In the current discussions, which involve at least two big media companies, Apple envisages working with cable companies, rather than competing against them, the people said. For programming, it would rely on cable providers to acquire programming rights from media companies, rather than acquire them on its own, the people said. Apple might consider seeking some rights directly in the future, one of the people said.
One of the people said Apple was aiming to release the new set-top box as early as June, though another cautioned the device might not be ready for several months after that.
Apple had been hoping to directly work with content providers like Disney, CBS and Fox to provide content directly to the Apple TV by streaming content over the Internet. Unfortunately, the content providers pulled out of negotiations, and Apple is now forced to deal with cable/satellite companies like DirecTV, Comcast, and Dish Network.
Apple reportedly had big plans to revamp some cable service's video-on demand content that would allow users to skip commercials and watch any show at any time. Instead, Apple is now asking for just the five most recent episodes of current shows from the cable companies.
Apple's latest approach is far less ambitious. Instead of asking for full current seasons of shows, it is asking programmers for just the most recent five episodes of current-season shows—the standard for video-on-demand services in the TV industry, a person familiar with the matter said. Apple is also proposing to disable fast-forwarding on shows for three days after they air, which would protect TV channels.
It is unclear whether Apple would sell the box directly to customers, as it does with Apple TV, or reach a deal with a cable operator to distribute the box and lease it to customers. One of the people said cable operators are interested in saving money by not having to invest in buying set-top boxes if Apple were to sell boxes directly to consumers.
Comcast's latest move to acquire Time Warner Cable could bring even more headaches for Apple as it is still in tough negotiations to bring content to its next-generation TV device.