Apple's Plan to Disrupt Cable Is Also Netflix's Nightmare

For Apple (NASDAQ: AAPL  ) , cable companies are more "frenemy" than enemy. New deals bring HBO GO and WatchESPN to all Apple TV users who have cable plans that include access to those channels.

Viewers also gain access to SkyNews for coverage of breaking news in the U.K. and Ireland, Crunchyroll for Japanese Anime, and Qello for on-demand streaming for concerts and music documentaries.

Promotional video for HBO GO on Apple TV. Sources: HBO, YouTube.

"HBO GO and WatchESPN are some of the most popular iOS apps and are sure to be huge hits on Apple TV," said Eddy Cue, Apple's senior vice president of Internet software and services, in a press release.  

Viewers benefit by getting access to a better interface for live sports programming and HBO's full library of content, while cable companies preserve their connections to subscribers. Everyone wins, right? For now, yes. Just don't mistake Apple for anything other than a disruptor.

Apple says customers are downloading 800,000 TV episodes and 350,000 movies per day from an iTunes Store library that includes 60,000 movies and 230,000 TV episodes. All told, more than 1 billion TV episodes and 380 million movies have been downloaded so far.

Mix in iCloud syncing and precisely the sort of HBO integration I suggested in April, and you've the makings of a compelling "TV Everywhere" platform that could make both Apple TV and the iPad hot commodities among cord cutters.

Meanwhile, the lines between Netflix (NASDAQ: NFLX  ) and HBO, its primary rival, are blurring. Adding HBO GO to Apple TV suggests parent Time Warner is interested in expanding the service beyond a handful of other devices. Doing so would blunt Netflix's distribution advantage.

Could Netflix win a battle waged just over great content? Founder Reed Hastings expressed some concerns in a recently posted manifesto covering the company's long-term strategy:

While we are passing HBO in domestic members in 2013, it will be several years before we are peers with them in terms of Original programming, Emmy awards, and international members. It wouldn't be surprising to us if HBO does their best work and achieves their highest growth over the next decade, spurred on by the Netflix competition and the Internet TV opportunity.

Translation: It's early. But not so early that Netflix can sit idle as Apple revs its iTunes engine. Investors need to see Hastings and team not only funding originals but also exploring cheaper expansion options, such as rescuing cult hits that may have been canceled too early.

Do you agree? Are you more likely to buy an Apple TV as a result of HBO GO? Let us know what you think of Apple, HBO, and Netflix in the comments box below.

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