What Would Get Me To Buy An Apple TV

December 11, 2007

Apple TV sales are reportedly in the 400,000 range, which isn’t utterly awful, but certainly short of the 1 million Apple hoped for. And despite my initial fascination, I still haven’t bought one yet.

Basically, when I consider the Apple TV as it currently stands, there are several things that are pretty “meh” about it. Granted, this is “version one.” Both Paris Lemon and Louis Gray have pointed out several things that could be improved in a future incarnation.

Here’s what would get me to pony up:

Personally, the video rental option is a huge “must have.” iTunes music and the iPod are all about downloading and owning files – mixing and matching them in different playlists. I don’t think that metaphor works for video, today. There are many reasons why, but one is just price: 9 bucks for a download doesn’t make sense when Netflix has all you can rent DVDs for little more a month, or the DVD itself can be had for not much more.

Basically, Apple’s video download strategy is in direct competition with much cheaper or quicker streaming and rental options – your local video store, NetFlix, Hulu, ABC.com, or video on demand over cable.

Apple TV 2.0 could take some cues from Vudu. I want “Netflix in a box.”

So here’s hoping Jobs has a section in his upcoming MacWorld 2008 keynote announcing video rentals in the iTunes Store. Otherwise, I’ll continue to pass on Apple TV.

Here’s a cool video from the Wall Street Journal regarding the general subject of internet video on televisions:

Additional Reading: Wall Street Journal

Comments

  1. Dave says:

    I know we discussed this in person, but I’ll add it for the benefit of some web conversation.

    I still think that Apple TV and other technology set-top boxes are a tough sell in light of DirectTV, Comcast and other traditional cable/satellite carriers.

    I currently subscribe to Comcast and going through your wishlist, here’s where they stack up:
    * HD. Currently available for several dozen stations as well as for on-demand tv and movie programming
    * Blu-Ray or HD DVD: On demand renders the format issue moot since you don’t have to bother with portable media when you request an HD movie.
    * Merger with the Mac Mini. This one gets an N/A. But it’s interesting to look at all the other add-ons like video game consoles wrt to how they might fit into the multimedia/web browsing equation vis a vis a tv set.
    * Video Rentals. Already available via on-demand. Library is limited, but still compelling. Involves a combinations of “free” content (incl. with basic subscription), on-demand/one-off purcases ($4 premium movies and $6 high-def movies) as well as premium subscription channels (like HBO) that include “free” premium on-demand content for the premium channel.

    I think the fact that you have 3 of the 4 items already covered by the Satellite and Cable carriers AND high penetration for those technologies AND the fact that these technologies are easy to use makes the MacTV a tough, tough sell in my mind.

    Add a Nintendo/Playstation/Xbox into the mix and your tv-set browsing problems are also covered.

  2. webomatica says:

    Hmmm, well, I don’t disagree that the cable options do pretty much everything an Apple TV can do, but what are you paying for that complete package? It might be 80 – 100 bucks a month (or more). Ends up being over a thousand dollars a year.

    I’m a particular case in that the vast majority of people currently have cable and consider it a necessity, wheras, I’m usually looking for the cheaper, more cost effective option without stooping to piracy. We currently don’t have cable (proud to say).

    Basically what you’re saying is the cable companies still have a pretty hard lock on the content and distribution of video content. I’d agree with that. But I definitely wish it weren’t the case.

    My ultimate vision of video entertainment is on demand everything – but without a steep cable bill. And I’d even be willing to put up with some ads to get it :)

  3. webomatica says:

    Hmmm, well, I don't disagree that the cable options do pretty much everything an Apple TV can do, but what are you paying for that complete package? It might be 80 – 100 bucks a month (or more). Ends up being over a thousand dollars a year.

    I'm a particular case in that the vast majority of people currently have cable and consider it a necessity, wheras, I'm usually looking for the cheaper, more cost effective option without stooping to piracy. We currently don't have cable (proud to say).

    Basically what you're saying is the cable companies still have a pretty hard lock on the content and distribution of video content. I'd agree with that. But I definitely wish it weren't the case.

    My ultimate vision of video entertainment is on demand everything – but without a steep cable bill. And I'd even be willing to put up with some ads to get it :)

  4. JC says:

    Wow. I’m surprised you bought into this Forrester Analyst nonsense. Everyone else picked up the story, too, and as a result, Apple is down more than $5 today. Ahh. Where to start?

    First of all, Apple never stated anything about selling 1 million Apple TVs. That was James McQuivey’s number. This is the same idiot who claimed that iTunes Music sales were down last year when they had grown geometrically. Why does anyone listen to anything this guy has to say?

    So, no, we don’t know if Apple TV sales failed to meet Apple’s forecasts. For all we know, they exceeded them.

    Second, the two big requests I hear time and time again for Apple TV (HD-DVD/Blu Ray Support and DVR capability) wouldn’t help sales much at all. How do I know that? Because these products already exist, and they’re selling even more poorly than Apple TV is.

    Cable companies all but killed the TiVo by offering free alternatives. Most cable boxes already do PVR. Why would Apple want to compete with free alternatives, all the while tying its fate in with that of the cable operators? It’s much better off marketing the Apple TV as an ALTERNATIVE to cable TV. Drop cable altogether, buy the three or four shows you actually watch, and have money left over to buy a few movies. And never watch a commercial again. Doesn’t work for everyone, but it would work for me, and quite a few others.

    Now rentals on iTunes is a valid point, and I’m very confident that issue will be resolved soon. But keep in mind what the Apple TV is for: It’s a hardware device that delivers iTunes content to your television. Nothing more. Think of it as a non-portable iPod. Why do we want that? Because watching movies on a computer screen is just not natural. We want to watch our TV shows and movies in the living room. Apple TV does that, and it does it better than any other device can.

    Adding DVR and/or DVD support (HD or not) blurs the focus of Apple TV’s mission. It’s the equivalent of adding an FM radio to an iPod. Sounds like a good idea in theory, but it only takes away from Apple’s iTunes dominance. Apple would much rather people got their content from iTunes. That’s what’s going to bring the other studios on board. It’s also what’s going to drive NBC back with its tail between its legs. Anyone else notice that NBC has already signed up with a few other “alternative” video download providers? Is that enough proof that Hula is already failing? It’s just a matter of time before the iTunes revenue is missed enough to cause someone to get fired over there.

    Speaking of dominance, what James McQuivey at Forrester and just about everyone else fail to mention in their AppleTV bashing articles is that Apple has a greater market share of video downloads than it does music downloads. In other words, Apple OWNS Internet video right now (to the tune of 90% market share). And none of its competitors are even close. Microsoft doesn’t even show up on the list.

    And yet the story is that “only” 400,000 Apple TVs get sold. As if anyone else were selling more. And as if that number were even accurate. (Judging by McQuivey’s track record, I have no reason to believe that number wasn’t pulled directly out of his ass.)

    Keep in mind, Apple TV serves a much smaller market, but at the same time, it dominates within that market. And the market will grow significantly over the next two years, as people are forced to buy HD TVs. By that time AppleTV will be an established brand, and people will just walk on down to their local Apple retail store (40 more being opened this coming year) and pick one up like they do now with iPods, without a thought to any alternatives that might exist.

    This is the direction that video will inevitably go. It’s all a bit premature, but there’s almost no question that in ten years just about all video will be in downloadable form. Why do you think all those writers are still on strike?

    But don’t believe me. Read this article, and his others on the AppleTV. Daniel articulates the argument far better than I can. You’ll get a much better picture of what’s actually going on with the Apple TV.

    http://www.roughlydrafted.com/2007/12/11/apple-tv-digital-disruption-at-work-itunes-takes-91-of-video-download-market/

  5. Ubu Walker says:

    Why webtv won’t take off:
    1) large variety of proprietary formats, like flash, wmv, mpg, etc. make playing video on the tv too complicated and expensive.
    2) hooking up your computer to a tv, heck, a box to a tv, is too stressful and complicated, even for an ubergeek. None of the cables are standardized.
    3) videos on the web are tiny, like really tiny. who wants to watch something really tiny on a huge 32″ tv? no one.
    4) people would rather watch a video on an iPhone, than a huge tv.

  6. webomatica says:

    JC – good points as usual. Especially about the market share. While video downloads may be a small part of the video pie compared to broadcast and cable – the fact that Apple dominates that space is worth mentioning.

    Apple passed $195 for the first time in a while but then the stock market as a whole tanked due to the fed – so I dunno if people are specifically listening to Forrester.

    I do also hope for a future where broadband is better in the states or hard drive space is much cheaper, and we get video distributed over the Internet rather than the cable guys. In the meantime I feel a streaming / rental option would be a good bridge between today and the downloadable future you describe – and that’s what I’m hoping for in Apple TV 2.0.

    Anyhow, I’m sure we’ll learn more based on what Apple announces in January regarding Apple TV or the download strategy of the iTunes Store. They won’t kill Apple TV but I think they’re definitely overdue for an update on how things have been going and a 2.0 version.

  7. Dave says:

    Well, $50/month is more likely for a “standard” digital cable service with on demand and a la carte on-demand movies. So we’re talking about more like $600/year for most people. I saw some stat from Nielsen that claimed the average household DAILY tv consumption is over 8 hours/day (this was from earlier in the year). Aside from the fact that this number is crazy high, from a cost standpoint that means that *average* household is paying about 20 cents per hour of entertainment. I’m not a shill for these guys, I’m just adding that it’s not insanely expensive for the *average* user (and we wonder why America is jacked).

    That being said, I don’t think either of us fit into the 20 cent calculation :-P

    Obviously I’m an Apple fanboy, so I’ll root for Apple throughout all of this. But I dunno, I see a very crowded space with a LOT more big players who have skin in the game (big tv and movies media companies may be slow, but they seem to be responding to the online threat much better than the music industry). Apple not only has to thread the needle with the studios but also with the telecos and cable guys. And throw in all the consumer electronics folks vying for the living room.

    It’s no wonder we still don’t have clarity on the Blu-Ray vs. HD DVD war.