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How Apple could shake up TV: A la carte channels

Apple's much-expected TV could have one big trick up its sleeve: Giving consumers the power to pick--and pay for--only the channels they want.

Apple's Apple TV set top box.
Apple's Apple TV set-top box.

Apple can set its much-expected television set apart from those of competitors--and shake up the TV industry to boot--if it can figure a way to introduce a la carte pricing for shows and channels on Apple TV, a new analyst report suggests.

In a note today to investors, Sterne Agee analyst Shaw Wu asserts that Apple's strength lies less in the hardware innovation it might bring to the TV market than in letting customers subscribe to particular channels or shows of their choosing.

Such a model would run counter to traditional TV packages offered by cable providers that sell channels to subscribers in pre-packaged bundles.

Apple already offers a number of TV programs as subscriptions through its online store, giving buyers a way to purchase both single episodes and entire seasons. The difference, of course, being that customers must wait for the show to be broadcast before it's available to download. (In some cases, shows aren't available until the entire season has aired.) Wu is suggesting that Apple would rather move to live streaming of the programming, just like what customers get through their cable provider.

"This is obviously much more complicated from a licensing standpoint, and in our view, would change the game for television and give AAPL a big leg-up against the competition," Wu wrote in the note picked up by Apple Insider.

This is not the first such suggestion that Apple is planning to adopt a subscription model for video content. A Wall Street Journal story from 2009 suggested Apple was in talks with CBS and Walt Disney to provide TV programming for a monthly fee. The closest that vision came to be was with Apple's season pass feature, which lets customers buy an entire season of a given TV show, even before some of the episodes have aired.

Interest in Apple's prospective television boomed in October with the release of Walter Isaacson's authorized biography of late Apple co-founder Steve Jobs. Isaacson notedJobs' work on making an easy-to-use TV set that is integrated with the company's various products and services.

"I'd like to create an integrated television set that is completely easy to use," Jobs was quoted as saying in Isaacson's book. "It would be seamlessly synched with all of your devices and with iCloud. It will have the simplest user interface you could imagine. I finally cracked it."

Adding to that, a report yesterday from Taiwanese publication DigiTimes cited sources saying that Apple was already in the process of ordering components for 32-inch and 37-inch TV sets that would be ready for sale in the second half of 2012, suggesting that Apple is relatively far along in the process of bringing the set to market.

In the interim, Apple has made two significant adjustments to its sales of TV shows in the past few months. First, it killed off its TV show rental service, a decision the company attributed to consumer purchasing behavior "overwhelmingly" falling in favor of buying programming outright. It also introduced a new season-completion program that lets buyers pick up the rest of a show's season at a discounted rate if they've already purchased an episode.

Disclosure: CNET News is published by CBS Interactive, a unit of CBS.