Forbes: Apple could take chunk of sales from the $24 billion home video business

Apple CEO Steve Jobs did “something out of the ordinary at the Yerba Buena Center for the Arts Theater: He showed off a product Apple isn’t selling yet. The iTV box–a temporary name, Jobs promised–will let consumers move their downloaded movies from their PCs to their TVs, via a wireless connection,” Rachel Rosmarin reports for Forbes.

Rosmarin reports, “When Apple begins selling the boxes, priced at $299, early next year, it will have finally made its long-awaited leap into consumers’ living rooms. But given that details on the product are still scarce, it’s hard to assess what kind of impact the company is going to have on a market that’s embryonic at best.”

“To date, that story reads: In 2003, Apple began selling the iPod and music via the iTunes music store and changed the music business. Last year, the company started selling a video iPod and television shows, and changed that industry, too,” Rosmarin reports. “But the movie business may stay unchanged for a while, at least given what Jobs has announced so far. Apple’s selection of movies is limited to some 75 titles owned by the Walt Disney Co., the same company where Jobs is a board member and the largest individual shareholder. The movies will sell for $9.99 and $14.99, slightly cheaper than DVD prices, and close in quality to physical DVDs, but not nearly as useful–the films will be tethered to consumer’s iPods or computers, and consumers won’t be able to burn copies of their purchases to DVDs.”

“And while consumers have long used iPods and the iTunes software to play music they’ve ripped from their own CDs, or “shared” via friends’ discs and music collections, it’s unclear whether the same scenario will work with movies and the iTV box,” Rosmarin reports. “Still, some 25% of adults who own PCs are willing to watch videos right on their computer, according to Forrester research. The biggest benefit to Apple could be the chunk of sales it takes from the $24 billion home video business. Apple has already sold more than 45 million $1.99 television episodes since debuting its video store in October 2005. More than 5 million of those downloads were of Disney-owned content.”

Full article here.

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26 Comments

  1. One very simple remote controls all of your TV, movies, music, photo slideshows, and internet podcasts. All downloaded, stored and accessed in a single location (your Mac) from the comfort of your sofa. Eventually, no DVD players, TiVos, CD players, just one tiny 5-button remote with an Apple logo on it.

    How far away is it from the obsolescence of game consoles with your games in your Mac being streamed to the “iTv” and the bluetooth controllers in your hand?

    Also not directly mentioned is Apple’s marketing tactic for computers. With iTunes and “iTv” being PC compatible, there is no need to go out and buy a $2000 Multi-media PC from Dell or HP. And when time does come to buy a new computer, why not buy the computer with the same interface and simplicity they have been using for years on all of the Apple peripherals?

    Apple seems to be the slowly invasive cancer into Microsoft’s world… as well as the whole consumer electronics industry. People want simplicity, not a rat’s nest of tangled wires and metal boxes in the living room. Apple solves that!

  2. Did you notice the link to the iTMS store at the top of the iTV remote menu? It looks like we’re going to be able to purchase and download movie content directly from in front of the TV and not just get it ahead of time onto a computer.
    That feature will help sell more content because you don’t have to be a computer user, nor familiar with how to get to iTMS, find movie content and then purchase in order to use it. My wife does not know how to do those things on the computer, but the simplicity of having it right on the TV with perhaps a “get it now” button…? THAT she’ll do.

    It’s funny… all the places that Bill Gates wanted to have Windoze (remember ‘Windoze everywhere?) are going to have Apple instead. Did Bill ever envision a Windoze link to your running shoes? I don’t think so… he was thinking about a windoze controlled fridge… or toaster… what a joke!

    Steve has been able to march slowly and surely into a lot of nooks and crannies of our everyday life without cramming something down our throats that we did not want.
    Outstanding!

    incredibly, the MDN MW is ‘seven’. I’d still like to know how they do that!

  3. As much as I like Apple’s solution, I don’t believe, in it’s current form, it will be very sucessful. First, movies are not music. I really don’t want to download and purchase, even at $9.99, most movies. I will only watch them once and rental services like Netflix are a far less expensive option.

    So, how many movies will I buy through iTunes? Probably a few animated films for my children, but that’s about it. You know, they will watch a movie hundreds of times, so it’s worth it. Now, admittidly, I haven’t seen the quality of iTV, but even if it’s good enough, I still won’t buy very many movies. I want to rent them.

    Apple could offer a rental service allowing you to download and keep in que 3, 5, or more, movies for a set price. This would be ideal; it would also put Netflix and Blockbuster out of business. By downloading the media, you don’t have to wait days or weeks for a movie. You can watch what you want when you want. Also, you don’t have to worry about backing up all your digital media.

    People buy movies now only because viewing-on-demand is not available. If it were, DVD sales, and movie downloads for that matter, would be non-existant.

  4. Steve-O seems to be (slowly) moving toward having everything on a server somewhere in your house with the ability to stream anywhere. Your computer and TV will physically remain separate, but conceptually will be closer than ever. I also think that there are a few additional features of this iTV that will be revealed in January that will answer some of our questions.

    Remember two things – this is only a first revision product and Steve never releases something if he thinks it will suck. First impressions mean EVERYTHING to him.

  5. It’s a longer term strategy, and I think it’s gonna work. Apple is moving brilliantly slowly, and when the pieces all come together. Broadband will make gains and the quality and speed of the whole thing will go up with it. That’s when the whole thing becomes a no brainer.

  6. It is very difficult to lend credibility to any MDN poster that cannot master something as elementary as the contraction “it’s” and the personal pronoun “its.”

    This is NOT rocket science, MadMac and others!

    “It’s” = “it is.” “Its” is a pronoun showing ownership, as in “I don’t believe, in [its] current form, it will be very successful.”

    Sorry for the digression here, but we Mac users are so much better than this!

  7. I’ve finally realized that Steve’s vision of the “living room box” is not mine. Apple seems clearly only interested in managing content that it sells thru iTunes, so I don’t really see any hardware device from Apple that will capture and record, or time shift content from Cable or Broadcast.

  8. This iTV works at a number of levels. It’s not for the NetFlix person who likes to watch lots of movies. It’s more for the person who might go to Blockbuster, but since gas is so expensive, realizes that the money saved on gas, he can buy the movie instead of rent it.

    Also, this is great for parents with kids who watch the same movie over and over. Over time, that DVD gets unplayable due to scratching. Having a media server eliminates the scratching problem. And, the kids can take the movie with them on their iPod into the car. No more bulky DVD player and bag of disks.

    Also, when HD DVD and BR come, those players are going to be ridiculously expensive. They already are. And, the disks are not going to be as cheap as DVD movies are today. Expect $30, I imagine. However, if Steve can send you a HD file for less, and you don’t have to buy that expensive HD or BR box that may be obsoleted when one tech wins or the other, then you benefit. So, Steve can offer a better HD choice than HD DVD and BR.

    And, putting all of your music, photos, home video, tv shows and movies on one server makes all of those things more valuable and accessible.

  9. Apple is not going to record or time shift content. They can’t or they would shoot the cow (Hollywood). Instead, Apple will help some third party(s) do it seamlessly, somebody like “El Gato” (the German company behind the eyeTV product). EyeTV connects in nicely and provides all the Tivo-like goodness to those who desire it. Personally, I’m ok with buying programs off iTunes and not having to spend all the time tweaking files, but I don’t watch much TV so a few bucks spent here and there is cheap compared to what many spend on premium cable entertainment packages.

    Apple can’t make a program like Handbrake (a handy tool for getting DVD content into the Mac or iPod). They can’t make it or support it but they don’t have to “break” it either.

    The Apple media platform is working for me. I dig it, it’s easy to work with and unlike Amazon unbox, Apples stuff works.

  10. i already bought a couple of movies. Let’s all download a couple of movies now and help apple jump start this new market. Soon, all the other major movie studios will get on the bandwagon just like what happened with donwloadable tv shows.

  11. Jeffery,
    I think you are so right. Apples view of the future is not yours or some others. : -) And right now, I personally think Apple is right. JMHO.

    Why try to copy a $39.00 DVD player?
    Why try to copy a $99.00 TiVo player?

    What is not available? Movies on demand. Want a movie? Click on your TV, select iTunes, click on pay for movie, wait a minute – get some popcorn, WATCH YOUR MOVIE. And you own it. Take it with you to your other computers or with your iPod.

    Rentals???? Sure. Why not? But—- get people online first. Get the big movie houses to start selling movies first.

    Rentals are a trick business. Microsoft is STILL trying to get its drm fixed.!!! I think we will see a rental movie that will last say a week, be transportable and self-destructs in a week (the software already exists.)

    BUT you have to allow the movie companies time to come along. Right now they still think they can controll everything and make Billions, Amazon and other efforts will show them wrong. I think, just like iTunes, it will be a snowball gathering effort type thing. JMHO.

    Later,
    N.

  12. I think we are forgetting one extension of the strategy. If I buy the movie, put it on my iPod, then take my iPod out to the Car/Van/SUV and plug in the movie to lay on its entertainment system.

    Movie rental don’t work for this, and lugging the DVD’s around is a pain. Simple extension and Apple takes over entertainment in the car as well.

  13. “I don’t really see any hardware device from Apple that will capture and record, or time shift content from Cable or Broadcast.”

    Missing the point. People already own TV sets. Apple is NOT in that business (yet, anyway).

    The TV set has multiple source inputs. Most people can handle this just fine. The TV always has been, and will continue to be, for the VAST majority, the hub of the living room. Wanna watch cable? click to that input. Wanna watch satellite? DVD? Blu-Ray? You get the idea.

    Wanna watch your Mac? Now you can. Simple. Elegant. Enjoyable. Most importantly, my WIFE gets the significance of this. She thinks it looks really cool. She wants one. She wants to know if I can hook it up to the projector. She loves the remote. She loves that she will be able to run it without the assistance of either myself or our kids.

    I love it because it is HD ready (HDMI and component–sweet). I love it because of what it means 2-3 years down the road for HD content and delivery. I love it for the $299 price point. Apple does not need to conquer content providers. That is M$ thinking. The genius is that they are creating a new market segment here. It’s obvious. Steve thought he was being obvious in the presentation. Those complaining loudly are displaying suspect judgement.

  14. What’s frustrating to Apple enthusiasts – and ammunition for Apple doubters – is that Steve Jobs showed a lack of his legendary vision yesterday.

    Apple’s famous ‘minimal’ philosophy appears muddled, directionless and contaminated by the values of MSoft, music labels and movie studios.

    Apple’s first line of thought should be ‘Why connect a computer to a TV in the first place – REGARDLESS of if it is done with or without a wire?’ The company have yet to arrive at a compelling answer to this and, frankly, it showed yesterday!

    The answer Apple need to find QUICKLY is to make the computer a terminal to a vast, universal resource of video content which is quickly accessible and very cheaply available to RENT. To do this, Apple has to rise above all the nit-picking and squabbling over various interpretations of DRM, what apparatus a video file can and cannot be copied to, what constitutes ‘ownership’, complicated pricing structures etc etc and simply ask its customers to agree to video files which have single machine use and built in time or play limitations (software firms have successfully built this into their ‘Demos’ for years and everyone accepts it).

    BUYING content must be relegated to an almost invisible role – where simply deciding to pay the difference demanded by a studio will provide the user with an instant ‘key’ to unlock the file already on their hard disk.

    Apple may be scrambling to be first off the block with video – but if they are not careful they may just be first off the block of the ‘also-rans’.

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