Does a 55-inch Apple TV make a Hulu deal more likely?

Staff writer
18 Aug 2011

There are two camps out there on the "Apple buying Hulu" rumor: One is that it is nearly a done deal, but with any number of iterations. The other says the rumors are just pipe dreams, and Apple is a player in name only.

So far, the more skeptical pundits have pointed to several common factors as to why the deal won't happen. Among them: Apple is too in love with itself, its brand, the particular panache that allows it to dominate a segment of the market to take in an outsider like Hulu. Roll into that argument that Hulu, as an independent brand, might not connect deeply enough with the Apple ecosystem to make it attractive to the brass in Cupertino.

Another reason it won't happen? Hulu's basic format, i.e., an ad-supported platform, is not something with which Apple is very familiar, writes Peter Kafka in AllThingsDigital.

But there are more reasons to believe that Apple still is a favorite to win the Hulu sweepstakes. The company, almost two years ago, floated its own plan to TV studios for a $30-a-month subscription service to deliver shows via iTunes. While the plan, at the time, was met with mixed reviews from Hollywood--this was, after all, in the days when Hulu was in its infancy, Hulu Plus was still seven months away from its launch, and Netflix was still confined to streaming on Xbox and PS3--there are more reasons today that it might fit Apple's longer-term strategy.

With $76 billion available to spend, Apple has the cash to land the deal. And, with questions as to who else would be in the running--Netflix and Microsoft have publicly dropped out, Yahoo is a long shot and Google, although interested, may have antitrust worries hanging over it-its head, and perhaps Amazon, still look to be favorites. And it could cost them far less that the rumored $2 billion price tag to make it happen.

Apple still wants to be at the heart of the home entertainment universe. A UBS report earlier this month suggested Apple is poised to launch a smart TV that will deliver IP content direct from its iTunes store in 2012, potentially increasing its market cap by $50 billion to $100 billion. The key? Content, said UBS analyst Maynard Um.

While there has been other speculation that a connected Apple TV would debut in 2012, a rumor that popped up earlier this week may be the strongest evidence of new hardware to date. Online lifestyle tech guide Smarthouse, citing an anonymous source, said the company was looking to launch a 55-inch OLED TV, built by LG, which supplies screens for Mac products.

Getting the rights to programming from the major networks has been problematic for many companies looking to make a splash in the streaming market.

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