More Apple Video Downloadable Content, Don’t Believe the Hype

Apple adds NBC, SciFi, USA to iTMS – The Unofficial Apple Weblog (TUAW): It looks as though Apple is adding to their iTunes video download library by including more shows from NBC, USA, SciFi and Disney. In total they will be adding 11 new shows.

From CNET: “We’re thrilled to expand the iTunes video catalog with 11 popular TV shows,” Steve Jobs, Apple chief executive, said in a statement. Apple’s TV catalog now includes 16 shows.

Not to be a cynic here, but do I really want to pay $1.99 to watch “popular” shows like the 1950’s cop show “Dragnet” or can I live even one day without the cutting edge humor of “The Tonight Show with Jay Leno?” And of course unless I’m watching these programs on anything other than a Video iPod I’m going to HATE the low res quality of the programming.

Although the promise of video on demand is great and Steve jobs is “thrilled,” about this latest development for Apple, don’t believe the hype. Low res video downloads of more 2nd rate programming will not sell at $1.99. It will be a novelty to put one episode of Dragnet on your Video iPod so that you can and show it off to your friends, but in it’s current incarnation TV downloads from Apple will not fly in the long run.

TiVo’s potential (if they can avoid being sued) of letting you put ANYTHING that YOU want (not that they want you to buy) for no additional cost on your iPod is the better value proposition. Or better yet, why not just copy ANY show that I want to record today from my Microsoft Media Center PC and watch it on MY laptop, LEGALLY and at NO ADDITIONAL cost to me? I’ve never been a fan of either the Video iPod or the Portable Media Centers though — the screens are too tiny and it’s not a very enjoyable way to watch TV.

iTunes TV downloads are a novelty. They will be downloaded by the niche diehard Appleheaded types, and the kids will most likely download the music videos, but as it stands now with the low res quality programming this thing will not be the hit that iTunes’ music has been — no matter how much Steve Jobs says he’s “thrilled,” and tries to call “Dragnet” and “Alfred Hitchcock Presents” “popular.”

Certainly the fact that Apple has sold more than 3 million videos since their debut on October 12 is impressive. But it would surprise me to see anything less coming from one of the strongest marketing brands in the world with a certain number of followers who would buy whatever they sold no matter what. The question is will this thing explode the way their iTunes has for music and that I tend to doubt.

Back in 2003 it took Apple eight weeks to sell 5 million iTunes downloads. Here we are three years later with a substantially more popular brand and they have sold 3 million video downloads in a similar amount of time. Some would point to this and say that Apple has another hit on it’s hands and that we should expect similar results. I think time will show though that the market for this product is much more limited and that after the initial buzz dies down that the growth subsides substantially. Of course Apple could always pressure the studios to offer us high res HDTV versions of their shows which could help in the future, but as it stands now this will not be the hit that people might assume based on the early 3 million download numbers.

It took Apple computer 11 months to sell 50 million songs and then another four months to get them to 100 million songs. If you ascribe a 60% of iTunes music proportion (based on the comparable 8 week numbers between the two products’ launch) then you might expect to see 30 million video downloads by September of next year and 60 million video downloads by January of 2007. These are numbers that you will not see and I will be back in both September 2006 and January 2007 to see how right or wrong I was.

Of course Apple is smart and they may course correct as time goes on and offer HDTV downloads which could potentially change the landscape.

Thanks, Steve.

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  1. Josh says:

    It seems pretty clear to me that Apple’s video download is just a way to get their foot in the door with the TV folks. I (and a lot of other people) expect Apple to come out with a new version of their Front Row software and go into direct competition with TiVo and MCE.

  2. Thomas Hawk says:

    Josh, certainly this product has potential to evolve and if it does it may have more success. But in it’s current form it will not succeed. Ironically though, adding a PVR to their Front Row platform (which is desperately needed if they hope for it to succeed) would only serve to undercut their iTunes video downloads. It will be interesting to see what they come up with.

  3. Wizard Prang says:

    Once again the entertainment business is trying to sell us the same stuff again and again…

    I ain’t buying it twice. Thank God for TiVo

  4. says:

    If people really wanted to watch high resolution shows on demand, then Apple would make a product for it. People would obviously prefer to watch lower quality copies of the movies on their Front Row Apple computers while sitting on their couch. Since Apple controls the screen size, they don’t need to worry about how these might look once you blow them up on the 60″ screen. At some point in the future people might want to be able to watch high def movies on demand, but clearly not until Steve Jobs says so.

  5. Dwight Brown says:

    “Not to be a cynic here, but do I really want to pay $1.99 to watch “popular” shows like the 1950’s cop show “Dragnet” or can I live even one day without the cutting edge humor of “The Tonight Show with Jay Leno?””

    I took a look at *Dragnet* this morning. Apple’s price for all 17 episodes is $27.99.

    Per, I can get the DVD set of the same episodes for $29.95 (including shipping), which includes a bonus CD as well as actual physical media.

    I want to like what Apple’s doing, but I know which choice makes more sense to me.

  6. Don’t people know that there are other ways of getting content? I wanna know who’s buying these video downloads.

    Must be nice to be able to buy a $300 video iPod and pay $2 for a poor quality video.

    What people don’t know is that there are cheaper and just-as-efficient ways to get content on your portable device.

    Here’s my forecast on FrontRow:
    Apples’ gonna market the hell out of it and people are gonna buy because it’s freakin’ Apple. They’ve never heard of Media Center. They’ve never heard of portable media center’s. They’ve never heard of extenders. Microsoft better step up to the plate.

  7. Elinesca says:

    “They will be downloaded by the niche diehard Appleheaded types, and the kids will most likely download the music videos”

    Mr. Hawk. Would you swop your pc for an apple? No? Does that make you a mainstream diehard pcheaded dude?


  8. Thomas Hawk says:

    Ms. Elinesca:

    I would not swap my Media Center PC for an Apple PC because my Media Center PC can record TV and and iMac can not. Further, I prefer to consume my digital media on my 43″ plasma and not have a seperate unnecessary 20inch monitor built into the PC that I use to consume it. In order to best run this superior Media Center PC it is better to have other PC’s connected to it than Macs. I also use PCs at work thus the learning curve is easier when I use them at home.

    I’m not saying there is not a place in the world for Macs — there is. There are those of course that blindly buy whatever Apple sells.

    Am I a “mainstream diehard pcheaded dude?” Yep, pretty much. I’d also categorize me as a diehard HDTVheaded individual and even more than both of the both a diehard Flickrheaded individual as well. In fact, I’d also have to call you a little flickrheaded yourself.

  9. Elinesca says:

    Mr. Diehardpchead,
    there are of course those who blindly buy whatever some other company sells, too, because they have no choice. I’m not sure how that came to be, maybe you can tell me?

    Or maybe it’s time to do some Flickring instead.
    You’re right, we’re both diehard Flickrheaded individuals. That’s why it surprises me to hear that you have so much time to watch TV, but given that I don’t, it probably explains why I must defend Apple’s honor when I can.


  10. Thomas Hawk says:

    Flickering is more fun than TV in my opinion and you’re right, for someone who watches so little TV I do seem to obsess on it quite a bit.

  11. discfree says:

    While all the Apple fanboys are paying $9.99 to download an episode of Conan O’Brien, I’ll be watching Letterman on TiVo for free.

  12. Charlie Owen says:

    Thomas, it’s important to remember the market forces at play here — simply because Apples apporach to a consumption model doesn’t appeal to some folks doesn’t automatically correlate into failure of their approach.

    It’s also a long (and I do mean loonnnggg) term bet. But not without short term gains. I imagine the mom-n-pop video blogs available from iTunes are getting a boost in viewers from the fact Apple has marquee content drawing folks in.

  13. Thomas Hawk says:

    Charlie, your point is well taken. I do tend to overly personalize my market analysis sometimes and put too much of my own feelings into the overall market mix and there are many people, in fact most people, who are nothing like me, an early adopter and digital technology obsessed individual.

    I’m sure Apple has spent gobs of money on market research and feel that there is a market for low res content at $1.99 a pop. They don’t spend the millions of dollars launching something like this without doing some homework.

    Certainly mom and pop video blogs and other free type microcontent will benefit from this move just as podcasters have benefited from being added to iTunes.

    Still though, despite my biases, I do believe that the actual product they are offering for sale is not compelling enough to appeal to anything but a limited audience of Apple fans based on this early initial hype. Time will tell of course and I’ll revisit this product in the future and measure it’s success.

    The ultimate problem with this approach is the $1.99. $.99 was a valid price point for a legal song because some people felt that buying songs from iTunes was legal and “doing the right thing.” Still others were frightened over the fear of an RIAA lawsuit (as microscopic a potential this is statistically speaking) over to iTunes. Still others were fed up with the spyware and adware and bogus songs seeded on P2P. Hence iTunes became the defacto winner for a proportion (most music on iPods of course is not purchased from iTunes) of music.

    iPod video is different. As “free” music is available to compete with iTunes still today just as Bittorrent is here to offer us “free” TV today, the difference is that there are a number of clean and legal other alternatives to getting TV off your, well TV. In addition to things like Orb and Slingbox you have TiVo and TiVoToGo. As you are well aware of course anyone can copy TV from their Media Center PC and put it on a portable device or a laptop (although I do anticipate this changing at least with some HDTV content with Vista, I hope you still allow non-HDTV programming to be copied).

    My thoughts are with a lot of other free (well not really free but at no additional cost to people) avenues out there to get TV content, people will not choose to pay the $1.99.

    Also when you buy a track from iTunes you can use it on any platform. You can put it on your iPod, you can listen to it on your PC at home, you can stream it to your living room, you can play it in your car with some cheap devices, etc. And although the format is not exactly WAV, the differential in quality is small.

    With TV on the other hand, this is primarily a visual medium. While the poor low res quality won’t matter on a portable, it very much will matter on a PC screen and it will most definitely matter on a large screen TV. Thus this content will have a much narrower band of use than the music sold from iTunes.

    Certainly I have not done the market research that Apple has, but I suspect you see them change course over the next year and I suspect that beyond this early 3 million pop you do not see the type of growth that they experienced with iTunes.

    Time will tell of course.

    Of course in all of this the profit to Apple comes from selling Video iPods and to a lesser degree the new iMac more than the TV itself (which I would suspect they make nothing on). The problem here will be that the demand for small screen portable TV will be small and the iMac is a horriblle expensive product with a built in screen that is only optimal for watching television for college kids in dorms. Opening up Front Row to the Mac Mini would help (and they will of course do this shortly), but I suspect that hardware sales of Video iPods and iMacs will pale in comparison to sales of iPods.