What’s Apple’s Problem With Video Content?

Obviously, this ‘video entertainment’ nut is tougher to crack than music.

The technology is not the issue. Apple’s ability to design and deliver a perfect sales and distribution platform is not the issue.

The public’s desire to buy video (all kinds; music, TV, movies) won’t be much of an issue, either. They’re standing in line now. Bandwidth constraints becomes less of an issue each day, so that won’t be a problem either.

So, what’s the problem?

It’s the content folks. The content providers who develop, produce, distribute, and own the movies and TV shows. They’re the problem.

They’re scared to death all over the place. Because of Apple’s huge success with music and the iPod (and a few doses of Steve’s arrogance), they’d rather not have a single video giant (titan) to deal with, too. Worse, if it’s the same titan. The current distribution model is too fragmented to get the sales ball rolling. They don’t want much to do with Microsoft. They’re also worried about digital rights management, though Apple seems to have licked most issues with Fairplay on the music side.

Apple is probably the lesser of the two major evils, though not comforting to most of the content folks.

The content providers are NOT going to jump quickly into an ‘iTunes music model’ for video distribution. Steve knows that and has probably been knocking doors down trying to get the whole thing started, even at this simple level. What we see now with limited music videos, very limited TV, and no movies is probably the best Steve can get out the door right now.

The gamble, though, is that this ‘first start’ is a good enough start to get other content players on board in a steady stream, increasing the content catalog, increasing the cashflow. If it works, great. I think it will be slow going because the content folks no longer have control and they have another ‘titan’ to deal with. They’re a contentious and fragmented bunch.

So, where’s Steve’s niche? Where’s the big numbers for Apple? What combo of product and service gets Apple into the entertainment ‘driver’s seat’ and keeps them there? What’s the ‘tipping point’ to move the content providers as a herd in the right direction (to mix too many metaphors)?

First, Apple (Steve and crew) have recognized that Microsoft has had less than limited success with the Media Center. Steve puts it right: For TV, we lean back and don’t think. For computers, we lean forward and think.

Still, the need to control how and where and under what circumstances we, the users, access content will be the battleground. DVRs/PVRs are here to stay. TiVo and look-a-likes will continue to grow in numbers and functionality. For now, that’s not much of an issue for the content providers because the whole process isn’t much different than dealing with VCRs and VHS tapes; albeit easier, and at higher quality.

Second, and importantly, the content stays on the PVR/DVR for a limited time, then recorded over or deleted. Yes, there are ways to move it to VCR, perhaps to a PC or Mac, but that’s so far much more trouble than it’s worth. If it were a simple ‘click’ and last night’s episode of Lost recorded on TiVo became a QuickTime file on your Mac or PC, watch out. Big trouble. But that doesn’t happen. Yet.

The iPod nano is basically music and album art storage and playback. The high end iPod (which points us to what will be mainstream in a few years) is both a storage and playback device for all of the big three content items; music, digital photos, movies/TV shows/music videos.

Finally, the key thing to remember is that the iPod (new iPod that plays video may become the mainstream product of the near future) is BOTH storage and playback. It’s your digital life in the palm of your hand. That is of utmost importance. Why?

“For now, Apple is content to be ‘evolutionary’ with innovative products instead of ‘revolutionary’ because there’s no other choice.”What I see is Apple leveraging the iPod simplicity of ‘storage and playback.’ 

TiVo, and cable company PVRs and DVRs don’t easily provide for long term storage of digital TV shows and movies. The iPod, and via iTunes, the Mac and PC, can provide volumes of content storage, and the content companies could receive some additional revenue from this new sales stream using the iTunes Music Store model.

Initially, the iTunes/iPod/iTunes Music Store content will be complementary to the content that sits under the TV; TiVo, PVR/DVR, and DVD player. Movies and TV shows. 

Over time, via iTunes’s successors (version 7.0 must be due next week), the Mac and PC, and the iPod become the content storage devices of choice. The TV remains just a TV plugged into the cable outlet.

The TV of the future may very well be nothing more than we have now; flat screen, high resolution, high definition, stereo sound, but have one more device connected to it; something like Airport Express A/V which receives audio and video from an iPod, vPad, or Mac or PC.

That’s the first of two ‘bridges’ we’ll see crop up in the future. This first ‘bridge’ is the ability to move content from the Mac/PC and/or iPod directly to the TV. The iPod can do that now with the universal dock, though quality suffers.

This first bridge enables the content providers to gain another revenue stream without sacrificing their current streams. As Apple leverages the iPod and iTunes Music Store content (and new ‘Front Row’ equipped Macs), more content shows up, we spend more money. Apple makes more money, and so do the content providers.

The second bridge is beneficial to users, viewers, consumers, perhaps even Apple, but not to the content providers. That would be a bridge between DVRs/PVRs and the Mac/PC and iPod, so that TV content, DVD player content, could be stored on Macs, PCs, and iPods.

Without some kind of digital rights management in place, that second ‘bridge’ scenario would open the floodgates of content to the masses.

Regardless, the second bridge won’t happen overnight, may not happen soon, it’s possible it may not happen at all. Why? The content producers control the content and they want it to stay that way.

They’re only interested in loosening control a bit if there’s enough of a NEW revenue stream. Apple’s new approach to video content may just be the right way to go. For now.

Finally, does Apple want to get into the set-top-box business? Will we see a Mac mini as a TiVo? Probably not. Have you seen TiVo prices recently? How about a cable TV receiver in every Mac or every iPod? Won’t happen. That’s not a business Apple wants to be in.

For now, Apple is content to be ‘evolutionary’ with innovative products instead of ‘revolutionary’ because there’s no other choice. The evolution will be steadily growing stream of video content that complements the DVDs, PVRs, and DVRs in the living room, a ‘peaceful co-existence’ of technology.

Still, I have a feeling that my iLife will end up in the palm of my hand and I’ll take it wherever I go.