Apple TV's Future?

[kiranmk2]

With 1080p it doesn't matter whether can can see the difference between 720p and 1080p - the digital camera "megapixel battle" showed that people assume the bigger number the better, so these days everything "needs" 1080p on the box to sell to the mass market.

See also "dynamic contrast ratio" and 200 Hz screens - pointless marketing terms.

 

[idunn]

ATV & Apple

There are a lot of good ideas on this thread, which Apple should pay attention to. They really should, if they wish their iTunes and ATV franchise to survive and thrive.

What Apple will soon discover is that the increasing size of HDTV televisions, the rapidly decreasing prices of same, increasing library of Blue-Ray media, rapidly decreasing prices of same, will effectively do an end run around their business model.

I love iTunes for its convenience. I much prefer shopping online and having something now (relatively) than running down to the store, waiting for NetFlix, or a physical delivery from Amazon. Moreover, it is much nicer to have all media easily accessed with little more than a click of a button than the (admittedly minor) hassle of sorting through DVDs or CDs.

HOWEVER, and I am probably not alone in this, all I want is to watch what I want when I want. In offering this, Apple and every other content provider has yet to deliver. In Apple's case they have yet to offer 1080p media, so their service worthless for those increasingly demanding such a standard. Also, due the limited size of its internal hard drive, ATV is not the simple plug and play device it purports to be; once someone fills that hard drive (which will invariably happen) they find themselves in the unhappy position of learning more about IT than ever wanting to know. A good many people can just about handle putting a Blue-Ray disc in the slot, and while they might appreciate having a unified library and download on demand, will not be willing (or able) to jump through any hoops to achieve it. Even if willing to forsake 1080p quality (which they increasingly will not), they'll stick with what they can do and understand, with shelfs full of Blue-Ray media to prove it.

Apple could solve a lot of this, and increase their revenue, by realizing they have this back asswards. Rather than on what they want to offer, their business model will depend on most easily getting the desired media up on someone's large HDTV television. The provider that does that best will prevail; if iTunes and ATV cannot or will not they will rapidly fade from existence.

I'm also not buying the issue of copyrights in this matter. As important as they are, and of concern to studios and all providers, it should be self-evident in this age of technology that preserving the broader audience is the best they can hope for. There was a recent program on '60 Minutes' about the trouble they have with guys with cameras in theaters. People willing to watch such low quality dredge will have no problem with the offering of someone creative enough to do a screen capture. But the broader, larger audience will likely happily pay a fair price for quality and convenience. Outfits such as Hulu point a certain (limited) direction forward; in time most media will probably be electronically delivered. Those concerned with preserving existing business models are still living in the 20th century. Online media is still treated like a poor stepchild to broadcast.

Quality and a measure of convenience presently comes in the form of Blue-Ray discs, or watching what is broadcast. Convenience can be had via iTunes and ATV until running up against the space limitations of ATV. If wanting any program extant at the push of a button, no one currently offers that.

Apple could get a lot closer to it by not only offering 1080p through ATV, but also via iTunes. That means a compressed movie file of about 8GB, but even via the lower echelon of 'broadband' it is feasible. But Apple also needs to seriously address the space limitations of ATV. About the only reason I can see to own one is to download HD content they do not otherwise offer. But one might notice they are rapidly increasing HD offerings for direct download, sans ATV. Either way, one will soon max out the storage capacity of an ATV, with the average customer then flummoxed in what to do then. That is unacceptable. Apple has made their reputation on ease of use, and this one critical area where they need to excel in it. They should offer 'plug and play' for all the storage one might ever want.

Then also the question of streaming content. Some movies I'll hold onto forever. Other movies or tv programs are of but passing interest, perhaps watched but once. In some cases not at all sure I want to buy them. One option I would like, is to be able to purchase a rented movie, rather than have it just expire. At minimum it saves having to download it twice, again just that much more convenient. It might not be a bad business model for Apple, in effect being a broadcaster of a wide range of media one also has the option of buying. They could opt either to charge for the initial rental, or perhaps free with inclusion of advertising.

One thing I'm fairly sure of, ATV cannot exist much longer as it is.

 

[fpnc]

There are a lot of good ideas on this thread, which Apple should pay attention to. They really should, if they wish their iTunes and ATV franchise to survive and thrive...

Your entire post seems to ignore that fact that it is the media companies and not Apple that control the quality and cost of the movies that are being offered through the iTunes Store. Apple can't just say, "Oh, let's offer everything in 1080p and at a price that is competitive with Blu-ray discs." It's no coincidence that all of the online media outlets are basically offering the same content, at the same resolutions, and at the same prices (or nearly so, exceptions are probably being done for marketing tests and for special promotions). Furthermore, the movie companies don't want Apple (or anyone else for that matter) to grow to the same level of dominance that Apple has already achieved with music on the iTunes Store.

As for your comment about 8GB downloads being feasible for the "lower echelon of broadband," well I think that's somewhat questionable. The average broadband speed in the U.S. is about 5Mbps which means that an 8GB download would take about 4 hours (at best and while consuming 100% of a user's bandwidth). Practically speaking, you'd have to begin the download the night before you wanted to view the movie which might be okay except that if everyone started to use bandwidth at that rate the internet would basically slow to a crawl. That's why I suggested in an earlier post that it could be another 5 years before quality, high-bit-rate, 1080p streaming and delivery becomes commonplace here in the U.S.

Note this statement from the Communications Workers of America (CWA):

“Between 2007 and 2009, the average download speed in the United States has increased by only 1.6 megabits per second (mbps), from 3.5 mbps in 2007 to 5.1 mbps in 2009,” the CWA explains in its report. “At this rate, it will take the United States 15 years to catch up with current Internet speeds in South Korea, the country with the fastest average Internet connections.”

http://digitaldaily.allthingsd.com/20090826/cwa/

South Korea has an average speed just over 20Mbps which is a speed at which quality 1080p should become practical (and then some). In an earlier post I estimated that a broadband speed of somewhere between 8Mbps and 12Mbps would be required to support 1080p streaming ("instant" on). If you take the rates of improvement cited by CWA that means it will be another four years before the average user in the U.S. will have the bandwidth to support that type of service.

In any case, I do think Apple will update the Apple TV hardware within the next year. When they do that it will make sense for them to support 1080p decoding on the Apple TV, but that doesn't mean that they will immediately offer downloads at 1080p.

So, in 2010 expect a new Apple TV with 1080p decode support, larger storage options (or interface to a high-capacity, standalone iTunes Media server), and possibly some support for third-party applications akin to the App Store for the iPhone/iPod touch (sandboxed, controlled, and not a completely open platform).

 

[HobeSoundDarryl]

Your entire post seems to ignore that fact that it is the media companies and not Apple that control the quality and cost of the movies that are being offered through the iTunes Store. Apple can't just say, "Oh, let's offer everything in 1080p and at a price that is competitive with Blu-ray discs." It's no coincidence that all of the online media outlets are basically offering the same content, at the same resolutions, and at the same prices (or nearly so, exceptions are probably being done for marketing tests and for special promotions).

If the current TV had been 1080p capable from the beginning. And if the mass market chose TVs for the last few years instead of BD players and (later purchaser) DVD players such that a 1080p TV was as prevalent at BD players are today, the studios would experiement with 1080p downloads, find that they will outsell handicapped 720p, and 1080p content would be rapidly growing on iTunes.

The studios just want to sell their content- as much as possible. A few studios chose to exclusively support HD-DVD and not BD. Then when HD-DVD as a format folded, they changed their minds and switched to BD. If BD failed but a 1080p TV succeeded (that is, it sold big time to the masses), how long do you think the studios could resist as a group?

1080p podcasts would come out. 1080p captures from DVRs would start showing up as "alternatives". Etc. The pressure to compete would build. The internal pressure for profit would build. And boom, 1080p experiments would begin on iTunes. If they found that 1080p outsold 720p, more 1080p content would be added.

However, "as is", it's impossible to play 1080p studio content on hardware that can't do it anyway. So there is little reason to experiment with 1080p content on iTunes, and thus the Studios push their best to mediums (and hardware) that can play it back (and where the money is).

Other than the fear of Apple dominating the video industry like they are dominating the music industry, the studios just want to sell their stuff. And if TV was as appealing for the home as iPods and iPhones are for what they do, the Studios would have little choice but to play ball with Apple.

This is Apple's next big thing to take... or to lose.

As to the broadband problem. That is a real problem for the U.S. But some of those kinds of problems aren't addressed until they become a revenue problem for broadband carriers (much like AT&T looks like they are finally feeling enough pressure to actually have to put some serious money into building out their network). Some parts of the world- and some parts of this country- are not so limited in high-speed broadband. So, opportunities for 1080p broadband distribution on a global scale have existed for Apple for some time.

If we have to wait until the U.S. companies that control the broadband pipes will expand the plumbing because they want to do so, even 5 years probably won't be enough. But making 1080p content available should not be delayed because the likes of Comcasts and AT&Ts and others have not yet given "us" the bandwidth.

 

[idunn]

I wish

I wish I had 5Mps of download speed. You don't even want to hear what a fight it has been with Qwest to get a reliable 1.5Mps (in actuality 1.3Mps, at best). I consider that lower echelon 'broadband.' Yet I can still download the average movie (not in HD), say 1.2GB, in less than 3 hours. Hardly wonderful, but given my location it is still preferable to driving somewhere, etc. I have downloaded HD content from iTunes, and would 1080p if it were available. Doesn't require 100% of internet resources, but does slow all else down. My understanding that at least in metro areas download speeds are appreciably better, if certainly not matching that of Japan or South Korea.

Be that as it may, Apple still has to contend with the realities on the ground. The average customer doesn't know or care what their licensing agreement with studios may be, only in what provides them the best overall experience. If that means forsaking iTunes and ATV for Blue Ray media, they will. Apple could help its cause by at minimum allowing their ATV to transmit 1080p. If not knowing the ins and outs of their licensing agreements, my presumption that content providers will be happiest with the widest possible circulation at the highest possible price. They do themselves no favors in short sheeting online providers, such as Apple.

Personally, my two biggest issues with ATV are problematic storage options and the lack of 1080p, and probably not alone in this. Allowance for such sites as Hulu would be nice as well. But this is academic, the average customer wants the easiest solution towards what they want on the HDTV set, favoring those offering results rather than excuses.

 

[kiranmk2]

The thing is Apple was wise enough to make the iPod support not only AAC, but also the popular mp3 format. This meant people could rip their CDs to their iPod and once they enjoyed having all their music with them they would be encouraged to use the iTunes store. The problem of a similar approach for the ATV is that it is technically illegal to rip your DVDs at the moment which I guess is why Apple don't support the .mkv format. It's a shame as .mkv has a lot of advantages over m4v including DTS audio, but it is used a lot for pirated material.

 

[NightStorm]

The thing is Apple was wise enough to make the iPod support not only AAC, but also the popular mp3 format. This meant people could rip their CDs to their iPod and once they enjoyed having all their music with them they would be encouraged to use the iTunes store. The problem of a similar approach for the ATV is that it is technically illegal to rip your DVDs at the moment which I guess is why Apple don't support the .mkv format. It's a shame as .mkv has a lot of advantages over m4v including DTS audio, but it is used a lot for pirated material.

All it would take to get DTS in the MP4 container is someone writing the standard. That's how we were finally able to get AC3 in it a few years back.

 

[JonHimself]

I've spent a good amount of time reading through this thread and even though it's just my opinion and it's no more or less valid than anyone elses, I think that a lot of people not only want this device to be something that I don't think Apple intends it to be but they also seem to not have a grasp of the largest group of people that would be purchasing this device.

I don't think this device is meant to be a replacement for all of our current media devices but (in traditional Apple fasion) represents a NEW media device. From Apple's perspective (in my opinion) they want people to purchase their movies and tv shows from iTunes (more on that later). I don't think they're intending to create one device to rule them all, but rather one device to create a new way of watching tv (Tv. Reinvented (copyright))

My second point is who the device is targetted at. I see a lot of people mentioning that it needs DVR, it needs Bluray, it needs 1080P, it needs 5.1 and 7.1 surround sound, it needs to support MKV files and DTS audio. Now consider the following sentence, "I won't purchase an AppleTV until it supports MKV files, decoding of DTS audio and displays full 1080p resolutions" NOW consider repeating that sentence to your boyfriend/girlfriend, coworkers, people in Best Buy asking what the difference between 1080p, 802.11n, and 1TB or asking if LCD is the same thing as HD and think about how much of that statement they would understand. I'm a tech nerd and love to be on the cutting edge but am also realistic enough to realize that a good portion of people don't share the enthusiasm and probably are content with 720p and would never even notice the difference. (As an example and not at all representative of anything, my parents recently called me to say they finally got HD. When I showed up they had an LCD, HD satellite received but had it hooked up with composite cables, had the picture cropped and didn't even realize that NBC had a standard definition channel AND an HD channel).

Apple products (at least their most recent media-related devices) are not about being the most technologically advanced but seem to be more about getting the most amount of people to be able to use their products with little to no trouble. The iPod doesn't support all the codecs people want it to, probably doesn't have the best DAC.. the iPhone doesn't have the fastest processor, the best resolution, the best camera, etc.. and the Apple TV doesn't support full 1080p, every (or even some) video codecs or allow us to attach external hard drives, etc. Being restricted hasn't seemed to hamper the other two devices in terms of success.

For me, the solution is simple and isn't entirely in Apple's hands (which I think is very important in looking at why the device has taken so long to be pushed/advertised/adopted). In order for the AppleTV to "succeed" they need to do the following - slight bump in specs, not to 1080p but just to be able to handle 720p flawlessly, increased hard drive size to reduce dependence on iTunes, some kind of App Store (things like adding weather, customizing the screen saver/adopting a "home" screen, MLB at bat, news feeds, etc), subscription service for movies and tv shows and a big advertising campaigning.

Unfortunately, I think the most important part of that (the content) is out of their hands. I will admit that I download all of my TV shows in HD mkv files and spend the time converting and tagging them to get them to work with AppleTV. Movies are done similarly, though I do find I'm purchasing more and more Bluray movies, ripping them and storing them. If Apple was able to offer a subscription service (even if it was 30-40$/month) and all of my content that I download in HD was available in HD, I would sign-up (that's the "new" way for Apple - subscription iTunes will mostly replace my cable bill and my need to purchase movies... doesn't cover live sports, but this isn't a perfect solution, I don't think there ever will be). I think the biggest piece of the puzzle is easily accessible content and right now it's hindered by hard-drive size (for longer-term storage) and availability. A subcription service limits your reliance on hard drive size and getting the networks to sign-up helps with the availability.

Anyways, this became one of those long posts that will likely get glazed over, sorry.

 

[fpnc]

JonHimself is correct on almost every point.

I do think, however, that Apple will sneak in 1080p in the next hardware update to the Apple TV. What I mean is that it might have 1080p capabilities but there won't be any introduction of 1080p to the iTunes Store. Kind of like the situation with the iPhone 3GS and latest iPod touch, which can both play 720p videos and yet iTunes won't allow you to transfer such content to either unit (but I'll admit that there's really little point to watching HD on the iPhone/iPod's small screen).

 

[Tilpots]

If Apple was able to offer a subscription service (even if it was 30-40$/month) and all of my content that I download in HD was available in HD, I would sign-up (that's the "new" way for Apple - subscription iTunes will mostly replace my cable bill and my need to purchase movies... doesn't cover live sports, but this isn't a perfect solution, I don't think there ever will be). I think the biggest piece of the puzzle is easily accessible content and right now it's hindered by hard-drive size (for longer-term storage) and availability. A subcription service limits your reliance on hard drive size and getting the networks to sign-up helps with the availability.

Live sports and live news. Include a tuner and DVR into the AppleTV and these are no longer obstacles. Almost every major sporting event and major news event is covered by the big networks. These networks broadcast their signal FOR FREE into the vast majority of American homes. Until they put broadcast TV in the AppleTV, the "non tech people" will never, ever buy this equipment en masse.

If you include the DVR, and only if you include the DVR, you can then put together an iTunes subscription package of what the cable and satellite companies offer that will prompt enough people to drop cable or satellite and buy in to Apple's iTMS. The one cannot coexist successfully without the other. At least not until every content provider can provide their viewers with live streams of their programming.

A DVR does not add a significant cost, it does not take away sales from the iTMS (exactly the opposite), and it gives consumers a choice in how they receive their home entertainment. An iPhone replaces a traditional phone with 10x the upside, an iPod replaces a walkman and a boom box among many other things, the AppleTV replaces nothing currently, and until it does, it will remain a failure. My use of the word failure is not meant to start an argument. It's the only product we never see sales figure touted. It's the only general consumer product that gets zero advertising. It's the only product Apple produces which the distance themselves from by using the term "hobby." If they saw it as a success, wouldn't Apple treat it differently?

 

[JonHimself]

Live sports and live news. Include a tuner and DVR into the AppleTV and these are no longer obstacles. Almost every major sporting event and major news event is covered by the big networks. These networks broadcast their signal FOR FREE into the vast majority of American homes. Until they put broadcast TV in the AppleTV, the "non tech people" will never, ever buy this equipment en masse.

If you include the DVR, and only if you include the DVR, you can then put together an iTunes subscription package of what the cable and satellite companies offer that will prompt enough people to drop cable or satellite and buy in to Apple's iTMS. The one cannot coexist successfully without the other. At least not until every content provider can provide their viewers with live streams of their programming.

A DVR does not add a significant cost, it does not take away sales from the iTMS (exactly the opposite), and it gives consumers a choice in how they receive their home entertainment. An iPhone replaces a traditional phone with 10x the upside, an iPod replaces a walkman and a boom box among many other things, the AppleTV replaces nothing currently, and until it does, it will remain a failure. My use of the word failure is not meant to start an argument. It's the only product we never see sales figure touted. It's the only general consumer product that gets zero advertising. It's the only product Apple produces which the distance themselves from by using the term "hobby." If they saw it as a success, wouldn't Apple treat it differently?

Live sports/news are great examples and absolutely will prevent mass adoptions. However - with things like MLB At Bat available as a plug-in and perhaps NHL Centre Ice (again, hypothetical plug-in) that is potentially one LESS hurdle and would prevent the need for a DVR. That opens a whole other debate about blackout restrictions etc etc.. but if all major sports got on board with that (which they probably will eventually - maybe not AppleTV but certainly live online video streaming) it would help. Even news networks could do something similar. There have been broadcasts available live online and it wouldn't be a stretch for the major news shows (maybe not all the locals) to offer it online simultaneously. Just options.
You are right though, not having live sports/news will prevent A LOT of people from getting on board with a complete replacement/rethinking of how they watch tv now.

EDIT: How would a DVR promote sales in the iTunes store? I'm just wondering because if I can record and watch shows whenever I want I don't see an incentive to ALSO buy them from iTunes.

 

[Tilpots]

Live sports/news are great examples and absolutely will prevent mass adoptions. However - with things like MLB At Bat available as a plug-in and perhaps NHL Centre Ice (again, hypothetical plug-in) that is potentially one LESS hurdle and would prevent the need for a DVR. That opens a whole other debate about blackout restrictions etc etc.. but if all major sports got on board with that (which they probably will eventually - maybe not AppleTV but certainly live online video streaming) it would help. Even news networks could do something similar. There have been broadcasts available live online and it wouldn't be a stretch for the major news shows (maybe not all the locals) to offer it online simultaneously. Just options.
You are right though, not having live sports/news will prevent A LOT of people from getting on board with a complete replacement/rethinking of how they watch tv now.

MLB At Bat is the current shining beacon in the pro sports digital world. Will the NFL, Hockey, and Basketball join in? No idea. The pro sports franchises are the ones that really need to be concerned with the content producers, not Apple as some suggest. Just about every dime these franchises make come from selling their broadcast rights. If MLB can show that their new distribution method can not only co-exist with traditional broadcast rights, but also make them a nice profit, the other leagues can't, won't , be too far behind. I've yet to see stats on how the MLB is doing here and would love it if someone could post some concrete info.

The college sports issue gets into a trickier territory than the pro sports issue. These are, after all, learning institutions rolleyes and their goals are different than the pro's. While I'm sure the NCAA would back a broad digital distribution platform, until the pro's successfully make the transition, I just don't see it happening. I could be wrong, of course, and the NCAA may go first, but there's over 330 D-I schools and I would bet it's an all or nothing deal to bring them into alignment.

EDIT to your EDIT:

EDIT: How would a DVR promote sales in the iTunes store? I'm just wondering because if I can record and watch shows whenever I want I don't see an incentive to ALSO buy them from iTunes.

Right now, most markets only receive 5 or so stations (more if you count subchannels) for free OTA. But these are the big networks, for many the majority of their viewed programming comes from these networks. Many, many people in these markets also subscribe to cable or satellite and with the above mentioned local networks comes about 500+ more channels. 490 +/- of these channels are worthless to most people, yet they have to pay for them to receive the 10 +/- ones they actually care for. For me that's the ESPN's, a couple of the Discovery's, HGTV, the Golf Channel, Fox Sports South, and maybe a couple more. I pay about $120 a month to watch these channels in HD with an HD DVR and to receive the rest whether I watch them or not. If I could get the major networks for free OTA with DVR capabilities and download/stream only the shows I actually watch (not live sports) from the above channels, I'd probably save $90 or so dollars a month. That $30 I am spending now goes to Apple, not the cable or satellite companies. I'd then be inclined to rent/purchase movies through iTunes instead of Movies-onDemand from my cable provider or from Netfllix or any other service, becasue I'm already in the system. Apple, to their credit, does make it easy. Apple becomes my TV entertainment provider and not the cable or satellite company. I spend my money (which I'm already spending now) with Apple. I'm even saving almost a hundred bucks a month. I'm super excited, Apple's super excited. The cable company's pissed, but screw them, and I know I'm not alone here. Apple also doesn't need to invest in or support a street to street infrastructure so $30 bucks to them is like my $120 to the cable company.

 

[JonHimself]

You are right about it being complicated and largely out Apple's hands, unfortunately and definitely right about it not being something that could happen quickly (ie within the next few months). I know the NHL offers an online solution and were looking at putting on the iPhone, the MLB app - as you said - is a great example. And, again as you said, it probably gets even trickier when you get into college sports (or minor pros like AHL, CHL... sorry only hockey examples).

I'm just making the argument of NOT needing a DVR... would I like one? Absolutely! It would go great with my OTA antenna and would allow me to NEVER need/want to have cable/regret not having cable again... the only thing I miss from not having cable is the live sports.

 

[fpnc]

...A DVR does not add a significant cost...

Would you like to provide some data to back up that claim? Without a fast and potentially expensive CPU the only way you can compress live video is with a custom hardware encoder chip. Then you have issues with AV certified drives and reliability as a DVR needs a drive that can be recording/accessed 24/7. Next, if you want a really nice DVR experience don't forget the cost of the intellectual property and the need for a good TV schedule service. As one data point, look at Elgato's EyeTV 250 which runs $200 just for the tuner and hardware encoder. Apple could beat that price, sure, but a DVR might add at least $100 to the cost of the Apple TV. In any case, I don't think that could compete very well with the DVRs from the cable and satellite services (which also offer DVR capability for their premium content). As for the latter (tuner and DVR for premium content), Apple would have to include support for CableCARD which I've already discussed as a failed initiative (according to the FCC).

Here are the stats for the EyeTV 250 (a somewhat pricy but nice video converter and tuner):

http://www.elgato.com/elgato/na/mainmenu/products/250plus/product1.en.html

It's the only product Apple produces which the distance themselves from by using the term "hobby."...

And it will have to remain a "hobby" until the broadband infrastructure is ready for widespread HD transmission and the content providers loosen their grip on the control of the movies and TV shows. Besides, the sales numbers on the Apple TV are estimated to be about 7 million units which is around $1.5 billion in revenue -- not a bad "hobby" if you ask me. For a company with other "hit" products like the iPhone/iPod that's not a great success, but it's really not at all terrible.

Note, I'm not suggesting that Apple can't or shouldn't improve the Apple TV, it's just that I agree with the post from JonHimself -- Apple has "bigger fish to fry" with the Apple TV.

 

[HobeSoundDarryl]

EDIT: How would a DVR promote sales in the iTunes store? I'm just wondering because if I can record and watch shows whenever I want I don't see an incentive to ALSO buy them from iTunes.

Because if you give the market what it wants, the market will buy more TVs. And while a DVR (preferably an add-on option for just those that want a DVR) may indeed prevent a sale of what can be DVRd, EVERYTHING ELSE in the iTunes store that isn't being run this week on "free" television would also be available to you via iTunes. Similarly, you DVR a program as a trial, decide you like and want to go back and "catch up". You can't DVR into the past to catch up, so you'll buy the old episodes or seasons to catch up from... that's right... iTunes.

Now, don't give the market what they want, and those that won't buy it unless it also gives them an (optional) DVR function does NOT buy an TV. I can say for certain that those people CAN NOT possibly buy other shows and old shows or seasons on a device they will not have in their stack.

The analogy would be to go back in time to that first iPod and iTunes roll out. And Apple decides that this new thing called "ipod" can ONLY get its content from iTunes store purchases- not CDs, no MP3s, etc (not from content you already have). Would iPod have sold as well? Of course not. And if not, would other innovations such as iPhones, many more kinds of content in the iTunes store, etc, etc have come to pass. Maybe or maybe not.

You are right that a DVR may indeed prevent a sale of a show that some guy is already getting via the DVR. But what you're missing is that if that guy isn't motivated to buy an TV in the first place, he can't possibly buy that iTunes content via a device he doesn't own.

On the other hand, open up the TV a bit more. Let those that want a DVR add on be able to pay for it via someone like Elgato. Let those that want BD functionality be able to buy it from someone like Other World computing. Etc Then, the mass market will see ways to buy an TV instead of a DVR or BD player, Apple can get TVs deeply entrenched in the living room, and let the convenience and much broader availability of content via iTunes supplant- and eventually obsolete- DVR and BD functionality- just like the iTunes store content is supplanting and moving CDs toward fading away. But it seems unlikely that this will work the other way.

 

[Tilpots]

Would you like to provide some data to back up that claim? Without a fast and potentially expensive CPU the only way you can compress live video is with a custom hardware encoder chip. Then you have issues with AV certified drives and reliability as a DVR needs a drive that can be recording/accessed 24/7. Next, if you want a really nice DVR experience don't forget the cost of the intellectual property and the need for a good TV schedule service. As one data point, look at Elgato's EyeTV 250 which runs $200 just for the tuner and hardware encoder. Apple could beat that price, sure, but a DVR might add at least $100 to the cost of the Apple TV. In any case, I don't think that could compete very well with the DVRs from the cable and satellite services (which also offer DVR capability for their premium content). As for the latter (tuner and DVR for premium content), Apple would have to include support for CableCARD which I've already discussed as a failed initiative (according to the FCC).

Here are the stats for the EyeTV 250 (a somewhat pricy but nice video converter and tuner):

http://www.elgato.com/elgato/na/mainmenu/products/250plus/product1.en.html

Even a $100-$200 price increase to the consumer would be a savings. As I mentioned above, I would recoup that in 2 months. CableCard compatibility is not necessary, because the whole reason to include the DVR is to get people to cut the cord. And as for scheduling services, that's something Apple could easily take care of. I'd think it even be included as part of the purchase...

And it will have to remain a "hobby" until the broadband infrastructure is ready for widespread HD transmission and the content providers loosen their grip on the control of the movies and TV shows. Besides, the sales numbers on the Apple TV are estimated to be about 7 million units which is around $1.5 billion in revenue -- not a bad "hobby" if you ask me. For a company with other "hit" products like the iPhone/iPod that's not a great success, but it's really not at all terrible.

It's not about the infrastructure, everything they need is alrady in place. Everybody else is currently doing it. 1080P, Blu-ray, and DVR's don't need any other support than what's already here, now.

The competition, you may say apples to oranges, but it's the best I can think of with comparable specs, costlier prices, and other features that a "useful" AppleTV might include:

Worldwide sales figures

1. Wii – 50.39 million, as of 31 October 2009 (2009 -10-31)[update][7]
2. Xbox 360 – 31.20 million,as of 27 January 2009 (2009 -01-27)[update][19]
3. PlayStation 3 – 27 million, as of 30 July 2009 (2009 -07-30)[update][20]

So 7 million units sold over three+ years is way off the mark. Again, the word "failure" is about the only one that fits.

 

[HobeSoundDarryl]

Would you like to provide some data to back up that claim? Without a fast and potentially expensive CPU the only way you can compress live video is with a custom hardware encoder chip. Then you have issues with AV certified drives and reliability as a DVR needs a drive that can be recording/accessed 24/7. Next, if you want a really nice DVR experience don't forget the cost of the intellectual property and the need for a good TV schedule service. As one data point, look at Elgato's EyeTV 250 which runs $200 just for the tuner and hardware encoder. Apple could beat that price, sure, but a DVR might add at least $100 to the cost of the Apple TV. In any case, I don't think that could compete very well with the DVRs from the cable and satellite services (which also offer DVR capability for their premium content). As for the latter (tuner and DVR for premium content), Apple would have to include support for CableCARD which I've already discussed as a failed initiative (according to the FCC).

Here are the stats for the EyeTV 250 (a somewhat pricy but nice video converter and tuner):

http://www.elgato.com/elgato/na/mainmenu/products/250plus/product1.en.html

fpnc, that's why "bigger" options like a DVR or BD should be "add on" options- perhaps from third parties like Elgato- vs. built in. The price of TV is probably about right should a 1080p platform come out with some of the more "open" feature to support aftermarket options, maybe an iTunes app store, etc

Now, if someone wants Apple to build all of these bigger things in, then price will likely run higher, making it less appealing to the masses. So, as I see it, the goal is to give the markets what they want, but let them adapt the product to their own wants (mostly) through add-ons (much like add-ing on DVR of BD players to Macs).

Those, apparently like you that want the "pure" vision of buying everything from iTunes could still get it exactly as you do now. But those that want it to do a few other things for them could pay up to add on the extras to fulfill their own wishes. You win. They win. And Apple wins (by selling a whole lot more TVs).

Or, Apple sticks with the vision as you seem to favor it: buyers of this device shall buy their content solely from the iTunes store, even if that means having to buy the same shows they could already get as part of what they are paying a cable/satt provider for. That is how we like it and that is how you shall like it." and not see that big pickup in TV sales.

Meanwhile, BD players with some extra TV- like functionality will sell well. And DVRs either near-free from their cable/satt provider or via TIVO purchases and similar, will keep flowing into homes that don't have TVs. Let that go long enough and TVs potential fades to a very small group of Apple fanatics, never getting entrenched, and thus the vision of everything via iTunes seems to stretch ever-further out into the future.

The vision that you keep arguing for hinges on Apple getting an TV in every living room. How you seem to keep arguing to accomplish that (sticking with iTunes only "as is") doesn't seem to support the "hinge" piece of the vision. The vision won't happen if Apple doesn't win the living room. And the market doesn't seem to be buying enough of what Apple is selling "as is" relative to this device.

 

[fpnc]

...So 7 million units sold over three+ years is way off the mark. Again, the word "failure" is about the only one that fits.

Small point, but let's keep our facts straight. The Apple TV first became available at the end of March 2007 so it's been available for less than three years. As for the Wii, XBox, and PlayStation numbers you cite I'll counter with this which is much more applicable since TiVo offers a combination DVR and streaming media box and service:

TiVo subscribers as of 3rd quarter 2009: 1.5 million and the company is still losing money. Further, note this statement from TiVo's last earnings call:

On a net basis, TiVo-owned subscriptions decreased by 45,000 in the third quarter and our TiVo-owned subscription base ended the quarter at approximately 1.5 million subscriptions. Our MSO [Multiple System Operator, Time-Warner, CableVision, Comcast, etc.] broadcaster subscription base declined by 123,000 from the prior quarter, in line with the pattern we have seen over the past several quarters, when taking into account the 146,000 subscription adjustment due to the DIRECTV reporting issue.

In addition, Sony and Microsoft have lost billions of dollars on the PlayStation 3 and the XBox 360 (respectively) -- a situation that I don't think Apple would consider a raging success. The console gaming market, however, can't really be compared to the video streaming and DVR businesses and that's why I suggest you take a look at the situation over at TiVo.

Link to TiVo earnings transcript: http://seekingalpha.com/article/175...d-10-31-2009-earnings-call-transcript?page=-1

The industry as a whole is moving toward internet-based delivery and it doesn't take a genius to know that in less than 20 years that's how all content will be delivered. This means that DVRs and Blu-ray will be gone before that time, maybe not in another five years, but even by that time the transition will be well on its way.

Apple's recent purchase of LaLa and their plan to build a one billion dollar server farm in NC are only the beginnings. Streaming media is the future of the entertainment industry and that's where Apple wants to go. Frankly, I think it is a possibility that Apple is looking at ways to reduce the cost of the Apple TV rather than making it multi-functional and even more expensive. What they may offer is a diskless, streaming-only player that will require an always on connection to your computer or an interface to an Apple produced, standalone iTunes server (something like Apple's Time Capsule).

 

[Tilpots]

Small point, but let's keep our facts straight. The Apple TV first became available at the end of March 2007 so it's been available for less than three years.

It was announced in September of 2006... anyway...

As for the Wii, XBox, and PlayStation numbers you cite I'll counter with this which is much more applicable since TiVo offers a combination DVR and streaming media box and service:

TiVo subscribers as of 3rd quarter 2009: 1.5 million and the company is still losing money. Further, note this statement from TiVo's last earnings call:

If you read the conference call, TiVo is actually doing just fine. You could almost say most DVR's are TiVo's, intellectual property at least, hence the number of litigations they're involved in. Everybody's been using their ideas, and they're starting to get paid for it. Not only that, they have begun to license their tech to companies with millions upon millions of subscribers, like DirecTV, Dish, Virgin, and many others. It proves the point that DVR's are in extremely high demand.

In addition, Sony and Microsoft have lost billions of dollars on the PlayStation 3 and the XBox 360 (respectively) -- a situation that I don't think Apple would consider a raging success. The console gaming market, however, can't really be compared to the video streaming and DVR businesses and that's why I suggest you take a look at the situation over at TiVo.

Link to TiVo earnings transcript: http://seekingalpha.com/article/175...d-10-31-2009-earnings-call-transcript?page=-1

I chose to compare the AppleTV to the gaming consoles mostly due to their functionality, namely the PS3. It's a media center, a Blu-Ray player, and in the UK, it's a DVR. While Sony is subsidizing these boxes somewhat, they're making much more money on the backside with the game purchases. Apple would be able to do exactly the same thing. Say they lose $100 on the AppleTV hardware. As I stated above, they still stand to make a monthly income from a user buying iTunes content. For a casual user like myself, I might spend $30 a month at the iTMS. I use it for 4 months and the AppleTV has made Apple $20. I use it for another 4 years, and that same AppleTV unit will bring Apple $1440. Just like AT&T subsidizes the iPhone, because the voice and data plans are where they make their money.

The industry as a whole is moving toward internet-based delivery and it doesn't take a genius to know that in less than 20 years that's how all content will be delivered. This means that DVRs and Blu-ray will be gone before that time, maybe not in another five years, but even by that time the transition will be well on its way.

Apple's recent purchase of LaLa and their plan to build a one billion dollar server farm in NC are only the beginnings. Streaming media is the future of the entertainment industry and that's where Apple wants to go. Frankly, I think it is a possibility that Apple is looking at ways to reduce the cost of the Apple TV rather than making it multi-functional and even more expensive. What they may offer is a diskless, streaming-only player that will require an always on connection to your computer or an interface to an Apple produced, standalone iTunes server (something like Apple's Time Capsule).

Hey, the future is great, but what about the here and now? Everybody talks about physical media being a dying breed. That's such a lame statement. It's like saying gas powered cars are a dying breed. Of course, both statements are true, but your not going stop seeing discs or gas stations anytime soon. Transitions, by nature, take time. In five years, Blu-Ray will still be here and so will gas guzzlers. Just because their "old" doesn't mean they won't work. And especially in today's market, if it ain't broke, don't fix it.

 

[fpnc]

...If you read the conference call, TiVo is actually doing just fine. You could almost say most DVR's are TiVo's, intellectual property at least, hence the number of litigations they're involved in. Everybody's been using their ideas, and they're starting to get paid for it. Not only that, they have begun to license their tech to companies with millions upon millions of subscribers, like DirecTV, Dish, Virgin, and many others. It proves the point that DVR's are in extremely high demand...

I'm glad you bring up the intellectual property point, since I already mentioned that as an obstacle to Apple's entry into the DVR business. Yes, DVRs are doing just fine but those are being offered through the cable and satellite companies and that's why I've suggested that this isn't a business where Apple can compete. Furthermore, TiVo lost money in the third quarter which isn't what I'd call "doing just fine."

Here are their statements for the last quarter and their projections for the next:

...This led to a net loss for the third quarter of $6.7 million, which compared to our guidance of a net loss of $8 million to $10 million. This compared to a loss of $900,000 in the year ago quarter, after excluding the $100.6 million net gain from the EchoStar litigations, which included litigation proceeds, interest and related taxes.

-- and next quarter --

...for the fourth quarter we expect...[a]...net loss in the range of negative $13 million to negative $15 million.

However, the only money they appear to be "making" is through litigation (mainly) and through the licensing of their DVR technology (marginally) which isn't exactly a business model that Apple can use to make the Apple TV a success (although that money is allowing TiVo to continue to exploit the DVR business). In any case, Apple isn't going to include TiVo software within the Apple TV so your point about "most DVR's are TiVo's" doesn't really help your argument.

...While Sony is subsidizing these boxes somewhat, they're making much more money on the backside with the game purchases...

True, the business plan for these gaming consoles was to subsidize the cost of the hardware through their licensing business. However, that hasn't worked at all for Microsoft (which is still billions in the red on their XBox business) and I suspect that Sony is in the same situation (they've lost more than they have made).

...Hey, the future is great, but what about the here and now? Everybody talks about physical media being a dying breed...

Well, the future may be closer than you think. That's where the real genius is, knowing or guessing when that transition will take place. In any case, Steve Jobs has said the following, ""I skate to where the puck is going to be, not to where it's been." That's partly marketing talk and a Steve Jobs' vision statement, but I'm pretty sure that's what they will be doing with the Apple TV.

 

[fpnc]

...It's not about the infrastructure, everything they need is alrady in place. Everybody else is currently doing it. 1080P, Blu-ray, and DVR's don't need any other support than what's already here, now..

Since you were responding directly to this statement from my earlier post:

And it will have to remain a "hobby" until the broadband infrastructure is ready for widespread HD transmission and the content providers loosen their grip on the control of the movies and TV shows.

I have to ask, where is "everyone else" doing 1080p streaming and downloadable content? Microsoft is just beginning to do some trials with highly-compressed, 4Mbps, 1080p but that hardly proves that the infrastructure for quality 1080p content streaming is "already in place." YouTube just started 1080p "HD" postings, but the one I looked at was a horribly artifact-ridden 2.5Mbps clip that was certainly no better than what Apple offers today with their 720p iTunes Store (and my internet connection averages about 8Mbps which is well above the average in the U.S.).

I've already said that I expect Apple to introduce a new Apple TV next year that will have the capability to decode 1080p, but I don't expect them to make significant use of that resolution until the internet infrastructure is able to support it for a large user base. Then, as I've noted before, Apple has to find a way to convince the content providers to allow 1080p delivery in direct competition to Blu-ray and their other HD carriers (premium cable and satellite, etc.).

As far as Blu-ray and DVRs, I've already voiced my concerns (or doubts) about the possibility of Apple either including or enabling those technologies in the next Apple TV. I'm very confident that Apple will continue to focus on streaming and downloadable content from the internet, that's where they want to be successful and that's where they should be attempting to "slay the beast" (whether that should be infrastructure, easy of use, and/or new and expanded licensing terms with the content providers).

To enlarge upon Steve Jobs' statements concerning Blu-ray, both Blu-ray and DRV are probably a "bag of hurt" as far as Apple is concerned.

 

[MacConvert]

The AppleTV is going to die a quick death soon.

Steve Jobs et. al. will see the light of day (as he always has, that smart son of a gun) and match the Mac Mini to AOpen's MP45-BDR tech specs, and/or possibly beat it.

I could see even your DVR wish coming true with Tru2Way - either embedded in the Mini if they can squeeze it in or perhaps w/an external USB module just for the CableCard.

With increasing broadband speeds (e.g. FTTH) as well as wireless upgrades to infrastructure (LTE), TV/movies/music are all going to go a-la-carte, instead of packaged, e.g. you will create your own packages a-la-carte instead of being told what goes in your package (which I always found to be somewhat 'brainwashy'). Flat fee pricing for tv/movies/music will (e.g. Netflix) will become more common, because it creates the perception of value for the consumer.

This is how I see things unfold for the ATV...

Is apple planning on keeping the apple TV line? I think they need to add a DVR and a blue ray player as well. I'm sure apple could take over this market as well. Comments?

 

[HobeSoundDarryl]

I found this article: http://tech.yahoo.com/news/ap/us_tec_blu_christmas interesting relative to the debate within this thread. There are points made to support both sides, so if you pick and choose- as is being done within this thread- you can draw out of this support for both visions.

My perspective cuts down the middle: deliver an TV largely as is, with 1080p hardware, a few "normal" (open) expansion ports, an "open" software platform (iphone like) SDK, plus app store. Apple could deliver this one without having to up the price, still get the Apple margin, and leave a lot of buyer wishes to third parties.

As such, my perception is that Apple needs to do what it needs to do to get this box entrenched in the mass market's living rooms. People will buy only so many set-top boxes, and the guy with 1080p BD player, and a DVR, etc is not going to be very motivated to go buy a 720p TV which, to approximate the DVR experience will then involve having to rebuy (some) shows already flowing into his home.

Give the market what it wants (through third party add ons if necessary) then obsolete the BD and DVR functions over time as we move toward the "vision" of "download everything from iTunes". Don't give the market what it wants, and Apple doesn't entrench this box in mass market living rooms, and someone else will win this battle. From my perspective, here's key excerpts from that article...

"There are now Blu-ray players in nearly 12 million U.S. homes"
and
"Until now, the pace of adoption for Blu-ray has matched what DVD had when it pushed aside video cassettes more than a decade ago"

I think its safe to assume that there are not 12 million TV's in U.S. homes.

The second quote presents the opportunity for Apple: follow the model of what made DVD players fly into homes (which is not solely deliver lower quality picture than standards that are readily available), entrench, then ride the wave that follows. BD is struggling to stick with the pace at which DVD players flowed into mass market homes, but certainly not because TVs "as is" are eating their lunch. Thus there is a hunger for a great "next gen" alternative which a next-gen TV could fulfill.

If I was Apple, I would kill 2 or 3 birds with one stone, by delivering a 1080p device that can also (optionally) be a BD player and a DVR (if users wanted to add those on). Keep the price about where it is, and Apple would basically be giving the market the choice of buying individual boxes or buying one box with lots of customizing feature options. It is easy to imagine that I'd sell tons of these next-gen 1080p TVs, entrench in mass market (not just Apple fanatic) homes, then leverage the convenience of deep library of content available via iTunes to eventually obsolete the BD and DVR add-on pieces (much like home AV equipment like the use of VCR's & Laser Disc players were eventually phased out by their buyers, as more convenient and/or better quality options came along).

Whatever boxes "fill" the stack next to the mass market's HDTVs are the boxes through which video content can be subsequently sold or rented. If Apple doesn't make it's box so appealing that the mass market deems it a "must have" addition to their AV stacks, there is no iTunes rental revenues from boxes that aren't in those homes.

 

[fpnc]

A few comments. First, for the most part everything that has been posted in this thread has been pure opinion and I've yet to see any suggestions from anyone (including myself) that I'd call a real game changer for the Apple TV.

HobeSoundDarryl continues to claim that Apple needs to do what the "market wants" or "give the market what it wants." However, if HobeSoundDarryl is privy to some extensive market research that indicates that customers would rush to the Apple TV if it allowed DVR and Blu-ray expansion then he should just make that information available. Otherwise, HobeSoundDarryl is just repeating what he wants and there is no way that he can claim that he speaks for the majority of potential Apple TV customers.

I suspect that market research along this line is pretty difficult. People may not really know what they want since this technology is relatively new. Further, it would be pretty easy for someone to ask for this or that until they actually have to pay for it or until they experience the full meaning of what they are asked to approve or disapprove. Thus, it may be that the best that Apple can do at this time is to merely guess at what customers might be willing to buy. Well, "guess" may be too strong of a term, it should be an informed opinion backed up with real financial estimates on what the market will accept and with a good dose of analysis on what is really feasible given current technology and competitive markets (things like intellectual property barriers and licensing costs need to be examined in great detail).

The only real game changer that I can see for Apple's movie/video store is for it to have a reduction in pricing. If all of the standard definition movies rentals were $0.99 and if the HD was priced at $1.99 then they'd have a likely hit. Unfortunately (for us) the content providers won't allow such pricing because it would compete too vigorously with DVDs, Blu-ray, and cable/satellite broadcasting. In any case, if Apple could get terms like that then the rest of the providers would get the same deal so that may not alone be good enough to push the Apple TV over the top.

A subscription service might be a good idea, but it would have to offer both price and convenience features over standard cable/satellite services to make much of a difference (and once again, pricing and availability is all in the hands of the content providers).

Next, it is my opinion that the 1080p question is kind of pointless. Yes, it's most likely that the next Apple TV hardware will support 1080p decoding but that doesn't mean that the industry will then be ready to support content delivery in that format.

Given the above, it's my opinion that Apple can't really do much to make the Apple TV as wildly as successful as either the iPhone or iPod and that may just be the case for the time being.

 

[mstrze]

I can really see why this is still a hobby piece of equipment to Apple since 'Hollywood' has such a stranglehold on the actual 'physical' media:

THEY dictate prices to a great extent
THEY will not allow native importing of DVDs or BluRay into iTunes/AppleTV

PLUS

You have the infrastructure limitations of how to deliver larger than 720p content via current internet methods.

You have most people with TVs that won't allow you to notice a differewnce between 720p and 1080p....and don't tell me that TVs will keep getting bigger. There is a physical limitation in homes whether it be wall space or significant other that will set this upper limit to probably around 37"-42" for most folk.

Until some of these issues are solved, I don't think AppleTV will make any significant changes. They may add 1080p, but don't expect the iTunes store to start offering that content anytime soon due to size and quality issues. This would appease folks who have 1080p sources already inhouse. I can't see a DVR or BR built in, although an outsourcing through 3rd party would indeed be nice.

Argh...so many hurdles! I really, REALLY love my AppleTV and have been able to get some friends and relatives to get them too. I really wish some of the suggestions in this thread could be done. I would love to see it more mainstream.

Biggest wish right now: Subscription...I would pay as much as $40 a month. I have already dropped DirecTV and we live entirely on OTA HDTV and AppleTV and we are very happy.