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Apple made a ton of announcements last week, including a new iPod Nano, iPod Shuffle, iPod Touch and Apple TV, as well as new versions of iOS and iTunes. These are all interesting new products but, in my mind, the new Apple TV stands out from all the others because of its potential future impact to Apple and the entire media industry. Here’s why.
Up until now, Apple has only let customers buy content from iTunes. You load iTunes on your Windows or Mac notebook, then either rip your CDs or go to iTunes Store and purchase songs, videos and shows. You then download music, audio, photos and video via the sync cable to your computer. (Newer iPhones and the iPad can access the iTunes Store wirelessly). But, in all cases, you purchased all of your content from the iTunes Store. You couldn’t rent it like you do when you get a movie from places such as Blockbuster (individual rental) or Netflix (subscription or group rental).
With the new Apple TV, Apple is offering an entirely new way to obtain rich media: they are renting it to users.
Apple TV (should really be called iMedia) accesses remote content stored on a number of servers via the Internet, as well as remote content stored in the user’s iTunes library. It then streams the content to the user’s high-definition TV, iPad, iPod Touch or iPhone. This content is rented out on an individual basis to the viewing devices, although I suspect at some point Apple will offer packaged services via a subscription service.
Also note that there’s a wall preventing other devices such as those using Google Android and RIM BlackBerry to play in this garden. Users can’t (not yet, anyway) sync their iTunes library to non-Apple devices. I hope that Apple will soon remove this restriction now that iTunes has become the de facto library for music and video for many hundreds of millions of users. Allowing any device to connect with iTunes would increase sales of iTunes content.
Apple vs. Amazon
Apple vs. Amazon
The battle here is on many fronts. But, so far as the “rent versus buy” distribution of rich media content such as movies, TV shows, videos, music and photos is concerned, the big battle is likely looming between Amazon and Apple (but it could also include Comcast or Time Warner). Amazon doesn’t sell smartphones, but they do sell Kindle e-readers. It wouldn’t be much of a jump for them to step up and produce a full-color tablet and go head-to-head with Apple’s iPad.
But, more importantly, Apple is focused on providing a “walled garden” to content. Apple’s thesis is: “We provide great content on great devices. You can access that content on any device as long as it’s made by Apple. You can get remote access to really great content as long as you access it through us.”
Amazon has a very different philosophy: “We provide great content for any device.” Hmm, that’s the same initial statement. “You can access that content on any device and you can buy or rent content from us or anyone else. We’re open. Apple is closed.”
Remote Access Rental via Streaming
Remote access rental via streaming
There are huge shifts going on in the distribution of rich media. We’re moving from a buy model to a rental model. The result is the same: you get to hear or view what you want, when you want. But local ownership via downloading-while not going away-is being slowly replaced by remote access rental via streaming.
In the local ownership model, content is made available and stored in a library such as iTunes Store, Amazon store, etc. Users then select what they want to buy and download it to their local devices. In the Apple iTunes case, users select a TV show, song or video and buy it. The selected content is downloaded into your Windows or Mac notebook and then is further downloaded to your iPod, iPhone or iPad.
In the remote access (that is, rental) model, content is also made available through the Internet. Users select what content they would like to listen to or view and the content is then streamed to their device. Ownership is retained by the content provider. You simply get temporary access for which you pay either a rental fee or a subscription.
Pandora, Rhapsody and Sirius XM
Pandora, Rhapsody and Sirius XM
We’ve already seen a good example of how remote access can be successful with the acceptance of Pandora, the streaming service that tries to personalize channels of music streams based on your personal interests. Another good example is the approach taken by RealNetworks for their Rhapsody service provided through Yahoo. And, of course, another great of streaming remote access rental is Sirius XM, which is slowly migrating out of satellite-to-car radio to being a full-fledged subscription service on many devices-including notebooks, handhelds and tablets.
While remote access via streaming works, there are still limitations in what you can access. While Apple provides access to recently broadcast shows (for example, access to “Modern Family” the next day), there is still not a generic way to access recently broadcast content from the previous night.
In the end, I suspect users will desire to always own some of their favorite rich media content such as their favorite TV show, music or movie. But, for much of the time, users will use remote access content rental to get what they want when they want it, via streaming from one or more services.
J. Gerry Purdy, Ph.D. is Principal Analyst of Mobile & Wireless at MobileTrax LLC. As a nationally recognized industry authority, Dr. Purdy focuses on monitoring and analyzing emerging trends, technologies and market behavior in the mobile computing and wireless data communications industry in North America. Dr. Purdy is an “edge of network” analyst looking at devices, applications and services, as well as wireless connectivity to those devices. Dr. Purdy provides critical insights regarding mobile and wireless devices, wireless data communications and connection to the infrastructure that powers the data in the wireless handheld. He is author of the column Inside Mobile & Wireless that provides industry insights and is read by over 100,000 people a month.
Dr. Purdy continues to be affiliated with the venture capital industry as well. He currently is Managing Director at Yosemite Ventures. And he spent five years as a Venture Advisor for Diamondhead Ventures in Menlo Park where he identified, attracted and recommended investments in emerging companies in mobile and wireless. He has had a prior affiliation with East Peak Advisors and, subsequently, following their acquisition, with FBR Capital Markets. For more than 16 years, Dr. Purdy has been consulting, speaking, researching, networking, writing and developing state-of-the-art concepts that challenge people’s mind-sets, as well as developing new ways of thinking and forecasting in the mobile computing and wireless data arenas. Often quoted, Dr. Purdy’s ideas and opinions are followed closely by thought leaders in the mobile and wireless industry. He is author of three books as well.
Dr. Purdy currently is a member of the Program Advisory Board of the Consumer Electronics Association (CEA) which produces CES, one of the largest trade shows in the world. He is a frequent moderator at CTIA conferences and GSM Mobile World Congress. He also is a member of the Board of the Atlanta Wireless Technology Forum. Dr. Purdy has a B.S. degree in Engineering Physics from University of Tennessee, a M.S. degree in Computer Science from UCLA, and a Ph.D. in Computer Science and Exercise Physiology from Stanford University. He can be reached at [email protected].
Disclosure Statement: From time to time, I may have a direct or indirect equity position in a company that is mentioned in this column. If that situation happens, then I’ll disclose it at that time.