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Here’s Why Apple Inc. (AAPL) Won’t Dominate TV After All

If Apple Inc. (NASDAQ:AAPL) shareholders were banking on the company revolutionizing the TV market, they ought to reconsider their investment thesis. On Tuesday, Microsoft Corporation (NASDAQ:MSFT) fired a preemptive shot at Apple Inc. (NASDAQ:AAPL), affirming its dedication to control the living room.

Apple Inc. (NASDAQ:AAPL)

The Xbox One

“What if a single device could provide all of your entertainment?”

Microsoft Corporation (NASDAQ:MSFT)’s third Xbox is called Xbox One, and as the name suggests, it’s a bit of starting over for the Windows-maker. Although gaming remains a major part of the Xbox brand, the new Xbox is about entertainment in general, rather than gaming in particular.

In an interview with Bloomberg, Microsoft’s Yusuf Mehdi remarked:

“This is the one where we start to become not only a fantastic gaming device, but also an all-in-one entertainment system.”

Although the Xbox One does not fully replace set-top boxes, it does interface directly with them — users can plug their cable box into the Xbox One with an HDMI cord, allowing the Xbox One to take over the process of serving up content.

From there, users can utilize a combination of their voices, hand gestures, tablets and smartphones to control the TV experience — which is dramatically augmented by Microsoft’s technology. For example, with Skype integration, users can talk to each other online while watching TV.

But, perhaps most significant, is Microsoft Corporation (NASDAQ:MSFT)’s partnership with the NFL. The Xbox One will allow for an ideal Fantasy Football viewing experience, showcasing scores and statistics while players watch the game in their living rooms.

Netflix, Inc. (NASDAQ:NFLX)’s latest competitor

When Netflix, Inc. (NASDAQ:NFLX) CEO Reed Hastings resigned from Microsoft’s board, many wondered if it could be the sign of an imminent takeover. But that doesn’t appear to be the case.

Rather than acquire Netflix, Inc. (NASDAQ:NFLX), Microsoft has become the company’s latest competitor. The Redmond tech giant revealed Tuesday that it had commissioned a Halo TV series — produced by the legendary Steven Spielberg, no less.

The series appears to be exclusive to Xbox Live subscribers (Microsoft’s subscription-based online service). Although it seems insane to believe that many people will spend several hundred dollars on an Xbox just to watch the Halo show, it should increase the device’s general appeal to non-gamers.

Of course, that’s just one series, and Netflix has commissioned half a dozen at this point. Few Netflix subscribers will cancel based on Xbox’s original programming (indeed, with its online capabilities, Xbox One could help Netflix, Inc. (NASDAQ:NFLX) reach more potential subscribers), but Microsoft’s decision to make its own content — rather than acquire Netflix — weakens the case to buy Netflix’s stock.