aaron evans

Some background

Apple just released a new Mac Mini with Intel processors and it includes Front Row. Front Row is only available when bundled with particular macs and the Intel Mac mini is the first Mac that Apple is marketing as a viable device to hook up to a TV. So, the speculation is that Apple is going to do something to make Front Row a more compelling application for use with your TV.

Some Speculation

Nearly everyone that follows Apple believes that they’re partnering with content studios to provide movies via the iTunes Music Store. You could buy content on your computer in iTunes and then play it back on Front Row on your TV. Or, perhaps you could preview a trailer in Front Row on your TV and buy it directly through Front Row. In any event, Apple currently sells video that is targeted for playback on the iPod; most analysts believe that Apple would need to offer high definition content if they start selling movies. Recent rumors suggest that Apple (ie Steve Jobs) wants the movie download model to be a la carte (pay per download and keep it forever) whereas content studios want a subscription model (pay every month, download as much as you want and keep it for as long as you subscribe). The feature that I and many other people are hoping for from Apple is an Apple DVR via Front Row. Apple squashed those rumors today, saying that a DVR would add too much complexity to Front Row.

My Take

Apple is trying to leverage the strength of iTunes as a music player to make it a compelling video distribution service. In much the same way that Microsoft gained dominance in the workplace in the 80s and 90s via proprietary office file formats, Apple’s is trying to gain dominance in the entertainment business by attaching users to its DRM. Apple has already done this by tying music downloads to iTunes and the iPod. Users who own an iPod buy content from the iTMS and must continue to buy Apple hardware to play the iTMS content they have purchased. Apple hopes to attach users to its DRM in the video world so that consumers will be dependent upon Apple for software and hardware in the future. I believe that this is really why Apple is strongly pursuing an al a carte model: once consumers own their Apple content, they will not want to throw it away to use non-Apple services. If a subscription model were chosen, Apple would be far more vulnerable to competition because consumers would never own any content and the risk in changing services would be minimal. Apple will become an even larger media player if they can get content distributors to go along with this. However, the apparent resistance by the content studios to go along with Apple on an al a carte model may indicate that they are somewhat on to Apple’s strategy. Content distributors stand to lose a lot from Apple’s al a carte model because Apple’s hypothetical dominance in the video market would likely reduce the studio’s bargaining power when selling their content. I’m not sure what I hope for in this situation. On one hand, I realize that competition is what is in consumer’s long-term best interest. On the other hand, I really like Apple and everything them sell and would like to see them become big enough to seriously challenge Microsoft. I think I’m just going to buy a Tivo.

This entry was posted on Thursday, March 2nd, 2006 at 8:24 pm and is filed under Apple. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.