Over at DVR Bulletin, my other blog, I posted a story from Forbes titled: “How Apple Got Apple TV Wrong“. It’s a pretty good look at how Apple’s new Apple TV box hasn’t fared as well as say, the iPod.
Essentially it comes down to money and technology: Disagreements between Apple and Hollywood on pricing video downloads. And putting out a product that lacks functions found in competitors like Tivo and Vudu.
Forbes has a pretty good article detailing how Apple got the new Apple TV device wrong, calling it an “iFlopâ€.
When Apple first announced a new living room device to stream and buy movies from your TV, people had high hopes. Apple’s iPod and iTunes work so well and have tremendously successful. How could Apple not get a next-gen TV device right?
Says Forbes:
“Six months later iTV is a flat-out iFlop. Renamed Apple TV upon launch, the ballyhooed box has sold perhaps 250,000 units–far behind the 1 million sold for the iPhone, which was priced twice as high and has been on the market less than half as long. Apple, which declined to let FORBES interview Jobs and other execs for this story, provides detailed sales data for the iPod and other digital wonders but won’t reveal any numbers for Apple TV; apparently the truth is too humiliating. A company spokesman declined to respond to written questions.â€
Surprisingly. Jobs said at a May tech conference that the Apple TV was a “hobby” and even Apple isn’t giving much shelf space to Apple TV in their own stores. Apparently Apple has been trying to drive the price of its video downloads, much to the chagrin of the studios. Apple wants to sell movies for about $10, while the studios want $20 per download.
The movie studios got their way with Vudu, a start-up video download service, which allows users to rent movies for 24 hours (Apple TV has no rental option) and charges $20 for purchasing downloaded movies.
Apple also had problems pricing Apple TV.
According to the Forbes article:
“It wanted to keep the price low at $300, but that resulted in cheaping out on components. The first box had a tiny hard drive (40 gigabytes to store fewer than 50 hours at standard-definition TV resolution) and an older, slower Intel chip. Even then the box’s insides cost a total $237, says research firm Isuppli. That left a scant $62 in gross profit, or 20%, to be split by Apple and retailers (barely half Apple’s typical 37% gross margin). The stores went along, but when Apple TV faltered, they had even less incentive to push the new product.â€
Worse yet, is Apple’s relationship with Hollywood. NBC Universal dropped plans to put its new Fall TV shows on iTunes and switched to Amazon. Again, the issue was pricing—NBC wanted higher prices, while Apple stood firm on its price.
Bonus: Unfortunately, Forbes requires free registration to read their articles online. Try BugMeNot to get access to free user names and passwords for sites that require free registration.
On Monday, EchoStar announced it was acquiring place-shifting company Sling Media for $380 million. Although many people expected Sling Media to be acquired, it seems many were shocked that it happened so soon.
Sling was one a pioneer place-shifting company, makers of the Slingbox. The device connects to the TV/cable box/DVR and lets users watch their TV shows anywhere there’s a broadband connection. A new feature, called Clip and Sling, allows users to create clips of their favorite TV shows and share them with friends.
The relationship between EchoStar and Sling go back a few years since EchoStar was an early investor. And teaming with Echostar means that Sling now has deeper pockets. Says GigaOm:
Sling has established a nice brand, but in order to grow further the company needs deep pockets of a corporate master.
Meanwhile, EchoStar just asked the Internal Revenue Service if it can separate its technology and infrastructure assets by forming a spin off. The Sling acquisition will fall into the spinout.
You may also recall that EchoStar is in the middle of a lawsuit with Tivo. Tivo filed a lawsuit against EchoStar in 2004 saying that the operator of the satellite-based DISH Network, was infringing on its DVR patent.
Overall, I’d bet that Tivo is miffed now that EchoStar owns Sling. A combination of Tivo and Sling would have been a killer combination since many customers already own both a Tivo DVR and a Slingbox.
So some questions:
The field of digital media streaming adapters (or devices) is growing. These are devices that connect to your home network and allow you to view videos or listen to music on your TV via your computer. Perhaps the most popular is Apple’s AppleTV, which works with its iTunes service and allows customers to buy movies and TV shows for about $1.99.
PC Advisor from the U.K. recently reviewed the top six digital media adapters:
The competitors:
They concluded that Netgear’s Digital Entertainer HD EVA8000 was the winner calling it the pricier option, but the most versatile:
“The Netgear Digital Entertainer HD EVA8000 supports a wide range of video formats, can play files protected by Windows Media DRM (digital rights management), works as a digital video recorder and even lets you check your email and watch YouTube.com videos on your TV. It also outputs up to a full 1080p resolution for HD content.”
Looks like it does a little bit of everything. Just add a wireless keyboard and you can turn your home PC into a home server instead.
Sony said that it is dropping support from regular DVDs from its DVRs and only supporting its Blu-Ray format. This is for their upcoming DVR lines in Japan.
Dropping support for DVDs means that consumers will have to upgrade and buy the new Blu-Ray discs if they want to archive shows that they’ve recorded. Now that’s great news for those looking to store more movies in each disc and good news for the growing number of HDTV users. But it’s bad news for people still clinging to their DVD collections.
Coolest Gadgets says that support Blu-Ray offers much more storage:
“[a] …50GB Blu-ray disc is capable of holding slightly more than 4 hours of HDTV whenever one records over-the-air MPEG2 stream, but transcoding this stream to MPEG4 AVC makes it possible to cram in up to 16 hours of HDTV onto the same disc. “
It will probably also raise prices since the new recordable HD drives are more expensive than regular DVD recordable drives. I guess it’s great that Sony is very forward thinking, but here in the U.S. many people are still using regular DVDs and haven’t made the transition to HD discs.
But what about support for HD-DVD? Looks like the battle between HD-DVD and Blu-Ray is heating up.
Jose Alvear is a an author, researcher and analyst on digital media topics. He covers Internet movies, music, IPTV, digital video recorders and everything else for the convergence industry.
Contact him at jose at alvear.com
