How Apple is Going to Own the Living Room

As with everything I write here, these are my opinions...

The most important part of Apple's announcement today was not the video iPod or the new iMac, but the bombshell that followed Jobs' "one more thing..." (the last time he said that, he announced the Nano.)

Apple has convinced Disney to sell TV shows through the iTunes Music Store, ad-free, at $1.99 a pop, available the day after the show airs.

I tried it out by downloading an episode of this season's Desperate Housewives. It took me about 40 minutes, it looks great (the quality is even very watchable at full-screen), and I can copy the file to my heart's content.

Beyond the product, though, here's why the announcement is interesting.

Disney is a conservative company, so getting them to sell their shows on iTMS is a coup for Jobs. But it's also an experiment for Disney, which is why there are only five TV shows available. When this takes off--and it will, because Jobs convinced Disney to make the hot Lost and Desperate Housewives available, and because customers want to consume media when and where they want--the TV studios are going to jump on board the iTunes Music Media Store faster than you can say Eva Longoria.

And when that happens, Apple will own digital music distribution (they currently own 84% of the legal downloads market) and they'll own digital video distribution, because once TV happens, movies won't be far behind.

Then, Apple will move into the living room. Apple won't buy TiVo, because it's inconsistent with their "secret until launch" strategy and "not built here" mindset. Instead, they will build a better PVR with a slicker interface than TiVo. And they'll have existing win-win-win (the third win is for customers) relationships with TV and movie companies, so they'll launch their PVR with a video on demand service that has an iTMS-esque purchasing experience that millions are comfortable with.

Throw Jonathan Ive at the problem, and you'll have the sexiest-looking set-top box that will cause people to say--as my buddy Tim said today when looking at the iPod--"I have no need for one, but I want one."

Of course, this turns companies like Comcast and Netflix into wallflowers. Unless Netflix and TiVo can beat Apple to the punch with their VOD service, and unless cable providers can figure out a way to deliver a more compelling VOD customer experience (hint: get a customer-focused company to develop your PVR), they're in danger of being made irrelevant with respect to on-demand content distribution.

Basically, Nivi was on to something when he wrote about Apple's monopsony. In the voice of Steve Jobs, Nivi wrote:

iTunes + iPod is the only digital content distribution platform that consumers are actually using (globally too). I have a monopsony on digital content distribution.

Now quit fucking around and supply me with content, components, and serious partnerships at a reasonable cost because I am the only game in town. And I may bury you next if you don’t join my team for the big win.

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Comments (Post | Latest)

1. Nivi said on Oct 13 2005:

How do you envision the transmission of the content into the "living room"?

A quick stab: 300 GB hard drive sits on top of the TV and asynchronously pulls media from the computer over Airport Extreme. The Apple Remote talks to the Hard Drive. No streaming from the computer.

2. kareem said on Oct 13 2005:

I'm thinking that they're going to take the (traditionally defined) computer out of the equation. Nobody but a geek wants to have their computer hook up to their TV. It's set-top box all the way.

As far as specs--it depends whether they support HD recording or not. Maybe v1 they don't?

A quick scan of Techbargains shows a 300GB HD selling for $90, and that's obviously without a volume discount.

Throw one or two of those in an Ive-designed box, throw in the Front Row interface (which Jon Gruber rightly points out is begging to be hooked up to a TV), and plug it in to the web via 802.11g or wired cxn, and you're set.

Initially, shows won't stream--they'll be downloaded from Apple's servers (or peers--do they layer BitTorrent file distribution on top of this???) and customers will wait a few hours to watch their shows. Maybe they'll be able to subscribe to shows, so new movies hit their boxes the day they could out. That's really the one flaw in the customer experience, but it's a function of a bandwidth bottleneck, which means that every other company out there faces the same problem.

3. Ravneet said on Oct 20 2005:

Nice post. All this entertainment integration needs to be happening. Its inevitable. Steve Jobs will do it.
This is what I call as LifeStyle2.0 here at my this post (http://www.emergintex.com/blog?p=107)

About

Hi, I'm Kareem Mayan. I co-founded eduFire, an online video tutoring company.

I've done time at ESPN and FIM.

I advise WorldBlu, helping them build democratic companies.

I moderated a council for Creative Good.

And, I helped bring Barcamp, a technology un-conference, to LA, which is where I live. I am now living and working in cool cities around the world.

More about me.

Opinions stated here are mine alone.

Contact: blog -at- reemer

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