paul skidmore andparabolos

cinematic storytelling, strategy, and advice

Apple TV will be a hobby for a while.

Apple unveiled its new iPod lineup today, and Steve’s “one more thing” was a long-awaited refresh of Apple TV. while quite a few people seem to be excited about this tiny, sleek new incarnation of Apple TV, personally, i think it’s kind of a dud, for a few reasons.

a lot of rumors hit the price-point ($99), but it is not an iOS device, at least in any recognizable form. this means you still have most of the same options of media to choose from as with the last version. one addition would be Netflix, but as a menu item, not an app. the Apple TV update comes hand in hand with a business model update, namely cheaper HD rentals and, for the first time, TV rentals. some people seem really excited about this. i could be wrong about this, but here’s my initial thoughts about it.

the iPad

let’s go back to the iPad.

among my friends, i’ve achieved “fanboy” status over the last year for being so pro-iPad, which is fine. while i don’t really see myself that way, i do like most things Apple. i do own several Apple products. i’m certainly more than a casual Apple customer. but for what it’s worth, i was mainly excited about the iPad because of what it was going to bring to my toolkit as a filmmaker. my iPhone 3G had been a huge boon to my on-set experience as an AD and director on some recent films, and I was dying for the processing power and the screen real estate of an Apple tablet. i wanted something more iMac-ish than iPhone-ish, though, and the keynote about the iPad was pretty lackluster, at least until they hit the price point. i knew i’d get one; i’d already booked a workshop at Biola Media Conference and wanted to have one in hand. and i could see that it would eventually change the computing game, though it might be a little farther down the road than i’d hoped. still, i really underestimated how much i’d be using it and loving it.

and the LAST thing i thought i would use it for is watching video. Steve kept talking about TV and the iTunes store and HD movies and HTML5 video. i rolled my eyes as he went on during the Keynote. as much as i despise Flash, let’s face it: most of the video on the Internet is flash. it wouldn’t be the media device Steve was touting it to be without all that video. sorry, Steve.

then, in just a few weeks between the unveiling of the iPad and it’s appearance on the shelf, dozens of major video sites prepared HTML5 versions of video. the night before the iPad appeared in customer’s hands, the Netflix and ABC apps appeared with little to no warning in the app store. TED, ABC, Netflix, YouTube… nearly all the video i watched online would be accessible from my iPad. even now, hulu plus brings most of the offerings of its online counterpart to the smaller, more portable screen of my favorite device. i probably run between 1-5 hours of video on my iPad on any given day, mostly from Netflix and hulu plus. people like me, who bought the iPad for its many uses, were pleasantly surprised by the amount of video one can watch on it.

still, though… i’m not buying movies or TV shows in iTunes. they’re just too expensive. i’m broke. i realize this isn’t an issue for everyone else, but it’s a big one for me. as a broke filmmaker (i.e., someone who desperately wants to watch a lot of movies), i go for volume per dollar over picture/sound quality or ad-free. sure, all things being equal, i’d rather watch all of Season 6 of House in HD. but if it’s between seeing it on hulu and paying $24, i’ll not mind the mid-range quality and a few ads. i could easily spend $30+/mo in $.99 rentals, not to mention movies. if i’m going to do that, i might as well get cable again. for movies, i’ve stopped buying DVDs, and won’t invest in Blu-Ray, but haven’t started purchasing iTunes movies yet. i just don’t have the money. besides, they’re not even 1080 yet. still just 720. buying/renting stuff with iTunes just still doesn’t seem practical to me yet, given all the other options out there.

anyway, the overall point is… my iPad became a media consumption device for me ONLY because there is a wide variety of media and payment models from which to choose, and only because i already owned it, for its many other uses.

the hobby

this is the central problem of Apple TV, by Steve Jobs’ own admission*, and why Apple TV, even after today, remains a hobby. at $99, some will add it to their entertainment system, but it’s not going to replace it yet. i believe, other than a little bump because of the price point, this Apple TV won’t fare much better than its predecessor. unlike the iPad, there is no delay between its announcing and its launch. we will likely not see any surprise hulu plus addition to the UI the night before it hits the shelves. also unlike the iPad, it has no other uses. for instance, Steve mentioned in today’s keynote that the iPod Touch was the #1 portable gaming device**… not really, Steve. people are playing games on their Touch, but i suspect few are buying a Touch to play games. its success as a gaming platform is incidental. if they released an iPod Touch that only ran games, it’d do worse than the Pippin.

* – i highly recommend watching this 4-minute clip of Jobs at D8 talking about Apple TV. in fact, his entire D8 appearance is worth watching.
** – update from TUAW: http://bit.ly/c4937c

the business

Apple cracked the music code by allowing people to buy a single song from an album of otherwise unlistenable songs, something people buying CDs had been saying for years… “if only i could just buy this one song…” i’ve heard less people say, “if only i could pay for this one show…” now, i HAVE heard people say, “if only i could pay for this one channel…” but even then, they’re looking at their $50 cable bill and the 250 channels they get and figuring, “hey, that’s $5/channel/month!” which doesn’t work out to $.99 an episode. at $.99 an episode, i only get two weeks of Bones, House, and Lie to Me before i’m over that $5/mo quota. the math may not be fair, but it’s what people do in their heads. $.99 for one song of 15 from an album that costs $15 makes sense. with TV, however, compared to subscriptions, $.99 STILL won’t be cheap enough for most consumers. and you still have to add a $99 box.

this is a problem that’s affecting the whole film and television industry in their move to digital and mobile. there isn’t a television network or film distributer on this planet that doesn’t want to put their shows and movies in your pocket, no matter what James Cameron’s opinion about it is. but what’s the model? there’s a lot of similarities to the music industry, but as the journalism and publishing industries are finding out, it’s not the same. a new economy has to emerge for it. $5 HD rentals do not accommodate $90 million slacker fantasies. the great TV shows get lots of ad money. people want rid of ads, but they also only want to pay a dollar or less for an episode of TV. unless some drastic changes come to the film and television industries in the form of union dissolution or independent distributors suddenly blowing up and taking over the big dogs, things aren’t going to drastically change in the next year or so.  again, the problem is not the tech. it’s the “go-to-market strategy,” as Jobs says. new tech tickles our gear lust, but the new Apple TV just really doesn’t offer anything new.

the future for Apple TV

surely, they see the potential in making Apple TV an iOS device. a $200 box that runs Netflix, hulu, the Internet, is a gaming system, can be used to sample and purchase content, includes FaceTime, GameCenter… it’s practically a small adjustment (both in UI and in form factor) from an 8GB iPod Touch (don’t need storage space if streaming/AirPlaying content). i think that would sell much better than what they debuted today, being more useful to more people. but then again i’d have designed the iPad differently, and i think they did it right. i’ve not spent years and millions in R&D, and they’ve sold over 3 million of them, so… i guess we’ll see…

the new Apple TV is pretty. the innovation of AirPlay is pretty neat. but i’m still going to make my next computer a Mac mini, and run something like Plex. then if i can ever afford an actual television, i’ll have a nice living room setup when i’m home, and an always on connection to my home server when i’m not. Apple may very well crack the TV/film distribution code, but they haven’t done it yet.


November. really?


skidmore | administrator

believer. follower. filmmaker.

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  • Topher | 10.09.01

    Not ONLY are iTunes HD movies in only 720p but they are in stereo. no 5.1 audio mixing. When I lived off my laptop, buying movies was awesome and Apple TV was gonna be the thing to get when I got an entertainment center. But now that I want to get that stuff to my LCD and surround sound it bothers me to have the lack of quality. Especially with it being stereo, transfers terribly to a 5.1 setup. Id buy it for the netflix feature but I already have my bluray player and xbox 360 that have it. Plus my iTouch.

    • skidmore | 10.09.01

      actually, i bought Star Trek in HD a while back as a test, since it came with iTunes extras. it has a 5.1 soundtrack. the problem is that most people don’t have their computers set up for 5.1. many Mac owners are unaware that their headphone jack doubles as an optical digital out. you just need a TOSlink mini to TOSlink cable and a receiver capable of decoding Dolby Digital 5.1, which is nearly every surround receiver on the planet. Star Trek sounds GREAT in this setup.

      another option is to using something like the discontinued Griffin Firewave. i use the Firewave because it is a multichannel out, allowing me to mix in 5.1 in real-time without having to render or encode. and it was only $30! but you must have a receiver with multichannel in (six separate phono jacks — one for each channel). i use each for different functions. the TOSlink optical cable for just general audio playback, and the Firewave for surround mixing in Soundtrack Pro.

      Apple Airport Express with AirTunes will do optical through their audio out mini jack as well. but AirTunes does not support video. we’ll see how much obsolete AirTunes hardware i have once AirPlay is implemented.

      that being said about the hardware setup, i have no idea what percentage of iTunes HD movies offer 5.1 audio, but a quick poking around the store i couldn’t quickly find one that didn’t offer 5.1.

  • Topher | 10.09.01

    See I didnt realize that. But I had already gotten fed up with the whole thing and bought a Blu Ray player. I had bought Star Trek HD off iTunes and I bought a Blu Ray copy. I MUCH prefer the Blu Ray. But i do Netflix Blurays so I dont buy a whole lot. I maybe own 12.

    • skidmore | 10.09.01

      yeah, i would like to check out the Netflix Blu-Ray thing. don’t think that works on the web, and certainly not on the 1024×768 iPad or 960×640 iPhone, so i’m not able to do that currently.

      this is probably better to save for another post, but i think Blu-Ray vs digital download is going to end up being like Laserdisc vs DVDs. right about the time the early adopters get really invested in it, right about the time it’s about to take off with the regular marketplace, Apple or somebody will figure out the digital distribution angle in a way that makes sense, and Blu-Ray will be obsolete.

      i have a Blu-Ray burner, mainly for data backup. even my clients don’t ever want a Blu-Ray disc of their masters. i’m either making SD DVDs for churches or swapping files with young filmmakers. there’s no in-between commercial Blu-Ray market anywhere. the techies have already moved past it.

      it’s good that you’ve only bought 12… i wouldn’t suggest making a huge investment in Blu-Ray.

  • Topher | 10.09.02

    Yeah most of them were basically 8 bucks a pop in 2 packs. Only 2 I have paid full price for and those were Star Trek (I mean come on) and The Dark Knight.

    You DO have netflix right? I’d be surprised if you didn’t. I considered doing Hulu Plus but I wasn’t impressed with the trial. Netflix has never EVER let me down. The instant access alone makes it worth it for me, I truly use it. In the last month I’ve watched all 3 season of Arrested Development, 1 season of the office, on the third season of Bones and maybe a dozen movies.

    I do kinda with I had an iPad now that the Netflix app will stream shows/movies to it. Very good move for them.

    • skidmore | 10.09.02

      yes, i use Netflix almost every day on my iPad. hulu plus on iPad is still lacking a lot; i’m working on a post about that as well.

  • Kevin | 10.09.04

    I have to disagree that this is still a hobby. The first reason is because of content. I travel a lot and services like Netflix and Hulu Plus are nice, I have a Netflix account, they require constant high speed internet access. I have no internet at most airports (unless I want to pay $5/day or $10/month for which I would use it probably less than 8 hours/month, and even if I did pay for it it is usually slow). I don’t have internet on the plane (some flights offer it at a high cost, but that is still only a few and once again slow). Most hotels advertise free high speed internet, but in my experience I am lucky to see sustained download rates of 512kb/s (thats bits not bytes). So in these environments services that only do streaming are not practical. So my best option is downloads. iTunes is the only service I have found that offers true downloads, where I can download it, put it on my device and then watch it when I am not on the internet. But of course when I am home I would prefer to watch this content on my TV. The new rental model with the AppleTV makes this perfect. I can rent TV shows at $0.99/episode for HD, used to cost $1.99/episode for SD $2.99 for HD to buy for me to only watch once, watch them on my iPhone, iPad or MacBook Pro when traveling, but when I am home I can watch them on my TV. It also has Netflix built in so I can take advantage of that, I can stream anything from not only my computers but from my iPhone or iPad. I have over 400GB in my video library and growing, with the old AppleTV my only option was streaming, but it costs too much, at $99 I don’t feel it is too expensive.

    As far as your math with the cost of cable and channels you get, if you pay $50/month for 250 channels it is $0.20/channel. Of course if you are like me the reality is you only watch some of those channels. I would say for myself it is about 10 channels for which I pay $60/month, so in the end I pay $6/channel. Even with these 20 channels I don’t watch every show, there may be about 15 shows I watch regularly. If we assume every show has 22 episodes per season and I was able to rent every episode on iTunes then I would spend a total of $326.70/year on renting TV shows. I currently spend $720/year on my Satellite. So I spend additional $400/year for watching whatever else may be on, but I don’t care much about. I could use that money to rent 80 movies or maybe some other TV shows that I never took the time to watch originally.

    I also believe we will see things like Hulu plus added to the AppleTV over time. The Netflix on the AppleTV is completely different than any other Netflix implementation, and that takes time to write. Hulu Plus has only been out a few weeks, probably not in time for anyone to rewrite it for the AppleTV. Also, Netflix is available to anyone, Hulu Plus is only available for limited preview. I highly doubt Apple wanted to add something to the AppleTV that not everyone would be able to use. For this I would have to say lets wait and see.

    • skidmore | 10.09.19

      lots of excellent points, Kevin. thanks for responding. sorry i haven’t responded sooner!

      first of all, I still use the word “hobby” because Steve still uses the word “hobby.” he made a special point of doing so in the Keynote. back at D8, he talked about all the reasons why it’s considered a hobby, basically centering on the term “go-to-market strategy.” I’m not convinced that Steve or Apple feels this is the answer to that go-to-market strategy. i think if you were to ask Steve if Apple TV is still a hobby for Apple, he would probably say yes, but i could be wrong.

      your unique insight as a business traveller definitely brings things to the equation i hadn’t considered. certainly there are many in your position, and most in your position have the disposable income to go the Apple TV route ($1/episode). and surely geeky techies like myself will be interested in it. but i don’t think there’s a big enough market yet to take over the cable industry, and i think that’s what it’s going to take for Steve to no longer consider it a hobby. I love Steve, but let’s face it. he doesn’t want to be a content distributor; he wants to be THE content distributor.

      and yes my math is bad, yet in a direction that i think further proves my point. still, like you say, i think people are willing to pay $5 per channel or something. at the same time, i don’t think people will be willing to step away from from their cable/dish network until the offerings are the same. or at least the same as the iPad/PS3/mobile devices/etc.. in other words Apple’s going to need more than ABC and Fox on board for it to take off. and given the turmoil in the film/television industry (i.e., content license holders) at this point, i submit that cheap/free wifi ubiquity has a better chance of happening before Apple TV replacing the cable/dish companies.

      i think your comments on hulu plus for Apple TV are spot on. currently, hulu plus for iPad is currently moderately terrible. I’m working on a post for that. but I still want access to that content. and I (and probably most people) don’t mind watching ads or even mediocre quality. and given the supposed iOS backbone of Apple TV, adding things via a software update seems highly likely, not to mention easy.

      thanks for your input!

  • hulu plus on iPad needs work. | 10.09.20

    […] Apple TV will be a hobby for a while. Sep 20 […]

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