AppleTV is dead, it just hasn’t stopped moving yet. With fewer than 2 million units sold, it hasn’t achieved the commercial success of its rivals, and continues as a failed effort on the part of Apple to extend the digital hub into the living room.
The final nail in AppleTV’s coffin comes yesterday as Netflix announces a digital only subscription option, but the fatal shot was fired back in November. Follow me after the jump, as we discuss how Netflix strategy not only killed AppleTV but also threatens more than just longtime rival Blockbuster, and what (if anything) Apple can do about it.
On November 19th 2008, 28 million XBox 360 consoles woke up with the ability to stream movies from Netflix. Overnight, Netflix projected themselves into living rooms of over 10 million XBOX Live Gold subscribers. A couple of months later, in January of this year, they fired again, and added nearly 4 million TIVO subscribers to the mix.
No big deal, right? AppleTV’s, Tivo’s and a dozen other set-top boxes from cable companies and off-brands alike have some kind of streaming capability. Most of the Apple faithful probably shrugged it off –just as they did Steve’s announcement of movie downloads to AppleTV the year before. It’s just Pay-per-view nothing new about that, Right?
Netflix has been making a bundle and seizing market-share with both hands from competitors who either realize too late that they’re competitors, or shrug off their offerings as ‘also-rans’.
What people don’t understand is that Netflix offering on XBoxes and TIVOs is that it’s not just pay-per-view, it’s a subscription service, that for $8.99 –the cost of two pay-per-view movies a month– gives consumers unlimited downloads and video rentals (one movie out at a time). And yesterday they’ve announced a new plan for online only which will likely have a more attractive price point.
Shows stream to my TV, Laptop, Desktop, Netbook, (and though I haven’t tried, I’m sure there are or will be phones that work with the service) in SD or HD depending on my bandwidth. My play queue, and even pause points persist across multiple devices. After using the service for 3 months now, I have to report, it’s nearly flawless.
This is a huge deal –whose aftershocks we’ve not even begun to feel.
For example, I have a wife who is seriously questioning why we need HBO? Most movies on HBO are or will be on Netflix soon. The series’ I like to watch on HBO and Showtime are on Netflix shortly after the season ends. “We can wait”, she says. Our “Now Playing” queue on our TIVO proves it.
Prime time shows too, no need to pay for iTunes downloads of ‘Heroes’, when I can watch the whole series wherever, whenever, on whatever thanks to powerful mobile devices, open standards, big bandwidth, and ubiquitous connectivity.
Netflix has skyrocketed from a Blockbuster challenger, to a game changer that threatens several entrenched business models from video rental to pay-per-view, and now even premium cable channels. We’ve not seen it’s like as a revolutionary force for an industry since iTunes, which is ironic since iTunes own video service finds itself under fire.
I’m not saying folks need to trash their AppleTV’s. Heck with very minor modification’s they’re the least expensive legitimate Macs money can buy. However, Apple is going to need to do more than deploy some ‘also-ran’ service and think they can compete with Netflix, Xbox, and TIVO.
Of course one can argue that a strong second place runner is well within Apple’s comfort zone –but not in this space. Apple is accustomed to owning personal entertainment, and extending the computing experience into the living room has been a stated objective of Apple’s since Steve’s return.
So what is that something more that will put Apple into the show for real, and maybe over the top?
My vote? Gaming.
The meteoric rise of gaming on the iPhone was predicted here before there was such a thing as an App-Store, and its easy to see Apple entering this space with force –œalthough I can’t envision them doing it organically. To be successful they’d need to be bold, like buying up Sega’s assets, or bolder like buying Nintendo.
UPDATE: Some great debate, and some alternative strategies being discussed in the comments…