This is really a game of chicken. Both Sides think the other side needs them more. Both sides think if they do not need to give in. Both of them think they are better off in control.
They are both wrong is the problem. NBC thinks it can make more money with other online providers. They want to make different bundles because they think it will bring more revenue. What NBC is missing what customers love about iTunes. not needing to buy albums, just cherry picking ones they want. If NBC wants to force customers to buy content they don't want to get what they want, they are making a mistake. They run the risk losing customers to other content.
The mistake that iTunes is making is that they are opening the door to other download providers. NBC, Sci-fi, and USA networks have been the cornerstones of the iTunes Video store. If content is king, other providers will play ball with NBC to get this content. Those providers what a chunk of what iTunes has.
The interesting thing about NBC's decision for me is how a year ago it was a big story how iTunes saved the Office. After being saved by iTunes the Office has become a hit. One of the anchors of NBC's Line up. It is funny to me how this would not be important to NBC.
My guess is that NBC has no way to figure out how many people who viewed the Office on iTunes. They think they could get that many people on their own site when they launch it. The problem is that NBC is trying to be in more control when they do not understand the world they are operating. This is a major problem.
One interesting bit was this.
In addition to the pricing issue, NBC Universal wants iTunes to stiffen anti-piracy provisions so computer users would not have easy access to illegal downloads.
What are they talking about. Do they want Apple computers not to work with bittorrent? Do they want iTunes files harder to crack? Do they want more control over the Mac platform. All three of these are bad ideas. I want to know what they want.
The Big Gap is the place between early adapters and average consumers. The Big Gap is the difference between a single company being able to carve out a business and a whole industry being able to thrive. The Big Gap is often the difference between what people are saying and what they are doing. Right now that big gap is between Apple being able to sell TV shows on iTunes and the average customer wanting to pay for TV show downloads.
A new report from Forrester Research says people are not willing to pay for TV show downloads. This does not surprise me at all. People feel that they are already paying enough for TV. People pay a lot of money for cable, they do not want to pay more for other TV.
Only a sliver of the video-viewing masses -- about 9 percent -- have the know-how, time, money and patience to surf the Internet for programming, according to the Forrester report.
I am in that 9 percent, but I am still not willing to do it. I missed a couple of important episodes of Heroes, but I am not willing to pay $2 an episode to catch the ones I missed. I will just watch something else instead.
I know that television producers have made a lot of money with TV shows on DVD. TV shows DVDs have been big sellers. I think that people see downloads as different than DVDs. I think the downloads are not as friendly or collectible as the DVDs. Until people can burn downloads onto DVD I think this problem will continue.
Television producers face a real problem. They will have a problem passing along any more cost along to the consumer. Consumers are going to spend their money else where. The 30 second ad is coming to an end. Television producers and networks have to find a new way to get advertisers messages across. That might mean less revenue for them. That will turn the world of television up side down.
Lets see if the Apple TV has any power to change this. I do not think it will.
This week TiVo and Amazon announced an Unbox on TiVo. Yep, I have been working on this one. It is pretty cool. I cannot say much about it right now. I hope all my TiVo DRV using Friends check it out when it is launched.
I was going to write about Wal-mart getting into the video download business earlier in the week, but there has been too much stuff going on. Now I feel I cannot write about it because people will think I am only bad mouthing it because we are competing against it.
It would be nice if I lived in a world where I could blog anything I wanted without worrying that people might read it the wrong way and get me fired.
I was a little surprised to hear that the Xbox is getting a TV and movie download service. In some ways this makes a lot of sense. They already have a store front with X-Box Live. I am a little surprised because I am not sure this is how people want to use their X-Box. The hard drive is not that large. If the video is HD it will only fit a few shows.
You can watch the movie at home or at the office, but the license agreement prohibits you from watching it in 'hotel rooms, motel rooms, hospital patient rooms, restaurants, bars, prisons, barracks, drilling rigs' and certain other locations.
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Sometimes it takes a new technology like video downloading to make old technology, like renting a DVD from Netflix (Charts) or Blockbuster, look really good. In comparison to Unbox, a DVD rental is faster, cheaper, easier, more flexible, and delivers more choices and a better picture.
The review talks about how it takes a long time to get the program, how the quality is not as good as a DVD, and how restrictive the DRM is. I think that this is going to be the problem with download services for a while. I hope that these drawbacks get figured out before illegal downloads break the market.
I read some blogs and blog columnist say they were disappointed at Apple that iTunes 7 does not have HD support. They want shows and movies in at least 1080i resolution. Whenever asked about download bandwidth and time constraints, they say that Apple should use BitTorrent or a system like it. I hear people all the time talk about BitTorrent like it is free bandwidth.
Could a commercial service like Apple's iTunes Music Story use a shared distribution system successfully? I am not sure what the technical barriers to this would be. My guess is that it would not be as easy as it seems. Even if it was really easy, I am not sure what kind of customer experence it would be. I am not sure a technology like BitTorrent would support the kind of business Apple or Amazon wants to build.
But I also inserted the DVD versions of the two movies in my laptop, and the difference was stark. The DVD versions, in both cases, were noticeably sharper. The lower video quality of the downloaded movies would have been especially obvious if I'd connected my computer to a big-screen TV -- a move Apple and many others see as the next step for online video.
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The few dollars I'd save with Unbox or iTunes movie downloads aren't enough to compensate for all these shortcomings. With DVDs, I can easily move from players attached to my home TV sets to the DVD-ROM drives on my computers to the $89 portable player I bought to keep my 6-year-old daughter Sara amused on long car trips
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The transition to digital downloads won't ``happen overnight,'' Jobs told the Wall Street Journal. ``It takes years of investment,'' he said.
I'm happy to let Apple, Amazon and others make that investment, as long as they don't expect me to help that investment pay off until downloads are faster, video quality is better and prices are lower.
I am not sure how much control the download services will have on speed or price. If the price is too low the movie companies will say no. Speed is all about your internet collection. I wonder how much Apple and Amazon will be able to effect these things.
Replacing CDs with iTunes was a no brainer. The iPod and iTunes made listening to music easier for most people. It looks like the movie services make it harder than a DVD to watch movies. I think this is going to be the hard thing to overcome.
I also think that Apple and Amazon need to get companies to allow movies to be ripped into people's collections. Right now this is a major problem. Maybe they should work with rental companies to make discs that cannot be ripped and the ones I buy from the store can. I think that will be a barrier for these services to take off.
iTV - I Could swear Someone Else Owns that trademark
I looked at Apples Announcements today about the new iPods and new iTunes Movie Store. I think that Apple has done a lot get into a place where they can download video to people. I think they answered a lot of the questions I had last week.
I am happy to see that the movies and TV shows will be downloaded at 640x480 now. I think this is important. This makes it much more watchable on a larger screen. It will still look kind of crappy on a big TV. I wonder if they are working their way up to HD signals. That would take a lot more bandwidth.
I am not sure about the selection of movies. They are launching with 75 movies. That is a lot less than Amazon has right now with Unbox. Apple is only launching with movies from Disney. I wonder how long it will take Steve to get other studios on board.
I am interested in seeing the iTV hardward. I could swear that someone owns that trademark already. Maybe Apple bought it too. It has HD outputs, I wonder if HD content is coming. I wonder if that hardware will have a hard drive or not. If there is HD content without a hard drive, that will be rough on home networks. The iTV is an answer that Amazon Unbox does not currently have.
I think the iTV as shown implies that Steve Jobs has no interest in broadcast. He has said before that he was not interested in making a DVR. The iTV would lead me to believe this is true. There are no video inputs just video outputs. I wonder if it will be able to stream DVDs also.
I think the new iPod Nano without video is a good move. The Nano is already the most popular iPod ever. I see no need to ad video pay back to that product. I think it helps them create a value proposition for the regular iPods. I think they are really creating a family of products not just putting the same functions on every product.
I have been reading how everyone is guessing Steve Job's annoncement next week will be about an Apple Movie Service. For a couple years not people have been touting a download movie service as a killer app. All the time I hear how Netflix without the DVD would change the world. There is a geek elite out there that really want this.
I am not sure what will be announced, but I have a hard time seeing an Apple movie download service changing the way people watch movies. Lets say that apple starts this service on Apple only platforms. That means I would have to spend at least $600 to get a MacMini. For $600 I could get a DVD player and a few years worth of Netflix.
Second, I am not sure people are hooking computers up to their TVs. Yeah a 21 inch monitor is a big as my family's TV when I was growing up, but I am not sure people can make an iMac useful for both watch movies and using as a computer. I think the home media computer is still a rare thing. It would take a few years before something like this would really catch on.
Third, I am not sure a pricing structure could compete with renting/buying DVDs. It takes a log of bandwidth to download a movie at DVD quality. I am not sure that people will be willing to watch movies in the current 320x240 iTunes TV show resolution.
Forth, I am not sure enough people really want a movie download service. Right now Video On Demand systems are not as well used as cable companies expected. All of these systems let people play and pause the movies. Why would a movie download system have a bigger impact that Video On Demand which is already hooked up to customers TV sets.
I am not sure what Apple will announce. If they do announce a video download system people will be falling all over themselves to say this is the end of home movies as we have known it. I am just not sure Apple can be the company that can make that change.
