Online Home Video Delivery – Who Will Win? Part 1: Apple

By David Walker | January 22nd, 2008

No matter what technologies come along, our fascination with television shows and movies is virtually endless. Whether it’s the acting, stories or visual eye candy that grabs us, there’s no denying that we’re as fascinated with video as we’ve ever been. As we enter 2008, the ability to get to that video is becomingly increasingly easier. Several key players are entering the online video delivery marketplace and though choice is growing, it’s going to be important that consumers pick the provider that suits them best and that has the best long-term potential to get them the content they crave. Over the next few days, we’ll be taking a look at the major players, what their capabilities are and ultimately, who we think has the best shot of winning in this space. Today, we start with Apple.

What They Have
You’d have to be living in the cave the last two weeks to not know about Apple’s developments in the online video delivery department. Whereas Apple has had some solutions in place for online video – offering tv shows and some movies for purchase – the most recent developments are the ones that hold the most promise. First of all, the AppleTV is finally living up to it’s pedigree by no longer requiring a PC or Mac to get to your content. It’s now a true set-top box that can work with, but doesn’t require a Mac or PC. That makes the price of $229 a true price.

Secondly, Apple will soon be offering movie rentals from every major movie studio via the AppleTV. Older films will run $2.99 while new releases will peg you for $3.99. You’ll even be able to rent some of those movies in 720p HD format, though it will cost you $1 more than it’s standard definition counterpart. Though the initial catalog will be about 1000 movies, you can expect it to grow substantially in the coming months. The 30/24 rule is in play, meaning you have 30 days to start watching the movie after you order it, and 24 hours once you hit play to watch it. As before, you can continue to purchase tv and movies (no hi-def purchases) and you can continue to sync your videos to your various iPod devices, though rentals will only work on current generation iPods.

Advantages
Apple has quite a few advantages in this space. First off, the AppleTV now appears to be a serious set-top box, instead of the “hobby” that Jobs recently earmarked it as. The price – at $229 for the 40GB version – though not below the coveted $200 line, is pretty close and doesn’t seem unreasonable compared to the competition. And as with all Apple products, the UI is intuitive and elegant – something not typically said of devices of this sort.

The biggest advantage, though it’s tough to see at the moment, is the fact that all movie studios are on-board. This ensures that users can reasonably expect to see whatever major movie they want whenever it comes available. Think of it this way, would you sign up for Netflix or Blockbuster if Sony Pictures (Spider-man) or New Line (Lord of the Rings) movies weren’t carried there?

Disadvantages
Believe it or not, there are a few downsides to Apple’s implementation. First off, in order to get all the movie studios on-board, Jobs had to agree to a 30-day delay for new movies. So, you can forget about renting “The Game Plan” the same day it releases on DVD. You’ll have to wait 30 days before it gets Apple-fied. Also, while not completely unreasonable, the price for each rental leaves a bit of a sting – especially when you consider that going to a brick and mortar rental store gets you the same movie for the same price (if not less) with better rental terms and slightly better quality. Also, for movie buffs who are relishing the idea of buying HD movies for playback on their AppleTV, you can look elsewhere for now as HD is rental only.

Outlook
Even if you’re not a Mac-a-holic or an Apple fanboy, it’s hard not to admit that Apple has something very enticing in the AppleTV. It’s ability to work independently from a computer and it’s fair price point make it a great hardware option. Throw in support from all the major movie studios and Apple has to be considered a serious competitor in the delivery of online video.