netflix content as well TV shows from ABC and Fox on a revamped Apple TV device.
At a press event in San Francisco, Apple CEO Steve Jobs said Apple is ditching its purchase options for Apple TV, turning the device into a rental store only. Also, the price will drop from to $99 from $229, and the device will be available to consumers in about four weeks.
But the technology giant hasn't convinced everyone to come onboard the new Apple TV train yet. Only two television networks have struck deals with Apple to offer their TV programs for rental only at 99 cents. That's a change from the standard $1.99 purchase price for TV shows on Apple TV previously, with some having been priced at $2.99 in HD.
Jobs expects the other broadcast networks and studios to play ball. "ABC and Fox are taking the steps with us, offering the shows for 99 cents and we think the rest of the studios will see the light and get on board fast," he said, in an event that was capped by a piano performance of three songs by Coldplay's lead singer Chris Martin on stage at the Yerba Buena Center in San Francisco. Jobs introduced the frontman for the Grammy-winning group, citing Coldplay's 50 million downloads in the iTunes store.
Jobs introduced several new iPods at the event, but the centerpiece product was the revamped Apple TV, now one-quarter the size of the previous version.
With the Netflix deal, Netflix now has an even wider berth for its streaming service. The service already runs on Xboxes, Rokus, Blu-Ray players and other alternative devices that consumers hook into their TVs.
The makeover was necessary because the Apple TV hasn't taken off, Jobs said. "We introduced it four years ago and we sold a lot, but it's never been a huge hit. Nor has any competitive product. Nothing has been a hit in the living room," he said, then demonstrated the TV rental capabilities by showcasing a scene from the finale of the first season of Glee.
While YouTube content and podcasts have been part of Apple TV and will remain core features, the Hollywood deals are most vital to the service.
"What have we learned [from Apple TV] is the No. 1, 2 and 3 thing they want is Hollywood movies and TV shows whenever they want," Jobs said. "The don't want amateur hour. They want professional content and they want everything in HD."
First-run HD movies will be available for $4.99 the day and date they come out on DVD, Jobs said, but did not elaborate on any new deals with film studios.
While Apple has not been successful as an alternative TV provider, the company's Apple TV reset raises the specter again of cord cutting. But despite the plethora of options for watching TV shows and movies on alternative devices from mobile phones to gaming consoles to computers themselves, there's little evidence yet that customers are ditching their cable service to go broadband-only.
Leichtman Research Group analyzed official data from cable and satellite providers and found that in the last year the largest TV providers added more than 1.7 million new video customers signing up to watch cable TV shows.