While I was going to express some dubiousness about the headline of this WSJ article—it at first suggests revamping a mythical set-top box that Apple has yet to produce, rather than the one that they’ve been producing for years—but that probably isn’t fair. It could be the actual Apple TV that they’ve been selling.
So instead, knock them for the first sentence.
"Apple Inc. appears to be scaling back its lofty TV industry plans."
In theory what this means is that Apple “envisages working with cable companies, rather than competing against them.” Well, yes. As much as some may dream of Apple displacing cable companies, that’s going to be pretty hard to do in the near-to-mid term for financial reasons alone. Netflix and Amazon are starting to compete with cable networks by paying for original content, but they established themselves first. Apple will need to do the same thing. (If they even want to get into that side of the business.)
If the WSJ report is correct, Apple’s service sounds like it will be nerfed to the point of bringing nothing new to the table—but that doesn’t mean it will remain nerfed forever. Even so, for right now they have the same problem that always faced Hulu: a profound disconnect between what their customers want to get, and what the media companies are comfortable giving. Apple got nearly everything they wanted when they launched the iPhone because Cingular was desperate enough to agree to their demands. As much as techies believe Hollywood should be that desperate, they’re not.