In a brief interview in AdWeek yesterday, Mark Cuban said "if Apple released a set-top box that supported authentication for multichannel video programming distributors (like cable and satellite companies), it would be a huge success." I agree with him - and that's exactly why such a product won't see the light of day.

As I asserted in August ("Apple to Make Cable Set-Top Boxes? Not. Going. To. Happen."), if pay-TV operators invited Apple to make set-tops it would be like letting the proverbial fox into the henhouse. They would be turning over their user experience to Apple, allowing the company to drive the UI and therefore reshape the video experience as it determined, just as it has done in music with iTunes. While there might be some short-term benefits (e.g. lower capex, etc.), the pay-TV industry's ability to sustain its multi-channel bundle long-term would be undermined.

Whereas the music industry's woes led it to capitulate to Steve Jobs's overtures, the pay-TV industry finds itself in no such quandary, and in no need of Apple's rescue. Sure, online video is proliferating and pay-TV affordability is more concerning than ever, but there is still little evidence of cord-cutting. In fact, late last week, Comcast, the largest pay-TV operator in the U.S., reported its 8th straight quarter of smaller year-over-year video subscriber losses along with higher ARPU of $151/month. Much as Apple would love to repeat its music experience, for now anyway, the pay-TV industry is highly unlikely to play along.

That leaves Apple in a pickle as to how it will penetrate the video business. Yes, it has Apple TV, which CEO Tim Cook said sold a respectable 5 million units in its last fiscal year. But Apple TV remains a "hobby." It's a niche product that for most people is not going to supplant a pay-TV subscription any time soon. And as Mark also correctly points out in the interview, Apple is unlikely to try to "blow up cable" by going off and striking a bunch of expensive carriage deals of its own. That approach may tickle Google's fancy (though it remains to be seen whether the company has an appetite to go beyond Kansas City), but it would be distinctly out of character for Apple.

With the launch of the iPad mini, Apple has products covering everything from 5 inches to 27 inches, leaving no room for anything more in between. The only big product category left for Apple to pursue is the living room screen. But how it will do so remains a huge open question.