Menu
Dead-end street for ITunes video, Apple TV

Dead-end street for ITunes video, Apple TV

Apple's for-pay video download business on iTunes and its Apple TV set-top box are "dead ends", a researcher says, because television and cable networks will quickly shift their creative products to free ad-supported streaming.

"The paid video download market in its current evolutionary state will go the way of the dodo," argued James McQuivey, a US-based analyst at Forrester Research.

While TV and cable move to ad-backed media streaming "where they have control of ads and effective audience measurement," movie studios will throw their weight behind subscription models similar to Netflix's mail-delivered DVD rental business, McQuivey says.

He made the prediction even as Forrester estimated that revenues from video downloads at iTunes, Amazon.com, Wal-Mart's web site and other online outlets will nearly triple this year, from US$98 million last year to $279 million. But because only a fraction of online consumers — just nine percent by Forrester's reckoning — have paid to download a television programme or movie, the market is driven by "media junkies" and not mainstream users.

"The people currently downloading are very unique," says McQuivey, citing statistics that claim today's downloaders watch three times more video clips than the average online American. "That need to feed a video habit isn't as strong for everyone else," he says.

Apple's strategy is unsound, says McQuivey, because its recent Apple TV has been made obsolete almost as soon as it was for sale. "A year and a half or two years ago, when Apple had to start development [of Apple TV], I bet they thought they would have two or three years to build this market slowly, just as they did with the iPod. What they didn't count on, what no one did, was the mass shift to broadcast-quality streaming. ABC's doing it now, and there are rumors that NBC will follow," he says.

Paying for video downloads and "renting" movies by downloading to a computer will turn out to be a short-term, transition-style business, McQuivey believes. "The pay download market will stay around, but it will not continue to grow like it did this year," according to McQuivey.

To adjust to the new reality, Apple must rethink Apple TV, he said, and turn Version 2.0 into a broadband service provider, most likely of second-tier video sources. "Only with ad-supported content will Apple be able to compete with the power of free television and TV-quality web streams in attracting the second million buyers," says McQuivey. "Beyond the faithful who want the Steve Jobs experience, Apple's closed system will have little appeal."

McQuivey suggested one route Apple might take: turning Apple TV into a set-top box that also offers back-catalogue programming for a fee. "It could stream current shows, and then say, 'Would you like to order back episodes?'" said McQuivey.

Apple officials did not respond to a request for comment.


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags AppleiTunes

Featured

Slideshows

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

Hundreds of leaders from the New Zealand IT industry gathered at the Hilton in Auckland on 17 November to celebrate the finest female talent in the Kiwi channel and recognise the winners of the Reseller News Women in ICT Awards (WIICTA) 2020.

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards
Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

The leading female front runners of the New Zealand ICT industry joined together for the annual Reseller News Women in ICT Awards event at the Hilton in Auckland, during which hundreds of guests celebrated 13 outstanding individuals who won awards, chosen from more than 50 finalists representing over 30 organisations.

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards
Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

More than 500 channel leaders gathered in Auckland on 21 October at the ​Reseller News Innovation Awards ​2020 to celebrate the achievements of the New Zealand technology industry's top partners, start-ups, vendors, distributors and individuals.

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners
Show Comments