Continues from Part I
As somebody particularly interested in IPTV and the different business models being adopted by content creators, service providers and publishers/broadcasters in all areas of the media in the digital distribution age (maybe have a read of my blog about 3D), I found the announcement about Apple TV being rental-only particularly interesting. This model is by no means an innovative one, even in this space, however Apple’s pricing structure, payment system, and general user experience of digitally distributed content, has clearly been well received by iTunes users. Whether the content is a song, TV episode, movie, ebook or app, 11.7 billion songs, 450 million TV episodes, over 100 million movies, 35 million ebooks and 6.5 billion apps all downloaded from iTunes certainly attest to the success of the platform, and it is this that makes me believe that Apple will make Apple TV work. I will now happily part with 59p or £1.19 on the App Store without a second thought, however the challenge that Apple faces is tackling the subject of ownership.
If somebody pays money for a piece of content, even digital, they expect to own it. Consumers comfortable with the idea of digital content and digital distribution have let go of the idea of physical tangibility, however this has been replaced by a sense of digital ‘space’. When your hard-drive has reached it’s capacity, you imagine it to be full of lots of little blocks each taking up a little piece of ‘space’ (well, I do!).
There is certain content that I personally am more likely to consume through a rental model than through a purchase model. Let’s look at two examples. First example: I saw Four Lions at the cinema back in May and enjoyed it. Let’s say I fancy watching it again. I have the option of buying the DVD for, let’s say, £10.99 or renting the movie through Apple TV for £4.99. In this instance I am more likely to pay the extra for the physical copy of the DVD as that way I will be able to watch it again in another 4 months, or lend it to a friend, as is my right to do so given that I own the DVD. Second example: Having missed the second series of Breaking Bad when it was broadcast I now have the option of buying the DVD box-set (as above) for around £24.99, buying and owning the series through iTunes for £24.57, or renting the series through Apple TV for 59p per episode (£7.67 for the series). As somebody that does not tend to re-watch TV shows, consuming this content through Apple TV over the other options provides a significantly more attractive proposition. This is where I can see Apple TV succeeding, particularly now that the price of the hardware has dropped to $99.
I would argue that before the DVD box-set generation, TV was a medium through which audiences only expected to consume a piece of content once, and in my opinion it still is largely. Video on Demand services such as BBC iPlayer have allowed audiences to choose when they consume the content, but I still believe that they still only watch it once. Project Canvas is geared towards bringing these VoD services to the living room, however it is my belief that Apple TV offers something quite different. Apple TV offers audiences the choice of what to consume as well as when using a microtransactional business model as an alternative to the subscription model that the likes of Sky and Virgin Media use to monetize their high quality broadcast content. The big question is, will audiences tire of high subscription fees for packages they pay for when only a small proportion of the content is what they actually want. Well, that and what are Google planning for Google TV!
