Why Apple TV Could be a game changer

Today, during Apple's announcement my Twitter stream was a festival of haters. People made fun of the Pencil and Live Photos, and pretty much everything else.In the meantime, I bought some Apple stock.I am long $AAPL, because the company is expanding the product line, and getting more embedded into our homes. Apple has a single, integrated and cohesive platform and I think this is very powerful.It also feels to me that most people who yawned about the features don't fully realize that Apple is not aiming to be one of the ways people watch content. Apple wants to be the way people watch ALL content.

Apple wants to be THE NEW TV.

Here is the diagram to show how and why this could be true:

In a nutshell, all content will be delivered via apps.

HBO already has an app. FX and AMC will have apps (see caveat about networks vs studios below). Big Bang Theory will have an app because it is such a huge show. In addition, Netflix, Amazon, YouTube -- all asynchronous content platforms already have apps.Apple's logic is simple - apps already exist on the phones, tablets, watch - so apps should be the way we experience TV as well.In addition, content apps will be very special.

What Apple is going to do is to require ALL content app to publish an index, or meta data.

The meta data will specify whether content is live or not, whether it is paid or not, whether it is a show or movie, etc.On top of this, Apple is going to build a killer app called... SEARCH. The search on Apple TV will become the NEW TV GUIDE.When people want to watch something they don't care where it is playing -- on live TV or on Netflix or On Demand. Apple TV will solve this problem and will provide a seamless way to watch via Search.So Apple's ambition is to become the new TV.It is big and broad ambition. Here are a few important industry dynamics and implications to consider.1. Sports: Live sports is the most watched content on TV, and the reason why people pay for cable. Apple TV will likely have live sports app or apps. MLB already built live streaming app (that by the way powers HBO Now), and other leagues are likely to get on board.2. On Demand: The reason Netflix is struggling to get all Hollywood content is because of economics. What worked for Blockbuster, pay per each rental, doesn't work for Netflix because Netflix is a subscription business.Studios would rather first make the movies On Demand. Apple already has access to some of this content and is likely working hard to broaden its library. Apple TV will likely have On Demand App for all latest releases you can buy, just like you can buy it now via set-top box.3. Direct to Consumer: This IS the holy grail for the studios, a.k.a content creators. In today's world, studios license the content to the networks, and networks in turn make it available to cable companies. This is arguably a hugely inefficient chain that everyone, except for HBO, is afraid to break. The reason is because Comcast, DIRECTV, Verizon (so called MSOs) make a killing today on TV content, and share their profits down the chain.4. Disruption: Apple TV stands to directly bypass MSOs and even tv networks. If Apple TV succeeds in the way we describe here, the scale of the disruption is equivalent, if not bigger, to what Apple did in music. In the new world of Apple TV, MSOs don't exist. What exists is a marketplace where content creators of all kinds directly serve ad supported or paid content to customers.5. Advertising: TV advertising spent is 70BN or 40% of all advertising dollars spent in US. CMOs of major companies are still sending all this money into traditional TV because they don't have anywhere else to spend it. What happens to this money in the world where Apple TV succeeds? My sense is that some content will continue to be ad supported at least in the short term. The dynamic is far from obvious, and ad supported content may struggle. Just like ads on mobile are still problematic, ads on Apple TV may not do well either.6. The Pipes: Lastly, there is a matter of pipes. Apple TV can't magically serve you content. It needs to use existing internet in your home. In my home it happens to be Comcast. If Apple TV uses Comcast to put a large chunk of Comcast business out of business Comcast is going to scream and fight back. Comcast is one of the smartest companies around. They bought NBC Universal in anticipation of major changes in landscape.Also, cable doesn't have to be the way we get Internet in our homes. It could be fiber or satellite, or something entirely new. We will likely see the rise of specialized internet providers like Pilot (full disclosure, a Techstars '15 company).To sum up, as I've written previously, TV is changing, it is changing a lot.

I think that Apple TV could actually be a game changer.

We won't know for sure until devices ship, until we see the user adoption, and until we see how the content battles play out.My bet though is that Apple didn't make small plans for TV this time, and that Steve Jobs did whisper into Tim Cook's ear some version of what I wrote down here.What do you think?