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Apple TV - It Will Change Everything!
Last night it really dawned on me how revolutionary Apple TV is going to be. In the grand scheme of things, Apple TV is much more revolutionary than the iPhone. Here’s the way it is…
What does Apple TV mean for the Consumer?
For the consumer Apple TV represents a revolutionary change in the way you view TV. It is now possible to download only the shows you want to watch, have them wirelessly transmitted to your Apple TV consul and then watch them whenever you want. It means completely customizable programming. It means I don’t have to pay for stations I don’t want. It means I don’t need a costly and under capacitated DVR. It means I can watch TV without commercials whenever I want - not when the networks tell me it going to be on. It also means turning my TV into a vehicle for listening to podcasts, music and viewing of my digital photos whenever I want. The TV is now released from the constraints of traditional networks, cable and satellite programming.
Think about the impact. I can download an entire season of The Office to iTunes and then wirelessly transmit it to my Apple TV consul. I can then watch it whenever I want - not on Thursday’s at 8 pm. If I want to do that right now I have to download the episode and watch it on my iPod, which isn’t as great as watching it on my awesome 40″ Sony 1080p HDMI flat panel. Â
What does this mean for the TV networks?
These guys are screwed. Unless they figure out how to compete, Rockefeller Center is going to have a “for lease” sign on the side of it in under five years. If you ask me, Apple is going to become their own network and take all the business away from these guys just like they are doing in the music industry right now. TV is the next step. The networks are going to have to work with the providers to figure out a way to make money without commercials and to offer on demand and completely customizable programming if they are going to remain relevant.
What does this mean for movies?
If I’m running a movie studio I think I would love this device. If I owned a movie theater, I would put it on the market and get out. There’s been a dramatic drop off at movie theaters because of cost, the crowed and the crap content. Furthermore, TV technology is getting so good that you can get theater quality viewing in your home for only a couple of thousands of dollars. If there is anything I want to see I usually wait for it to come out on DVD and then watch it in the comfort of my own home. Let’s use the example of Pirates of the Caribbean 2. The first one was a big hit. Why not distribute POTC2 through Apple and allow people to download it directly to their Apple TV consul? You would bypass the theater distribution costs (which are very high) going direct to the customer; However, Apple would take their cut. Still, if I could get POTC2 download to my Apple TV on opening night and not fight the theater crowds - I’m all in.  Â
What does this mean for the cable and satellite providers?
In order for the satellite and cable providers to remain relevant they are going to have to stream on demand programming and they are going to have to allow their customers to completely customize their programming. Frankly, I think they are going to have to dump the subscription model and rev share with the networks as well. This means a complete departure from their current business model, which for most large companies is a very hard thing to change. Given this, if I were a cable provider I would start thinking heavily about my future as a VOiP provider and wireless ISP. TV is not in their future.
What does this mean for Apple?
In 10 years Apple will dominate the music, movie and TV space. They will own the majority of the market. That means you should buy Apple stock right now. Last year, I read a lot about the idea that TV networks would be irrelevant in 10 years time. Apple TV represents the beginning of a revolution in TV and movie distribution that, in my opinion, will eventually mean the end of traditional TV networks as we know them today. Its going to hit the industry like a tidal wave. Look at what’s happening to the music industry right now. That’s the TV industry in three years.Â
The bottom line…
This is very exciting. TV, movies and music are now becoming fully mass customizable through Apple. It’s something I’ve been waiting to see for a long time. Even though Apple has been doing this for years in the music industry I finally see where they intend to really go.
I’ve got to admit - I’m starting to sip the cool aid.
How easy is it to set up? Do you just pull it out of the box and plug it in? That will be big for the average consumer…
Left by David on 01/11/2007While I’ll admit I’m really excited for Apple TV (rumors exists it could be apple’s opportunity to get into console gaming as well) I don’t think TV networks are screwed. Contrary to conventional wisdom, TV networks are just doing fine right now. Some argue YouTube nation actually promotes old fashioned TV. It does mean change is coming though, several of which you pointed out in your post.
NOTE: The only TV I watch is for baseball games, tennis matches, college football, march madness, and maybe something off the discovery channel. That’s it.
Left by Blake Snow on 01/11/2007@ David:
It very easy to set up. Sending programming to the Apple TV consul is easier than downloading music from iTunes to your iPod. The device costs $299 and comes with a 40 gig hard drive. I’m sure version 2.0 will be cheaper and have more storage.
Left by Chris Knudsen on 01/11/2007@ Blake:
If the TV industry is anything like the music industry, they are screwed and it will be Apple that does it to them. Given the fact that this device is coming on the market signals that all is not well for the networks. They may be “doing fine” now but in three years they will be in big trouble if they can’t figure out how to compete with or partner with Apple.
Left by Chris Knudsen on 01/11/2007One big issue Chris, is that those big media giants own the bandwidth in this country. Comcast is the largest Internet provider and will be for awhile, and if you think they will all just let Apple use their bandwidth while they ruin their business then you don’t give them any credit. Also, broadband penetration needed for full movie downloads is just not even close to there yet. Not only is broadband penetration only around 60-70%, but much of it is 256kb to 756kb download speeds. Even the larger speeds usually have 100 GB caps on downloads for a month, which is only about 30 shows and that is not HDTV. You would suck up your bandwidth with HDTV after just a few shows. The infrastructure is just not even close to being ready yet, and won’t be for at least another 10 years. TV is here for a good long time, we are just going to see more and more On-Demand offerings.
Left by Trent Miskin on 01/11/2007TV isn’t like the music industry at all, and people way underestimate the power of TV networks and “traditional” communication mediums.
To me this device signals more of a “get it out before Microsoft does” and less of anything to do with TV networks. Distribution isn’t king, but it still needs to evolve. Quality of content is king, and networks put together the quality content.
The music industry existed without Apple or iTunes and not the other way around. Apple TV exists because of networks and Hollywood and not the other way around.
Remember too. Disney bought Pixar from Jobs, so he is now the biggest owner in Disney. Disney is tied to ESPN and ABC (a network).
I don’t see signals at all. I see them making strategic decisions based on current relationships. They can capitalize on it it now better than Microsoft, and even if Microsoft has been planning this, they look like the “me to” people in the public perception.
Left by Russell Page on 01/11/2007Trent, you make a very good point on bandwidth.
Left by Chris Knudsen on 01/11/2007@Russ
I think you’re way off. This device has nothing to do with Microsoft. MS doesn’t have a built in distribution method - like iTunes - for delivering content. Their light years behind Apple. Apple is way ahead here. Distribution is king, that’s why crap shows on the networks still get viewed while quality shows on small cable networks have much small distribution.
The music industry existed before Apple but Apple has completly changed the rules. I meet a producer here at the show who works with artists like 50cent. He indicated that within two years musicians will go exclusively with Apple as their “label”. He indicated that the labels are in a panic and don’t know what to do about it. They’re finished.
Apple will do the same deals with studios and the studios will by pass the networks for direct distribution which will yeild much higher margins. Disney is tied to ABC and ESPN. So what! What this deal ultimately looks like for Apple is a million times larger than that. Steve won’t care on bit.
Left by Chris Knudsen on 01/11/2007What it has to do with Microsoft (as stated) is about perception. I’m coming at it from a positioning standpoint. Companies will do anything to release a product first because it ups their chances of being a category leader in the long run.
As for the music industry, the insight is an interesting one you make about the 50 cent/Apple label, but two years? That guy doesn’t know what he’s talking about. I also do not believe distribution is king, and after thinking about it more, I don’t think content is king either. It’s chickens and eggs. Distribution means squat without good product.
The other thing you’re forgetting here is that it’s not that easy for an artist to just “go with Apple” because it’s rare that the artist owns the rights to the all parts of the song (lyrics, music, etc…). Most of the top-selling albums of all time are still under the hand of the big media companies, etc. . . etc… Big music moves slow because of the legal ramifications involved with each artist and the ownership rights that pertain. Big music moves slow because of the system it set up, but it also makes it hard for change in distribution.
I also think you skipped my point when I say the music industry existed without Apple. The industry (and it’s talent and artists) existed without Apple. Will some go directly to Apple? Sure, but there will still be a record company (Apple-owned) that just works differently. Then, the indie version of “apple records” will pop up, and people will want the music, and Apple will license it. (Which means not going direct to apple).
Studios already bypass the networks. They don’t have to do a deal with ABC in order to get into iTunes. But, they will not abandon networks because networks still pull way bigger audiences. People give way too much credit to distribution with places like youtube, iTunes, etc… when shows like extreme home makeover are still pulling in 13 million viewers in one episode. The other thing you forget is that CBS is the network and the studio for a show like CSI. They’re not going to cut their own jugular. it is so short-sighted to think that direct distribution is the way to go because of a higher margin.
What about syndication? Product licensing? DVD sales? The dollar value on these things exists because of the popularity a show gets by getting network time.
Left by Russell Page on 01/11/2007“Apple” as a music label (as opposed to “Apple Computer” as a music label since they just changed their name)?? Does Jobs have some thing with the Beatles?
Left by David on 01/11/2007The Beatels sued them (twice) and won.
The Beatles own Apple Records, so somehow the Beatles and Apple Computer had some sort of agreement that Apple wouldn’t go into the music business.
Both companies use an apple as their symbol. I believe their are still some court cases up in the air.
Left by Russell Page on 01/11/2007[...] enjoys the simplicity of the device I do admit, though, that leaving out a TV tuner seems to be the crux here. But again, the typical buyer probably already has a DVR anyway. The Apple TV is clearly aimed at playing content that would normally only reside on a computer in the living room. And that, as Chris Kundsen points out, is what it is all about for Apple and is why this product might turn out to be more revolutionary than the iPhone. In the end, when all your content is on your computer, what do you need that DVR for anyway? [...]
Left by Why the Apple TV Will Succeed | The Last Podcast on 01/12/2007