Apple's TV Strategy(blog.shelby.tv)
blog.shelby.tv
Apple's TV Strategy
http://blog.shelby.tv/post/7617649688/apples-tv-strategy
7 comments
Commercials are an essential part of the television experience and the main reason why the transition to online is taking so long. Getting advertisers on board is difficult for a variety of reasons (namely that's it's a completely different model).
An episode of a TV show can cost several million dollars to make. Reality shows cost much less, obviously. ER, for example, cost 13 million per episode [1]. Do you think they can recoup that at $0.99 per episode? I don't. Can they recoup that at $9.99 per month for some subscription? No way. The only way they can pay for that is by drilling into your brain brand recognition.
http://wiki.answers.com/Q/How_much_does_a_cable_television_s...
An episode of a TV show can cost several million dollars to make. Reality shows cost much less, obviously. ER, for example, cost 13 million per episode [1]. Do you think they can recoup that at $0.99 per episode? I don't. Can they recoup that at $9.99 per month for some subscription? No way. The only way they can pay for that is by drilling into your brain brand recognition.
http://wiki.answers.com/Q/How_much_does_a_cable_television_s...
I'm not so sure about that.
Firstly, making the service I am describing available to customers like me doesn't mean that everyone is going to abandon the traditional delivery methods. Such a service would likely require some level of technical sophistication (i.e. plugging in an ethernet cable) where most TV users just want to turn on the TV. Traditional delivery methods, and revenue streams, would not be immediately damaged by such a solution.
Secondly, using your example of ER, there is marginal revenue per viewer. For every viewer that the new service draws from the old service, it becomes necessary to make a certain amount of money per viewer. ER's lowest rating was about 9 million viewers. At 13 million an episode, the marginal revenue per viewer (again, on the low end) would need to be around $3/viewer/episode to earn $14 million in net income per episode (that's 9M viewers x $3.00 = $27mm - $13mm cost per ep = $14mm). At 22 episodes a season, that's $66/yr for each viewer. Compare that to a digital cable service that can cost you well over $1200 dollars a year. You could buy 18 shows on the magnitude of ER for that price, and who could possibly have the emotional fortitude for that? Let alone the free time.
http://en.wikipedia.org/wiki/ER_%28TV_series%29#Ratings http://money.cnn.com/2010/01/06/news/companies/cable_bill_co...
The cable television business model is a value suck. Albeit, a value suck that's not going anywhere, but I sure as heck am not going to pay for it. I'll stick to free TV, Netflix, and my BD player.
The numbers work for the sort of service I want, and I would bet that Reed Hastings would love to give it to me for $30.00/mo if he could get around the content providers who are clinging to their 20th century business model.
Firstly, making the service I am describing available to customers like me doesn't mean that everyone is going to abandon the traditional delivery methods. Such a service would likely require some level of technical sophistication (i.e. plugging in an ethernet cable) where most TV users just want to turn on the TV. Traditional delivery methods, and revenue streams, would not be immediately damaged by such a solution.
Secondly, using your example of ER, there is marginal revenue per viewer. For every viewer that the new service draws from the old service, it becomes necessary to make a certain amount of money per viewer. ER's lowest rating was about 9 million viewers. At 13 million an episode, the marginal revenue per viewer (again, on the low end) would need to be around $3/viewer/episode to earn $14 million in net income per episode (that's 9M viewers x $3.00 = $27mm - $13mm cost per ep = $14mm). At 22 episodes a season, that's $66/yr for each viewer. Compare that to a digital cable service that can cost you well over $1200 dollars a year. You could buy 18 shows on the magnitude of ER for that price, and who could possibly have the emotional fortitude for that? Let alone the free time.
http://en.wikipedia.org/wiki/ER_%28TV_series%29#Ratings http://money.cnn.com/2010/01/06/news/companies/cable_bill_co...
The cable television business model is a value suck. Albeit, a value suck that's not going anywhere, but I sure as heck am not going to pay for it. I'll stick to free TV, Netflix, and my BD player.
The numbers work for the sort of service I want, and I would bet that Reed Hastings would love to give it to me for $30.00/mo if he could get around the content providers who are clinging to their 20th century business model.
FWIW, Steve Jobs owns 7.3% of Disney, which is a major content provider. While still a small fraction of all content sources, he has a lot of leverage.
You want to watch any show you choose, at any time, without commercials, for less than a cable TV subscription.
I'd also like a Boeing 747 for $5.
I'd also like a Boeing 747 for $5.
TV programming is ripe for an iPod/iTunes style disruption - Netflix is doing it now with streaming - but it'll be hard to get people to buy a whole new TV.
The iPod had a simple selling point - all your songs in your pocket - and it only had to displace cassette/CD Walkmen that wore out in a year anyway. Ditto for the iPhone - internet in your pocket, but this instead of your next phone upgrade.
TV is harder. What's the selling point for an Apple-branded TV, and is it enough to make me buy a new TV now instead of 5-10 years when mine wears out?
The iPod had a simple selling point - all your songs in your pocket - and it only had to displace cassette/CD Walkmen that wore out in a year anyway. Ditto for the iPhone - internet in your pocket, but this instead of your next phone upgrade.
TV is harder. What's the selling point for an Apple-branded TV, and is it enough to make me buy a new TV now instead of 5-10 years when mine wears out?
All I got from this article was that Apple has enough cash on hand to enter the market if it wants to. Nothing much about strategy...
iPod, iPhone, and iPad are all portable products that can be used in a wide variety of contexts, but a TV is only used in a single location. Unless Apple can come up with some revolutionary new ways to use a TV to consume media, I'd be surprised if consumers are willing to pay a premium for an Apple TV product that has limited utility compared with the portable product lines.
iPod, iPhone, and iPad are all portable products that can be used in a wide variety of contexts, but a TV is only used in a single location. Unless Apple can come up with some revolutionary new ways to use a TV to consume media, I'd be surprised if consumers are willing to pay a premium for an Apple TV product that has limited utility compared with the portable product lines.
I believe there is a tremendous potential for disruption on TV, the same way anybody can make a living selling software using Internet, anybody should be able to sell their documentary, films, or TV episodes using it without too much middlemen.
It is already happening, but it will take some years, bandwidth has to be cheaper and the economic models have to be tested.
Remember Apple App Store learned a lot from Lindows-Linspire click and run, apt-get, yum and other experiments that tested software distribution in the millions of users way before Apple did.
It is already happening, but it will take some years, bandwidth has to be cheaper and the economic models have to be tested.
Remember Apple App Store learned a lot from Lindows-Linspire click and run, apt-get, yum and other experiments that tested software distribution in the millions of users way before Apple did.
If Apple TV gets its own app store, then it will be interesting to see all the channels (apps) that will result. I think that is more likely than an actual TV (unless you are willing to call a big iMac a TV). I think the biggest limit on Apple TV is the bandwidth caps.
if/when Apple makes a TV, there will definitely be an app store with it.
I just don't see them having a need to make the TV part, unless we are talking a big iMac. It just seems like such a crowded field that doesn't really have an upside beyond what the Apple TV is currently able to provide.
one less device = simplicity
and brand is just so strong
and brand is just so strong
I think the reason the Apple TV isn't as disruptive or genius is that I don't believe that Steve Jobs watches much if any TV. He is a busy man running a Fortune 500 company. Do you think he spends a bunch of free time on his couch watching TV?
Apple products are great in part because Steve Jobs and other executives use them and so they make sure they are top tier.
Apple TV is a "hobby" because the people signing off on them don't have the same deep understanding of the TV watching experience that they do the phone experience or the desktop/laptop computer experience.
For example, for the longest time the Apple TV was where you could watch YouTube and movies you download from Apple. No DVD drive, no Netflix, no Hulu, no DVR, no game console. YouTube and iTunes purchases. That is not what a couch potato would design.
A couch potato would design something like a cross between the current Apple TV and the Wii or something. Streaming content + downloadable music/movies + casual games all running iOS. Make the Apple TV interface with the iPod Touch, iPhone, or Wiimote and you're basically there.
Again, if Steve Jobs were a TV junkie this might seem obvious to him, but I don't think he is so it probably isn't going to happen.
Apple products are great in part because Steve Jobs and other executives use them and so they make sure they are top tier.
Apple TV is a "hobby" because the people signing off on them don't have the same deep understanding of the TV watching experience that they do the phone experience or the desktop/laptop computer experience.
For example, for the longest time the Apple TV was where you could watch YouTube and movies you download from Apple. No DVD drive, no Netflix, no Hulu, no DVR, no game console. YouTube and iTunes purchases. That is not what a couch potato would design.
A couch potato would design something like a cross between the current Apple TV and the Wii or something. Streaming content + downloadable music/movies + casual games all running iOS. Make the Apple TV interface with the iPod Touch, iPhone, or Wiimote and you're basically there.
Again, if Steve Jobs were a TV junkie this might seem obvious to him, but I don't think he is so it probably isn't going to happen.
The idea that a ~350 Billion dollar company runs on the hunches of a single man might sound interesting, but it just can not be true. And again, the idea that Steve Jobs can not understand what constitutes a good TV, just because he is not a TV junkie doesn't sound convincing to me. If it is a 100 Billion dollar market and if it is something a majority use even for a few hours a day and if improving that can make their daily life even 3% better, they are going to go for it.
Steve Jobs is not the average CEO. He's famous for micromanaging and very directly being responsible for new products. It doesn't sound too far fetched to me.
Yes, but I dont think it would be too hard for him to understand what a good TV should be, even if he is not a TV junkie himself.
A couch potato would design something like a cross between the current Apple TV and the Wii or something. Streaming content + downloadable music/movies + casual games all running iOS. Make the Apple TV interface with the iPod Touch, iPhone, or Wiimote and you're basically there.
Note that Apple is going that way with AirPlay Mirroring. As a reminder, AirPlay Mirroring allows you to wirelessly use the AppleTV as a second display for any app that supports it. (and it's very easy for a developer to support) In particular, that includes games (see Real Racing HD for example). Though it will only work with the iPad2 at first, this has a lot of potential.
I'm not sure that this would be the ideal way to get into people's living-rooms (they would still need to buy an AppleTV on top of an iPad), but it's pretty close to what you're describing.
Note that Apple is going that way with AirPlay Mirroring. As a reminder, AirPlay Mirroring allows you to wirelessly use the AppleTV as a second display for any app that supports it. (and it's very easy for a developer to support) In particular, that includes games (see Real Racing HD for example). Though it will only work with the iPad2 at first, this has a lot of potential.
I'm not sure that this would be the ideal way to get into people's living-rooms (they would still need to buy an AppleTV on top of an iPad), but it's pretty close to what you're describing.
In his 1997 WWDC Keynote, Steve said that he likes to create products that he would want to use.
Even if he doesnt have time to watch TV, or isnt a couch potato, he will surely be interested in creating a TV that he would want to use.
I deliberately placed the word "use" here, because Apple is intent on creating highly interactive and/or immersive devices.
Apple is sure to use its learned experience from the success of the iPhone, iPad and Macbook to bring something revolutionary to the largest mainstay screen in our homes.
Even if he doesnt have time to watch TV, or isnt a couch potato, he will surely be interested in creating a TV that he would want to use.
I deliberately placed the word "use" here, because Apple is intent on creating highly interactive and/or immersive devices.
Apple is sure to use its learned experience from the success of the iPhone, iPad and Macbook to bring something revolutionary to the largest mainstay screen in our homes.
TV is also a technology that EVERYONE uses, much like a computer now. An Apple TV has the potential to get the Apple brand into MANY MANY more households. A successful Apple TV will do what the ipod did for apple, (or the iphone for that matter). If they do it right. (which is an oxymoron)
my issue with your point here is that i think you're stuck with the concept of what a TV is now, when Apple has the potential to completely redefine the concept of what a "TV" is or should be...
"Smart TV's" have the potential to cannibalize some of the PC market, as all of our data moves to the cloud and all we need is a good interface to compute...
Apple didn't make a tablet, they made an iPad. they won't make a TV, they'll make an iTV and differentiate themselves entirely.
"Smart TV's" have the potential to cannibalize some of the PC market, as all of our data moves to the cloud and all we need is a good interface to compute...
Apple didn't make a tablet, they made an iPad. they won't make a TV, they'll make an iTV and differentiate themselves entirely.
also, i think Jobs will tackle TV just because it is so challenging.
he wants to put a dent in the universe... what better way than revolutionizing TV/computing?
he wants to put a dent in the universe... what better way than revolutionizing TV/computing?
also, i think Jobs will tackle TV just because it is so challenging.
he wants to put a dent in the universe... what better way than revolutionizing TV?
he wants to put a dent in the universe... what better way than revolutionizing TV?
yeah... Dixon is dead on.
leave it to the naysayers to say "it's impossible."
Jobs will dominate and prove them wrong.
leave it to the naysayers to say "it's impossible."
Jobs will dominate and prove them wrong.
Right now, content creators have created an environment that is 10 times more complex and legally difficult to penetrate than anything the music industry did - and they're successfully defending this position against everyone, including Apple.
Television should be an experience where I can watch exactly what I want to watch, exactly when I want to watch it. No commercial interruptions, no content I feel 'meh' about. When I know what I want to watch, I should be able to select it and watch it on my terms. This should apply to new content in the same way Netflix is currently doing reruns.
Furthermore, when I don't know exactly what I want to watch, there should be a Pandora like system that creates a channel for me that will give me something I am probably going to like.
I should be able to know what my friends and people I find interesting think about what I'm watching. This should not, in any way, intrude on the watching experience, but it should never be more than glance or a remote tap away.
Finally, this entire experience should cost less than a cable subscription.
The technology is there. I could build this experience for myself using BDs, iTunes, DVR, a media server, and by programming a bunch of TV apps for something like Vizio, Samsung, or GoogleTV.
However, without the backing of content providers, something like this will never make it mass market because they are holding all the cards until a giant, like Apple, decides to take them on - and it'll be far more bloody than the battle for music.