Apple Said Developing Ad-Skipping as Part of TV Strategy

July 17, 2013 Leave a comment

Apple Said Developing Ad-Skipping as Part of TV Strategy

Apple Inc. (AAPL) is developing ad-skipping technology that would let owners of its Apple TV set-top box and future television devices watch shows without commercials, people with knowledge of the matter said.

Apple executives have briefed at least two owners of broadcast TV networks and cable channels, as well as some of the biggest U.S. pay-TV systems, said the people, who asked not to be identified because the talks are private. One proposal is for Apple to reimburse programmers for skipped ads, they said.The company is seeking to develop TV products with broader appeal than Apple TV, a set-top device purchased by 13 million consumers, Chief Executive Officer Tim Cook said in May at the D: All Things Digital conference. Apple TV is more appropriate for “hobbyists” than mainstream viewers, he said. Apple continues to work on a “grand vision” to update TV-viewing that remains “much like 10 or 20 years ago,” Cook said.

Jessica Lessin, a technology writer, reported yesterday that Apple was working on the ad-skipping initiative.

With advertising accounting for the largest share of their revenue, commercially supported TV networks have resisted skipping technology.

Dish Network Corp. (DISH) introduced ad-skipping for broadcast network TV shows in its Hopper TV set-top box in March 2012. 21st Century Fox Inc., Comcast Corp. (CMCSA)’s NBCUniversal and CBS Corp. (CBS) sued, claiming the service will destroy free, over-the-air prime-time television. Dish sued the networks in New York, seeking a court ruling that it isn’t infringing copyrights.

DVR Popularity

Almost three-quarters of consumers in a survey cited the ability to skip commercials as a main reason to use a digital video recorder, Motorola Mobility said in its annual media engagement barometer released on March 19.

Apple has also been working to license more content for people to watch via Apple TV. In June, it announced deals to offer apps from Time Warner Inc. (TWX)’s HBO and Walt Disney Co. (DIS)’s ESPN to customers who already receive those channels from cable or satellite pay TV services.

The maker of iPhones and iPods is also reaching out to cable services, which buy content from media companies such as Disney. It is nearing a deal with Time Warner Cable Inc. (TWC) that would let subscribers of that cable system watch channels on Apple TV, people have told Bloomberg. The companies plan to announce an agreement within the next few months, those people said earlier.

Accessing content from the Internet on a TV has become common since Apple introduced Apple TV in 2007. According to Leichtman Research Group, 44 percent of U.S. households have a TV set connected to the Internet through a video-game console, Blu-ray player or streaming devices such as Roku Inc. and Apple TV. That’s up from 38 percent a year ago, the researcher said.

Looming Competition

More competition is coming. Intel Corp. (INTC), the world’s largest chipmaker, plans to begin selling a set-top box with Web-based pay-TV service by the end of the year.

Google Inc. (GOOG) has also approached media companies about licensing content for an Internet TV service, Dow Jones reported today, citing people familiar with matter.

Apple, based in Cupertino, California, rose 0.6 percent to $430.20 at the close in New York. The stock has fallen 19 percent this year.

To contact the reporters on this story: Peter Burrows in San Francisco at pburrows@bloomberg.net; Andy Fixmer in Los Angeles at afixmer@bloomberg.net

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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