Apple in Talks to Supply IP STB to Cablecos

Apple (News - Alert) is talking to various cable companies, including Time Warner Cable, about creating an Apple-branded set-top box that would also function as a pay-TV tuner for cable TV services, according to the Wall Street Journal.

Citing anonymous sources, the WSJ is reporting that Apple is looking to create an IP-based STB that would be an exclusive for the cablecos. It is likely that Apple would ask for a 30-percent transactional revenue share for VOD purchases, the report said, which is another turnoff for the MSOs.

So far, according to the paper reports, the juggernaut from Cupertino has been rebuffed by the operators likely leery of allowing Apple, a competitor on the video on demand (VOD) front, into its revenue stream.

There is plenty of precedent for hybrid TV services that combine linear, traditional television with Web offerings via an IP STB or gaming console. AT&T (News - Alert) has a deal for TV Everywhere authentication through the Xbox 360, for instance. And several telcos have deployed hybrid STBs from vendors like Entone, to offer an operator-branded portal that combines over-the-top (OTT) content, VOD and broadcast.

It's unclear which tack Apple is looking to take – its own branded device that it sells at retail, or something that it would sell to the operators themselves. Apple, which famously referred to its TV initiative as a "hobby," is already in the market with a $99 over-the-top streamer box known as Apple TV.

It offers iTunes, Netflix, YouTube (News - Alert) and Hulu Plus, among other online options, but so far Apple has no pay-TV operator customers.

It has also been long-rumored to be developing a connected HDTV, which could be a stealth opportunity to enter the living room. The latest fuel to that fire is the fact that the U.S. Patent & Trademark Office has granted Apple a patent for middleware for programming guides and TV content discovery.

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