Apple TV’s next moves?
Before the Christmas holiday, rumors of Apple’s overtures to the networks abounded like so many visions of sugar plums. Journalists and bloggers posited about the effect of Apple’s entrance into the subscription television market. Most of the analysis was solid. The Seeking Alpha blog featured this succinct write up. Most expect a successful Apple offering would threaten cable and satellite subscription models. Others note that an invigorated Apple TV could put the pinch on the Netflix Roku service. Light Reading’s Cable Digital News noted the following.
While cable operators likely won’t face an immediate threat from the subscription service Apple Inc. (Nasdaq: AAPL) is purportedly pitching to major content suppliers, the offering may instead put the hurt on over-the-top video service providers like Boxee and Roku Inc.
It should be noted that Apple TV employs a hard disk. Content is downloaded before it’s played. Roku receives streams, so it’s a lower cost, lower footprint device. Most importantly streaming allows more delivery flexibility. Netflix doesn’t care whether I watch my content on a PC or a TV. Apple TV is anchored to a television. While an iTunes account can be managed from multiple devices, content needs to be downloaded to each to play it. Even with improved progressive download performance, this model has its limitations. One blog noted that a full season of an HD network television series can take up to 50 GB of hard disk space. So there’s a limit to how much content can be delivered to an Apple TV.
For Apple to leverage the strong iTunes brand it has to unhitch content from the device – a fundamental change in business model for a device manufacturer. But if any company has shown the ability to adapt to the digital media marketplace of the early 21st century, it’s Apple. If Apple succeeds at getting content deals in place, I expect a next-generation Apple TV to emerge shortly thereafter.
Use care discussing next-gen anything
The Times had a nice bit of analysis on some Forrester analysis of the Morgan Stanley* analysis of teen media consumption. While much can be learned from Forrester’s latest research into next-generation media consumption. There’s a bigger point to be made here. I call it Townshend’s Theory of Cultural Evolution. To most everyone else it’s the last line of Won’t Get Fooled again. Meet the new boss, same as the old boss. What Forrester discovered is the new teen is a lot like the old teen.
The Times tells the story best in the opening paragraphs of the Media Cache blog entry:
During a slow week for news last summer, the investment bank Morgan Stanley generated headlines when it sent out a research report about teenagers’ media consumption, based on the musings of a 15-year-old intern at the bank’s London office.
For those who missed it, here’s a summary: Teenagers like movies, music, video games and mobile phones. They like to pay as little as possible for them, or nothing at all. They use the Internet for social networking and other “fun” things when their homework is done. Twitter is pointless.
Like many of us, the analysts at Forrester figured executives probably shouldn’t be pinning their businesses’ futures on the media musings of a single, 15 year-old male Morgan Stanley intern. How typical could any teen be that opts to work at Morgan Stanley for the summer over lifeguarding amongst bikini-clad peers? But it’s absolutely amazing how that Morgan Stanley “research” became common wisdom overnight.
* I highly recommend reading our intern firend’s media worldview. The confidence, the definitiveness he shows tells me he’s going to make a hell of a grown up analyst.
The Forrester research didn’t completely disprove the Morgan Stanley intern’s world view, but it did rein it in. Yes, TV viewing is down, Forrester acknowledges, but TV is still top dog.
The lesson to be learned? Revolution is rare. Evolution is the norm. It doesn’t matter what the context, when a producer, a marketer, or an advertiser talks about how different today’s X is from yesterday’s X, be suspicious. Be very suspicious. In my world as a software designer the alarm bells start to ring whenever someone says anything prefaced by the phrase, “but newbies…” I spend a lot of time with new users. (I loathe the pejorative term newbies — it makes them sound like infants. You’re trying to describe a class of users, not a size of diapers.) Yet most of the people so eager to school me in the wants and needs of newbies, see one just a few times a year. We are all subject to believing our infinitely small sample size is indicative of a larger population, but it rarely is.
So the next time someone tries to instruct you how to write, shoot, edit, or design a website for today’s X, check their sources. If it’s their niece the intern, take it with a grain of salt because today’s X is yesterday’s X tomorrow.
Apple, iTunes, and the cloud
A small, but interesting tidbit. Word has leaked that Apple has agreed to acquire the hybrid streaming-download music service Lala. Unlike other streaming services, Lala is not subscription-based so it fits nicely into Steve Job’s view of the online music world. Lala is more of a cloud-based iTunes. If you keep your music on the cloud and stream it, you pay 10 cents to add it to your collection. Downloading a song costs 89 cents. Lala also has a nifty technology that allows the user to upload his MP3 library to Lala. Any song in Lala’s catalog is linked to the Lala version, others the user can upload for free.
Assuming a proliferation of music playing devices with inexpensive Internet connectivity, the deal’s a no-brainer. It accelerates iTunes’ much needed migration to the cloud. You gotta love this business model from the consumer’s point of view. “Let me get this straight, you’ll store, backup, and manage my music collection on your storage with your infrastructure for 10 cents per song, or I can take on the hassle for 89 cents per song.” Apparently the model works according to a Wired article.
This Lala acquisition could also help iTunes increase its revenue-per-user. Steve Jobs admitted in 2007 that the average iTunes user had only bought an average of 22 songs. By contrast, Lala CEO Bill Nguyen told us in October that its paying customers spend an average of $67 on Lala music…
And don’t forget all of those wi-fi capable iPods to be sold.
