Apple: As Ever, Ahead of its Time - Part I

Categories: New TV Technology,Thoughts

Written By

September 7th, 2007

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Seth Godin refers to it as the death of the "TV-Industrial Complex". Some refuse to believe that this is occurring. They're wrong, it's in progress.

 

Apple is reportedly considering a plan that would cut the price of downloads of individual TV episodes from $1.99 to $.99. Obviously the studio heads aren’t thrilled with the concept. I understand that the Heroes boxed DVD set sells for ~$40 retail, and the Apple plan would cut this down to $23. I certainly understand the concern of the studios because surely they realize the average Joe won’t pay an extra $17 just for a fancy box, director and actor commentary, etc.

 

But hear my words studio execs: In the future, people won’t pay anything extra for this content at all. It’s a dying revenue stream. See ya later, bye. It’s merely a question of when. Is it five more years of the gravy train or is it ten? It’s gonna seem like it snuck up on you awfully fast either way.

I can explain this very simply so that even those who are frightened to death of gadgets can understand. In the future everything will be handled digitally. Whether content is stored in your home or across the internet, you’ll be able to access it. Anywhere you want, from any gadget you want. In this vision of the future, it will all be very easy.It already works today. It’s just not that simple yet. But it can be done today, and the basics of it won’t change that much in the coming years. It will just go from being a pain in the ass that only a propeller head would take on, to being so simple that your grandchildren won’t believe there was a time when it was difficult.

The basics: you pay for content, just as you do today. Be it from your cable provider, your satellite provider, or some new fangled Internet thing that hasn’t been created just yet. As ever, you’ll be able to record any or all of this content for your personal use. In the far, far version of the future, everyone will have DVRs and they’ll just know what content you have paid for. If you paid for it, it will be yours digitally forever and ever. You won't even need to "record" it to have access. There will be many ways to do this.

Technology wise, and legally, this genie is already out of the bottle. It’s no different than it was with music and MP3. Try as they will to stuff the genie back in the bottle, it can’t be done. It never can. I don’t blame anyone for trying to squeeze every drop of gravy from the gravy train, but realistically, that’s all the coming years are about.

All the fuss about HD-DVD vs. Blu-Ray? Either way, in the coming years all those formats will be is incredibly cheap storage. At some point in the future, nobody will buy physical media. That future is a ways off. VHS, DVD or CD, twenty-five years from now all of that will be viewed similarly as my generation views the Eight-track. It may be a slow march, but it is a death march. The death of physical media.

My premise for about 4 months now, ever since I heard Steve Jobs refer to Apple TV as “a hobby” at the AllThingsD conference in May is that Steve was playing it down because he already knows what his plan is.

Apple will have a period where AppleTV really doesn’t do much but act as a pretty media extender, which in layman’s terms is just a way to easily get content off your computer and onto your TV. There are many media extenders currently available. Microsoft’s Xbox 360 game console also serves as a media extender to move content off your computer and onto your television. It works pretty well too. I can’t stream high definition content well over WiFi in my set up, but this is more technology that will get better.

It might not be the 2nd generation of AppleTV that executes on Steve Jobs’ plan, but by the third iteration it will surely have DVR functionality built in. You’ll not only be able to move stuff you bought via Itunes to your television, iPod or iPhone, you’ll be able to move content you recorded.

My cable package is around $100/mo. with almost every premium movie channel. With this set-up I will effortlessly be able to move content around my home and to portable devices, and I’d predict this isn’t more than a couple of years away. I’m doing it today already, it’s just not quite as effortless enough to catch on. But in a couple of years it will start gaining some more traction and move from the very early adopter phase, to the plain old early adopter phase and make its march into the mainstream.

Apple knows how to do this, and it knows you don’t have to show up to the dance too early. MP3 was generally available for about 5 years before the first iPod showed up.

How sure am I of this future? I’m 100% certain of the outcome, but less than 50% certain of the timing. But I’m sure. As sure as I was in 1982 when I got my first modem and connected to a network for the first time and got my first glimpse of e-mail, etc. I thought that would catch on a lot sooner. It took about 15 years.

I was one of the first 100,000 Tivo buyers in 1998 and I was sure DVRs were going to be a big deal, and I was right, but not yet. DVRs still have not reached mass adoption.

I got my first HDTV in 2000, and had a set-top box with HD content by the end of 2002. I love HD, but despite statistics and predictions, I still don’t believe this is reached mass market yet, and I judge that based on the amount of content not broadcast in high definition. It will reach mass adoption, perhaps not this year or next, but soon.

The stuff with liberating your media, which I believe is Apple’s master plan – that’s bigger than HD and bigger than DVR in terms of being disruptive. At least from the perspective of the studio folks, it will be as disrupting as the Internet has been to things like newspapers and evening news, and oh yeah, the recording industry.

It’s going to happen, and the studio honchos will look back with fond memories of when they could even capture $.99/show. That will definitely happen soon.

I’m sure I’ll continue to write on this thread until Bill Gorman gives me the evil eye. Until part 2, I’ll leave you with this thought: the studio honchos should do a deal with Apple. Not to sell the content, but to give it away. With advertising in it. I mean, if Les Moonves is right (cough) and only 45% of DVR users actually zap through the ads, why not try it? Oh sure, you won’t want to give Steve Jobs and the crew in Cupertino a cut of your ad revenue, but on a bet, Apple will not ask for much of a cut, perhaps none at all. They’ll just be testing how the world is going to work down the road with future versions of Apple TV, and get people into the habit of getting their favorite shows onto their iPods and iPhones easily.

But that is the future. The studio execs are going to have to live with it. It’s either that or lobby congress to pass laws that say we don’t actually own the rights to content we’ve already paid for or acquire legally (broadcast) for our own personal use.

 
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