What’s next for Apple TV?
Rumors abound regarding the future of Apple TV — Apple’s tepid foray into the set top box market. The big issue users face with Apple TV is that it’s either expensive or cumbersome to get content into the thing. Beyond movie trailers, YouTube, and podcasts available via iTunes, it’s either pay per download or rip your own from DVD.
Compare Apple TV’s value proposition to something like Slingbox’s. While the Slingbox allows the user to leverage and repurpose content he or she has already paid for, Apple TV doesn’t. (Coming soon, Slingbox Mobile for your Blackberry.) Someone already paying a $100+ for cable and $17 for Netflix won’t be compelled to drop $300 for a box that will run up the media bill further.
Apple needs to enable customers to get content into Apple TVs easily and inexpensively. Some options include:
- Adding a Blu-ray player. Saul Hansell predicted this in the NY Times Bits blog. It’s not likely. The box is already expensive enough, and Apple doesn’t stand to make money off of increased Blu-ray penetration.
- Adding rental options. Going toe to toe with Netflix is an option, but what about teaming up with Netflix? Netflix just announced an agreement with LG to allow direct-to-TV downloads from Netflix to specially equipped LG TVs. A deal with Apple would pack more punch.
- Adding DVR capabilities. I understand why Apple won’t do this. As TiVo has learned, DVRs are the domain of the cable and satellite companies. DVR software for the Mac is already available with EyeTV.
- Allowing independent producers to sell videos on iTunes. Currently everything I can get for my Apple TV on iTunes I can get cheaper elsewhere. If Apple allowed independents access to its store, content not available anywhere else would appear overnight on iTunes — you know, that long tail thing.
Obviously I like the last option. Apple’s following has grown as it’s empowered people to communicate in new ways — twenty years ago it was desktop publishing, more recently it’s been video editing. Now it has the opportunity to empower us to be distributors. If Apple TV and iTunes remain nothing more than outlets for the studios and Google, they will continue to be niche products in the IPTV market.
Looking back on 2007: IPTV disappoints again
This was going to be the year of IPTV, and Apple TV was going to spearhead the movement. Guess not. ABI Research released this last week:
A new breed of retail-based Internet video delivery devices has emerged over the past few years, the most notable being Apple TV. However ABI Research notes that these devices have had difficulty resonating with consumers, largely due to their higher prices and competition from legacy set-top boxes, as well as confusion over the benefits they will ultimately bring to the buyer. Overall, ABI Research believes that this new breed of devices will see shipments of 1.2 million in 2008.
“Since this category first emerged in 2004-2005 with the debut of Akimbo’s public Internet VOD product, vendors of these products have struggled with a number of hurdles that have so far made this market relatively unsuccessful,” says research director Michael Wolf. “The high cost of these devices, their reliance on the home network, the need for consumer self-installation, and the scarcity of content have all contributed to their lack of commercial success.”
I’m not interested in attaching yet another box to the TV, and placing another remote on the coffee table. Like the DVR, IPTV will need to be fed through an already-existing set top box. For this to happen, the cable companies and telcos will have to abandon their walled garden approach and embrace openness.
I obsess over the adoption rate for IPTV because it’s the game changer for content creators. We’ve got the inexpensive cameras and the inexpensive NLEs. All we need is inexpensive distribution. Amazon S3 can provide the storage and bandwidth at a reasonable price. Currently all you need to sell your content are links in iTunes or Amazon’s Unbox. The problem is that if you’re not a big studio Apple’s not interested in selling your content, and nobody is using Unbox or anything like it. That’s why we need open IPTV to succeed.
We all know the Long Tail story by now. And here’s the condensed version. IPTV is the most efficient way for content producers to serve niche markets effectively. Until it becomes a widespread reality, services like CustomFlix represent our most effective approach to living off the long tail.
IPTV delays continue
Nice piece on Businessweek.com, I Want My ITV. Nothing in it is earth shaking to video pros, but it’s a nice roundup of the main characters – cable, broadcast, TiVo, and the studios – along with some mention and explanation of Apple TV and Amazon’s Unbox.
Want to know why IPTV is unknown to the masses? The answer’s in the numbers.
But what’s holding up the transition from network TV to networked TV is that any company with a little piece of control in the way things work today is unwilling to jeopardize its power and revenues until it becomes clear how the new model will pay. Every time you hear about some product that sounds great but just has one strange limitation, follow the money to understand why. Hollywood worries digital downloads could lead consumers to stop buying $24 billion of DVDs annually, and broadcasters are nervous about the fate of the $185 billion-per-year TV advertising kitty. So studios and networks alike limit how long programs are available on Web sites or restrict the shows that play on various devices.
With that much money on the line, it’s no surprise players are moving slowly. There’s more to the story, though. The real cause for the delay is perceived lack of demand in America.
Most regular people still haven’t viewed their first TV clip on a computer screen. But a survey by the Conference Board-TNS shows that 16% of American households with Web access now watch full TV broadcasts online, double the number from a year ago. And visitors to parts of Europe and Asia can see how far behind we are in personalizing our TV experience. Speedy, reliable broadband access in those regions can deliver richer video service, and because providers face real competition, they have to add Webby services to television as a selling point. Today, some 60% of all households in Hong Kong watch programming delivered over the Internet to the TV, says researcher Parks Associates. From a hotel in Seoul, I can click to do my banking on TV. A couple of friends I know live on the frozen tundra of Canada; even there, I can play games or get onscreen score alerts of favorite sports teams.
The growth rate might seem impressive, but it will hit a glass ceiling. Broadband in the US doesn’t compare to broadband in Europe and Asia. A typical 1 to 3-megabit connection shared among a few PCs in the household, won’t deliver adequate performance to satisfy on demand needs.
To gauge demand for IPTV, learn the behaviors of Verizon FIOS users as they get used to their connection. I suspect devices like Apple TV that have failed to catch on with all but the Engadget crowd will do fine once the wait times for content diminish.
IPTV delays mean opportunity
ABI research released a report today on IPTV. The overall findings aren’t surprising. IPTV rollout in North America is behind previous projections. The telcos were expected to be the primary drivers, but they have fallen behind schedule, citing excessive regulation among other factors. Even where the telcos have begun rolling out IPTV services, true IPTV services are not available. ABI notes that Verizon’s video service is no more than an RF overlay. If that’s the case, then the telcos have nothing to offer over existing cable services. That leaves them to compete on price. Considering the pounding their voice revenues are taking, one would think they’d rather offer premium services at premium prices.
The telco delay also keeps the pure play IPTV companies in the game a little longer, running the risk that someone will gain traction. Among the gang of three – Brightcove, Akimbo, and Dave – Brightcove has the best chance. First, it’s got good leadership. Second, its initial go to market strategy did not include a proprietary set top box. (Akimbo and Dave are moving away from STBs.) Brightcove has instead hitched its wagon to Microsoft Media Center technology that requires networking the TV and the PC. How many non-geeks are going to try that? Who wants more wires and devices in the living room? This is a recipe for glacial adoption rates.
But what if Brightcove could untether the TV from the home network? Then they might have something. Develop a solution that gives users the option of burning content to DVDs or Video CDs. The digital rights management can be similar to that of online music purchases with the customer is only allowed to burn one or two discs of a downloaded program. Since Brightcove is initially focusing on shorter form, long tail content, this can be a viable alternative. The client application can be designed to download, decompress, and burn in the background. It might add some time to the process, but its service isn’t for the instant gratification crowd anyway.
Back in June, Amazon bought CustomFlix – an on demand DVD distributor. It’s not a leap to imagine a download service evolving from this marriage. The fact is that the longer the telcos delay real IPTV rollouts, the greater the chance they’ll miss the opportunity. What if the likes of Amazon or eBay partner with a Brightcove? The telcos will remain stuck in the dumb pipe business.
More on IP[od]TV
From vnunet.com: Apple poised to ignite mobile video
Apple’s offering, however, is far from complete, warned Michael McGuire, research director at Gartner. The introduction of a video iPod has only solved the technology side of the problem of how to create a market for digital media.
The amount of video content being offered needs to greatly increase, McGuire pointed out, before portable video becomes a viable business.
What doesn’t get mentioned in the article is that Apple has solved the chicken and egg problem. It’s introduced a technology that makes it worthwhile to create the content, something Akimbo, Dave, and Brightcove haven’t done. The cool thing is that Apple has essentially guaranteed an ongoing platform for portable video. Every new full-sized iPod going forward is video capable. Apple’s going to sell boatloads of the things anyway because Christmas is coming and the MP3 player market isn’t saturated yet. So Apple makes money while waiting for portable video to take off, and makes money even if it doesn’t.
I have no idea what the incremental cost of adding video to an iPod is, but I’m sure it’s a relatively small investment considering the upside potential. Also, Apple’s saving money on this generation by dropping Firewire compatibility for USB, so it’s probably very close to a breakeven proposition with little risk.
One guy who totally gets it and is a pleasure to read about this stuff is Fortune’s Peter Lewis. He loves the new iMac as an answer to Microsoft’s Medi[ocrity] Center and hates the ROKR.
Still, no one summed up the ROKR better than my friend Jon Alper who noted that an iPod nano duct-taped to a standard mobile phone delivers both a superior form factor and user experience. What can one expect from a product named for a homophobic relief pitcher? The ROKR also illustrates the complete idiocy of big media’s DRM and pricing policies. A ROKR user can buy a song from iTunes but can’t use that song as a ringtone. That song from iTunes costs $0.99 while the ringtone costs $2.99.
While I’m on the subject of pricing… iTunes charges $1.99 for music videos, further illustrating the absurdity of the wireless carriers’ pricing models. A music video on Verizon’s V Cast costs $3.99. It looks worse and can’t be played on anything but that little phone, and requires a $15 per month subscription to access. And I can’t move the video to a PC or TV. In fact, if I upgrade my phone I can’t move the video to my new phone.
V Cast will survive. It’s a pretty decent package of mobile data services that just needs a better pricing scheme. But you can start making funeral arrangements for MobiTV. At first glance it has lined up a compelling roster of content providers. The case can be made for a broadcast TV model for news, weather, and sports. That stuff needs to be live. An iPod surely won’t supplant it at any price point. But who needs video on their phones for the weather? If I’m on the go, just give me the text. I can see it’s raining. All I want to know is when it will stop. Sports… some highlights might be cool. But at 1 or 2 frames per second (soon to skyrocket to 10 to 12 if you upgrade your phone), on a screen that makes an iPod look like IMAX, who’s going to pay $10 per month? The diehard sports fans will get their phones from the ESPN MVNO. The rest just want to see how their fantasy players are doing. Text will be fine. News? Those big events will draw interest. But thankfully big news events that have people running to their TVs don’t happen too frequently.
All that other stuff on MoribundTV can be better experienced on an iPod. Who wants to watch cartoons at a couple of frames a second?
