The big flap today is yet another resurfacing of the notion of an aggressive move by Apple into the TV space. On one hand, the move seems not only logical but inevitable. Apple’s future obviously depends on its ability to keep launching new spaces to counteract the fact that its high-end model will always lose market share over time. Look at smartphones and, increasingly, tablets. On the other hand, TV isn’t the ideal place for Apple to go.
Television is an appliance married to a broadcast model. As a viewing culture, we expect things to “be on” at a specific time and we expect that there will be a regular refreshing of content. Sure there’s time-shift viewing through DVR and VoD, and sure there’s long-tailed content to fill in the annoying periods when nothing seems worth watching, but survey after survey shows that the primary value of television is still the link with broadcast network material. Device-based viewing may be adding to total viewing time but it doesn’t seem to be subtracting from normal channelized content consumption.
If you look at this from the perspective of a “TV” appliance player, or prospective player, the obvious question is how you differentiate when most of what the viewer wants is table stakes. All of the recent experiments with alternative TV have taken the tack of chasing the “nothing’s on” market, the viewers who don’t find anything on the schedule for a given timeslot that they’re prepared to watch. Most also take a swipe at the time-shift viewer, trying to figure out how to best address the people who aren’t around when the stuff they want to watch is scheduled.
My modeling has always suggested that the only fruitful path toward an Apple-TV-like product would be built around what we could call “virtual channels”. Everyone gets a plethora of stuff with their TV contract, most of which they will literally see only snippets of as they tune past it with their remotes. And that’s good because they’d hate the material; it’s just part of the bundle. But suppose you have a channel guide that starts with classification of your viewing “mood”. Suppose it learns what you watch under specific conditions, and suppose it then lays out these virtual mood channels by grabbing shows in real time, shows in deferred viewing, and downloaded long-tailed content. It lets you shuffle things around, jump to a different mood. You might actually like it. But would Apple find it a success?
One reason it probably wouldn’t is that it still has that nagging problem of commercials/ads. If you personalize TV you break the “Lucy is on at 9” viewing model that guarantees a rapt audience for a given show, and audience advertisers will pay for. Experience with online ads shows that while you can still target ads to people, perhaps even better, with online viewing, advertisers use the better targeting to reduce the people they target, and thus reduce cost. The overspray of commercials helps fund shows; take it away and you have less content. That shortage works against Apple’s desire to have pricing power and high margins in its ecosystems.
The other problem is that all of this is more a “service” than a product. An Apple TV is at risk to being nothing more than a large-format thin client. Apple doesn’t want to build that sort of things, not in TV and especially not in phones and tablets. How do they adopt a TV model that demands that role, whose features and capabilities are necessarily developed in “the cloud”, and not have that model creep into spaces Apple needs to protect?
Could they move to a pure fee-for-play TV business? iTunes for TV? The problem with that is that the cost would have to compete with the broadcast models of cable and satellite companies, and it’s hard to see how Apple could pay content providers and make a nice profit if they discounted the programming enough to make the iTunes approach even half-again as expensive as broadcast subscriptions.
I think Apple is earnestly trying to figure this out, as the WSJ article today suggests, but I think they’re looking deeper into the business model than into the TV design. They need to figure out a way of making an appliance-centric service out of what’s always been a network-centric service. That’s going to be VERY hard, and if they fail then they risk a lot of their aura of market invincibility. So maybe the fact this is taking so long means that it’s got no good outcomes possible. Not for Apple, for Google, or for anyone.