New Apple TV Service Shakes Up Home Entertainment Market

By Elliot Hong on Thursday, September 2, 2010
Filled Under: Business, Technology
 apple tv

Coming to a TV in your living room … hi resolution TV shows delivered over your internet connection for as little as 99 cents each.  What ever happened to free?

On Wednesday Apple Inc. CEO Steve Jobs held up a small box to a San Francisco audience and announced the new version of Apple TV. It allows your TV to be directly connected to Apple’s Itunes store via your internet connection. The new WiFi enabled box will cost the consumer $99 as compared to $299 for the previous version.

You simply browse through the shows available and when you find the one you want it will start streaming it to your TV. The big deal is that with the previous version of Apple TV a show cost $2.99. So far only shows from ABC and Fox will be available through this service although the BBC has indicated its interest also.

Questions are being asked if this new Apple foray into Internet TV will rattle the digital doors in the TV industry to the same degree that the Ipod Jobs introduced 9 years ago has reshaped the music industry.

Jobs admitted that a lot of media content providers are nervous about jumping onto the new Apple bandwagon right now but he thinks they will once they recognize how the market is changing. The two other big TV networks CBS and NBC have declined to allow their shows to be shown this way.

Not everyone is convinced Apple is on the right path here. A lot of TV shows are already available for free online and Netflix has a flat rate plan that allows subscribers to look at practically unlimited content for a fixed price. Consumers until recently haven’t made a habit of renting TV shows the same way that they rent movies.  Are they willing to buy TV shows one at a time … even if they seem cheap?

However the Internet may represent a threat to all the players in the TV industry. With ever increasing Internet bandwidths and constantly improving technology to deliver hi res video services like Netflix and others are offering, we may see consumers switch away from satellite and cable offerings to Internet TV services. How also would this affect the existing TV advertising business model?

Others in the TV industry question the logic of allowing Apple to gain so much control over the distribution side of the market. The cheap downloads may greatly undermine the financial underpinnings of TV show production and the bundling of these shows to others such as Netflix for syndication.

A 25 show TV series that they can now bundle onto dvd’s and sell in a store for $50 might only generate half that revenue if streamed over Apple TV.