Is Apple TV a 21st century Newton?

Apple TV menuI’m beginning to think so. While I love my Apple TV hardware and the software that powers it, it’s beginning to feel like a dead end product. The business model just isn’t there. The economics of buying or renting movies and TV shows on iTunes doesn’t make sense – $2.99 – $4.99 for a 24-hour rental just doesn’t cut it for most consumers.

Sure, downloading is the future and DVDs are the past. But in 2008 the DVD is remains more flexible than an MP4 file with DRM. The DVD I receive from Netflix can be played in my living room, my bedroom, my PC, and my car. Netflix’s terms are far more flexible than a $5 rental that times out in 24 hours whether I view it or not. Throw in Netflix’s instant watching option and iTunes doesn’t compete.

Obviously iTune’s cumbersome and costly movie rental model is not all Apple’s fault. The studios won’t allow Apple to rent (or sell) at better terms. (After watching Apple strongarm the record labels into a single price model, the studios were understandably wary, but their caution is costing them.)

Today my Apple TV sits in the family room, it serves up my music quite nicely. But I could always stick m iPod in a dock and feed it through the home theater just as nicely. It doesn’t serve much video beyond the occaisional YouTube break. What video is stored on it is overflow from the DVR, and it’s a good amount of manual labor to get those programs properly encoded – not work for the average television viewer.

For Apple TV (and Apple) to succeed in the video distribution space, Apple TV has to replace something — my Netflix acocunt, my DVR rentals, or a few cable channels. TO date, it’s done noe of that. I have set top box and subscription fatigue, and I’m not alone among consumers. I want fewer devices — not more.

For a while it looked like Joost had a reasonable chance at becoming IPTV’s killer app. With the announcement that Joost is dropping its standalone client to focus on browser-based playback, it’s in danger of becoming just another web video service with nifty distribution technology.

Apple and Joost need each other. Together they can bring IPTV to the masses. Separately they are both teetering on the precipice of irrelevance.

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