Four Ways Apple (AAPL) Could Approach Content with iTV - Jefferies
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Price: $310.03 +1.45%
Rating Summary:
45 Buy, 28 Hold, 9 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 5 | Down: 5 | New: 5
Rating Summary:
45 Buy, 28 Hold, 9 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 5 | Down: 5 | New: 5
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With Apple (Nasdaq: AAPL) potentially launching its own TV (iTV) later this year there are questions about how the company will approach content. Jefferies' Peter Misek see four ways the company could approach it.
1. Create content - Misek notes this is still domain of traditional movie and TV
studios and thinks the Lower margins and higher risks will scare Apple away from this option.
2. Seed content - This is the approach being pioneered by Google with its YouTube Original Channels. "We believe Apple has enough momentum to go directly at mainstream TV and movies rather than focusing on niches," Misek comments.
3. Buy access to exclusive content - This is what Netflix (Nasdaq: NFLX) did with "House of Cards" and DIRECTV (NYSE: DTV) with "NFL Sunday Ticket." On this Misek states, "Apple could sign a handful of headline deals (e.g. English Premier League soccer) to gain buzz but costs and antitrust concerns will limit the extent of this option."
4. Gain access to non-exclusive content - Misek sees this as the most likely
scenario, as Apple will pay less, provide access to a broader range of integrated content , and package everything with a superior user interface and ecosystem. Partnerships with carriers/MSOs are possible/likely (e.g., AT&T, VZ, Bell, Rogers). "We believe Apple thinks it can win on a level playing field for content," Misek said.
Commenting on the financial impact of the iTV, Misek said it will be minor. Based on a conservative assumption of 5 million iTV units in FY13, EPS would increase by 6%. However, the biggest opportunity for Apple is the 'halo effect‛ that the iTV can have on sales of Apple's other devices, he says.
Misek reiterated his Buy rating and $599 price target on the stock.
For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.
Shares of Apple closed at $459.68 yesterday.
1. Create content - Misek notes this is still domain of traditional movie and TV
studios and thinks the Lower margins and higher risks will scare Apple away from this option.
2. Seed content - This is the approach being pioneered by Google with its YouTube Original Channels. "We believe Apple has enough momentum to go directly at mainstream TV and movies rather than focusing on niches," Misek comments.
3. Buy access to exclusive content - This is what Netflix (Nasdaq: NFLX) did with "House of Cards" and DIRECTV (NYSE: DTV) with "NFL Sunday Ticket." On this Misek states, "Apple could sign a handful of headline deals (e.g. English Premier League soccer) to gain buzz but costs and antitrust concerns will limit the extent of this option."
4. Gain access to non-exclusive content - Misek sees this as the most likely
scenario, as Apple will pay less, provide access to a broader range of integrated content , and package everything with a superior user interface and ecosystem. Partnerships with carriers/MSOs are possible/likely (e.g., AT&T, VZ, Bell, Rogers). "We believe Apple thinks it can win on a level playing field for content," Misek said.
Commenting on the financial impact of the iTV, Misek said it will be minor. Based on a conservative assumption of 5 million iTV units in FY13, EPS would increase by 6%. However, the biggest opportunity for Apple is the 'halo effect‛ that the iTV can have on sales of Apple's other devices, he says.
Misek reiterated his Buy rating and $599 price target on the stock.
For an analyst ratings summary and ratings history on Apple click here. For more ratings news on Apple click here.
Shares of Apple closed at $459.68 yesterday.
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