BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Apple TV Is A Huge Cash Cow, Which Is Why Apple Is In No Rush To Make It Better

This article is more than 9 years old.

There is one thing standing between Apple TV and being the number one media player, and that's the enormous pile of money it's making. According to the firm, Apple TV has now made $1 billion in media sales. These are sales that the company can determine have come directly from people using their Apple TV to buy or rent movies and TV shows to watch on their TV. With it making that sort of cash, there's very little incentive for Apple to turn it into the device it has the potential to be. And it could be an amazing product quite easily.

To be clear, I think Apple TV is a very nice piece of hardware but it has already sunk from the number one seller, to number three. Roku and Google's Chromecast now hold the top spot - both have sold roughly the same number of devices - around 3.8 million - while Apple TV sold around 2 million in the same period (Q1 2014 according to 9to5mac).

Of course, Apple TV has been around longer, so it's perhaps unfair to expect it to sell as well as newer devices. But there's also a price issue. Apple's product is $99 while Google Chromecast costs $35 and the Roku Streaming Stick costs $50. If Apple really wants to win in this market, then it is going to need to consider dropping the price of its product. Of course, Apple has never been in the low-end of any market, so it will be interesting to see if it will reduce the cost of Apple TV.

Apple TV (Photo credit: Rob Boudon)

Apple TV started as a hobby project. Steve Jobs called it that because it was never given the same love as the other products Apple launched around the same time. Steve never really bounded on stage to declare Apple TV to be "the next big thing". By Apple's own admission, this probably had a lot to do with the fact that media on TV is impossible to get right. But Tim Cook has now officially removed it's "hobby" status, and it's now being taken seriously as a product. Why did he do that? Simply, because Apple TV has now made Apple a huge amount of money. It no longer needs to be hidden away as a project that might fail, because it has earned its keep.

That billion is clearly from Apple TV too. It's for content that has been bought from the device itself. So Apple TV is really doing its job, it's acting as a shop front for iTunes content, without the need for iTunes or even an iPod or iPhone. That's great for Apple, but it raises another issue about Apple TV. It's really not much use unless you have another Apple device to go with it.

Apple's system for streaming content from a phone or tablet to Apple TV, called Airplay, is very good indeed. Like most Apple tech though, it only officially works on Apple devices. Anyone can build an Airplay receiver, but transmitting is supposed to be limited to the firm's own hardware. That's good, but it means that those who use Windows PCs or Android phones are being excluded in a way they aren't with Roku or Chromecast.

The rear side of Apple TV (2nd generation) (Photo credit: Wikipedia)

The lack of openness when it comes to streaming is a problem for one reason: apps. Unlike iOS, upon which Apple TV is based, there is no way to provide third-party apps for Apple TV. This is a massive mistake on Apple's part because it would give entirely new life to its streaming product. Not only would users have access to a wealth of Apple's content, but they would also be able to get services that aren't currently provided. Of course, iDevice owners can Airplay mirror their phones to the Apple TV, but while that's a clever solution it's not ideal for a number of reasons. First of all, it might be a bit complicated for most users, but also means you're consuming battery on your phone or tablet to stream.

So aside from the price, and the need for another Apple device in many cases, Apple really needs to get developers on board for Apple TV to work. There have been rumours in the past that it would go down a gaming route, and Airplay does allow this to some extent, but it would make a lot more sense if you could run apps on the hardware itself. That would open Apple TV up for a Plex app, to stream media from the amazing Plex Media Server software that has become popular with home theater enthusiasts. Apps might make sense for Apple if it creates a curated store for them, but letting any company circumvent its profit-making is less likely to happen. We have, after all, seen that with in-app purchases on the iPhone in the past where developers are not allowed to cut Apple out of the loop.

New Apple TV interface (Photo credit: deerkoski)

Of course, there's one reason Apple won't open Apple TV up, and it goes back to that billion bucks it has made on Apple TV. It's about content, and most importantly selling that to users. While Apple does allow the likes of Netflix to provide services, it's not about to make it easy for people to play their downloaded movies and TV shows.

And ultimately, it's that which will hold Apple TV back from being the most popular media streamer, but it won't stop Apple making loads of money from it. So the chances of Apple TV becoming the product it is capable of being are slim, which I think is a great shame.

Follow me on LinkedIn