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Apple angling to transform TV?

Talks with CBS, Disney

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Apple is reportedly talking with CBS and Disney in its search for content partners for a planned US subscription-based television service.

Word of the discussions comes from "people familiar with the matter," according to a report (subscription required) in Tuesday's Wall Street Journal.

Details of the much-rumored service haven't yet solidified even to the level of "sketchy" - and, of course, Apple isn't talking.

Even in a country in which TiVO has become a verb and cable-based video-on-demand services are proliferating, most television is still viewed on a scheduled basis. An Apple offering built from the ground up as a viewer-controlled subscription or pay-per-view service could change that.

Cable companies rake in hefty monthly fees from bundling hundreds of channels in "basic" and "premium" packages, but most viewers settle on a few favorites. Devotees of Playboy en Espanol, for example, may have never tuned in to Showtime Women - but they pay for both.

Presumably, an Apple service would not require you to sign up for massive bundles, but instead allow you to pick and choose what you want to view. You might pay more on a per-channel basis, but less overall.

And if it were to be approved by the famously hard-to-please Steve Jobs, an Apple service would almost certainly be more user-friendly than any cable company's pay-per-view offering.

Perhaps the Apple TV, which Jobs famously referred to as a "hobby" product, was never expected to be a money maker, but instead Apple's test bed for television-interface experimentation. As Jobs once told an interviewer: "It hasn't crested to be millions of units per year, but I think if we improve things we can crack that."

Creating a subscription service filled with timely content from major networks would certainly be an improvement. As might also be the long-rumored, Apple-branded, big-screen TV, perhaps bundled with the advanced "magic wand" remote for which Apple filed a patent last year.

A major - and obvious - challenge facing Apple in creating a television-delivery service would be creating a deal for content providers that would be lucrative enough to wean them away from their current diet of ad revenue. Or, perhaps, to create a multi-tiered system in which consumers paid more for ad-free content.

Apple, of course, currently sells TV shows on its iTunes Store, but on a show-by-show basis, much as it sells tunes and iPhone apps. But Cupertino's recent acquisition of the music streaming service Lala - and, more importantly, of the engineering minds that created it - seems to indicate that a subscription-based streaming service is at least being bandied about in the conference rooms at One Infinite Loop.

And then there's that $1bn data center that Apple is busily building at the WestStar Mission Critical Data Park near Maiden, North Carolina. Certainly it will have a central role in Apple's content-delivery future.

It's been about a decade since Steve Jobs first announced Apple's "digital hub" strategy at a Macworld Expo keynote. During those ten years Cupertino has been hell-bent on transforming itself for a low market-share computer company into a leader in content creation, delivery, and consumption. And multiple signs point to an impending launch of it's next hardware foray into content consumption, the oft-rumored media pad.

The most recent spate of rumors swirling around that "iPad" have been focused on its future as an ebook reader. We're betting, however, that Jobs & Co's "next big thing" won't be marketed as a vehicle for as narrow a niche as text.

After all, there's a lot more money to be made by streaming CBS's Cold Case to millions of viewers than by selling a few thousand copies of Random House's In Cold Blood. ®

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