Premium Distributed Content from Apple?

By Jonathan Greene | November 1st, 2005

I’ve been thinking about the iPod 5G and the video capability in iTunes and the ITMS and considering the success announced this week believe that it’s quite possible for things to accelerate much more rapidly towards a new network model.

If you think about the manner in which you subscribe to a podcast and apply that to a TV show, you can probably agree that it’s easy to see offering beyond the single pricing for programs. If you add in the rest of the networks and possibly some cable access (Comedy Central) – even consider shows from premium networks like HBO and you can see a pretty intense disruption to how we collectively understand how TV works.

The current iPod supports a doubling of the current 320×240 resolution, which is great, but not ideal yet for true home watching. It’s even better for portable viewing, but that’s about it for now. Perhaps what’s missing is some additional networking capabilities within iTunes, like BitTorrent. As you enable a richer level of subscription content, it’s quite likely that the economics of delivering the materials could change considerably. Let’s not forget that there’s more than just licensing to deal with here and in fact the bandwidth required to deliver high resolution content on a mass level could be quite considerable. Assume Apple can nail this piece — if not BitTorrent for political sensitivities, than perhaps Kontiki or some other more acceptable private version of P2P. I don’t want to understate the shift this would create with how iTunes works, but it could be a very good thing to consider.

If Apple cut deals with quite a few networks for content – even movies, you would not need a cable or satellite box to bring you programming you like. I’m hopeful that when the day comes, we’ll see something similar to how HBO on-demand works which is that if you choose to watch on the day, you can, but if you want the on-demand option (not recorded from DVR) you have to wait 24 hours. This is quite reasonable to me and matches how ABC is offering their shows to Apple now.

You would still probably keep traditional viewing going for “appointment TV.” Things like sports, and special live events are prime candidates, though streaming is an option as well especially as our network access speeds increase. If you still retain the basic options through your cable or satellite provider, you’ll need to pay more just for the right to have that option, unless you switch over to antenna viewing.

At $1.99 per video how much would your subscription run with Apple? Well, if I look at my own viewing habits, I watch (or try) to watch about 7-10 shows a week. It’s pretty hard currently to keep up with my DVR actually and I usually watch a few in succession on Friday or Saturday night. We record a few more shows for my wife and daughter so if I add it all up we probably consume closer to about 15 shows a week. That’s about 30 bucks a week to Apple if we could subscribe on a per show basis and 120 bucks a month which is WAY more than I currently pay for cable and for considerably fewer channels. Let’s not forgot as well that this is the current pricing for low res material and that the cost for high res (not even high def) would be more.

Clearly there are some economic issues that quickly add up with per show pricing. Admittedly, I don’t have the solution here.

I do however see a future through iTunes with Front Row and what else might be planned here. Any subscribed video would be available through Front Row and as we already know this runs on machines beyond the current iMac so a small form factor box like our friend the Mac Mini makes an excellent future candidate for the living room. I’m sure though this type of machine gets even more capable when the switch to Intel takes place. Intel already has reference platforms of this size and has shown their Viiv technology running on them. Imagine the enhanced capabilities with a more powerful processor, digital audio and surround capabilities. Enhanced transcoding capabilities [PDF file] will make transfer to portable devices like the iPod or multi-room viewing very attractive and allow for higher resolution content to delivered to a larger screen (whether TV or computer).

As we step beyond single show downloads towards subscription models through syndication and P2P, TV and of course the Long Tail content we already download becomes an extremely viable source of programming through non-traditional sources. On-demand services are just beginning to deliver and will hopefully continue to grow rapidly to meet the pent up demand.

Update: I was just checking in with Memorandum and see that News.com has a piece on this worth a read.