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New Details on Apple's TV Vision

Apple Inc.'s (AAPL) vision for a new television set-top box includes features designed to simplify accessing and viewing programming and erase the distinction between live and on-demand content, people briefed on Apple's plans said. The Cupertino, Calif., company proposes giving viewers the ability to start any show at any time through a digital-video recorder that would store TV shows on the Internet. Viewers even could start a show minutes after it has begun. Time Warner Cable Inc. (TWC) offers a limited version of this feature called Start Over. Another significant feature of the Apple set-top box is likely to be its user interface, which could resemble the navigation icons on Apple's iPad. While the design may change, the interface is expected to be easier for people to use than existing cable on-screen menus, widely viewed as clunky. Apple's device also may create space on the TV screen for social media features, such as sharing TV shows through services like Twitter Inc., the people said. Apple spokesman Tom Neumayr declined to comment on what he characterized as rumor and speculation. The Wall Street Journal reported Wednesday that Apple has been talking with major cable operators, including Time Warner Cable, about letting consumers use an Apple device as a set-top box for live television and other content. In recent weeks, Apple also has approached entertainment companies, which own television content, with an outline of what it wants the new box to do, distributing, in at least one case, a document outlining its capabilities, one of the people said. Cable operators' existing rights over TV content would likely not be sufficient to allow some of Apple's proposed new services, the people said, particularly the Web-based DVR idea. As a result, entertainment companies may need to agree to expand cable operators' rights in order for the Apple box to be deployed. Apple also may negotiate directly with media companies over other features, such as new ways of offering past seasons of shows it already has some rights to through iTunes, one of these people said. Plenty of hurdles remain. Apple doesn't appear to have any deals with operators to sell the device, and getting them on board is likely to be challenging. The relationship between Apple, cable companies and content owners remains tense. Apple has tried repeatedly over the past few years to persuade entertainment companies to grant it rights for various kinds of TV offerings, so far unsuccessfully. In the past, however, Apple was trying to change the existing pay TV system by, for instance, offering individual rentals of TV show episodes, which TV companies feared could undercut their business models. Apple's current plan involves a less radical path than past ideas the company has contemplated. Still, some in the entertainment industry may fear that letting Apple establish any kind of a foothold in television could give the tech giant more power longer term. Some of the features Apple has discussed are improvements, but not radical changes, to those already available. For instance, Apple wants viewers to be able to access all episodes of current seasons of TV shows, whereas existing video on demand services from cable operators generally often offer only a few episodes of a current season. Apple's proposed device would also provide access to older seasons of shows, which are already available through Apple's iTunes media store. Even the idea of an on-screen menu with icons has begun to be adopted by cable and satellite operators, such as Dish Network Corp. (DISH). The talks come as sales of Apple's current TV hardware, a $99 box called Apple TV, are picking up but are still small. The company sold 1.3 million in the quarter that ended in June. The device allows users to access some Internet video on larger screens but doesn't offer traditional channel line-ups. Apple has struck deals with video providers like Netflix Inc. (NFLX) and Hulu LLC to offer apps for the device. At the same time, media companies are digging in and demanding more money when television distributors want to distribute content in new ways. Whether consumers would pay up for the proposed Apple device, which could be more expensive than renting a traditional set-top box, is another unknown. Write to Jessica E. Vascellaro at jessica.vascellaro@wsj.com and Sam Schechner at sam.schechner@wsj.com Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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