iTunes/Apple TV Take 2

iTunes/Apple TV Take 2

 

HISTORY’S JUDGMENT

 

It seems that if you’re not offering a downloadable movie service, then you just don’t care about the feelings and sensibilities of the pop culture politic. Netflix, Amazon, TiVo, Microsoft, Comcast, and DirectTV all offer digital movie rentals in one form or another. And now Apple joins the fray, if not a bit late. Is tardiness deadly? History tells us it’s not. The world was rife with portable digital audio players before October 2001, but then Apple released the iPod and gobbled up the music player market in short order. (Pay attention to that iPod reference, because we’ll be returning to it later.)

 

The iTunes/Apple TV scheme will be massively appealing to existing Mac users, as well as anyone who recoils from regular TV content (broadcast, cable, or otherwise) and the idea of paying for a regular monthly service. Netflix downloads currently require a PC connection, whereas iTunes works on both PCs and Macs, and of course the Apple TV requires no computer whatsoever.
Granted, Netflix is working on a set-top box with LG Electronics, but while the device is slated for the second quarter of this year, it’s not here yet. What’s more, any box that Netflix creates is unlikely to proffer up the modern geek-culture content (viral videos, podcasts, and photo libraries) that stokes the bellies of Mac fanatics.

 

Amazon? Its computer downloads are also only for Windows PCs. You can access Amazon Unbox through a TiVo, but this DVR, once so revered, is becoming increasingly less relevant as cable and satellite providers are integrating DVR features into their decoder boxes. As TV watchers make the switch to HD displays, they’re faced with the decision to ditch the old TiVo and buy an expensive new HD version, or simply get the DVR-enabled HD decoder box that their cable or satellite service provides for “free.”

 

Indeed, the pay-per-view movie services of the cable and satellite providers may be the biggest threats to the long-term success of iTunes/Apple TV. Now, it’s true that many people have no interest in cable or satellite service, precisely because they “don’t watch TV” and reject the idea of paying exorbitant monthly fees for anything. These are the people who will embrace Apple’s new movie products, and there might be enough of them to buoy iTunes/Apple TV to prosperity. However, one should never discount the legions of weary, easily defeated subscribers to which the cable and satellite providers lay claim. Millions and millions of households are addicted to HBO, Showtime, pro sports, niche network programming, and all the other mass-market offerings we define as “TV.” No one actually likes his or her cable or satellite provider, but these companies are ramping up their video-on-demand offerings, and if they ever get their acts together, the sheer ubiquity of TV decoder boxes in American living rooms will overwhelm Apple’s efforts to cement itself in the movie rental space.

 

The Apple TV’s hardware remains unchanged. Ports, left to right: power, USB (for diagnostics only), Ethernet, HDMI, component video, analog audio, and optical audio.

 

That said, the cable and satellite folks aren’t there yet. Their movie libraries are small. And if their track record in satisfying consumer tastes and wishes is to be factored in—ahem, we still can’t pick and choose our cable channels à la carte—then Apple need not worry about the Comcasts and DirectTVs of the world anytime soon.

 

Apple says it will have 1,000 movies available for download by the end of February; for this they can thank the support of every major movie studio. This number dwarfs the current offerings from the cable and satellite concerns, but still falls short of the 6,000 (and growing) movies in the Netflix catalog. A year from now, we think you’ll see Netflix and Apple engaged in heated competition that benefits us all, and a Holiday 2008 hardware battle—Apple TV versus the Netflix box—could well decide a victor. Throughout the year, iTunes movie rentals and Apple TV sales will not be so astounding as to reinvent Apple as a movie delivery megaplayer, but history will judge the new iTunes/Apple scheme as a savvy step in the right direction.

 

That said, if Apple would just manufacture a stunning, big-screen HD television—something like the system we prototyped in May 2007, with the Apple TV built right in—the sheer hardware splendor of the device might slingshot iTunes into a position of movie rental market dominance. This HD set would do for TV and movie watching what the iPod did for music listening: It would touch the emotional buttons of mass-market consumers. It would capture imaginations, and become the “it” toy for anyone who wants the newest, coolest consumer electronics.

 

The Apple TV is no iPod, but that doesn’t mean Apple is done with the hardware side of the movie equation yet.

 

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