I always thought that what Apple does best is taking a cumbersome consumer device and making it simple. E.g. iPhone replaced 4 or more devices with one (phone, iPod, internet+mail client and GPS, at the very least, and that happened before the AppStore opened). I really don't think that people at Apple sit around the table and think in terms of vertically integrated models, platforms, monetizing and all that other high-level stuff. I bet they think about user experience and do what needs to be done to achieve it. Integration models, platforms, partners, etc. come in next, they are secondary in the big schema of things.

From the user perspective, people need simple access to the following types of content: * real-time (think ESPN, Speed Channel and breaking news) * near real-time content (talk shows, nightly news, first-run TV shows) * archived content (moves on DVDs)

The archived content problem is solved by Netflix. The near-real-time problem is solved by Hulu (some networks, like HBO and Showtime are not there yet but will be once paid subscription becomes relevantly popular). The real-time problem is not solved -- flash-based players on news sites do not count. Apple might be able to to the third one, the way the newspapers are now published on the iPod.

In my view the opportunity is to bring all 3 types of content into one box, under one UI and wrap it into the nice user experience. Add IP-only delivery and a-la-carte subscription (e.g. I want monthly pass to 3 shows from Showtime and one show from HBO, but not the whole network), and users will ditch their $150/month settop boxes in droves.