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.