June 03, 2010, 4:35 PM — When the rumor went around that Apple would be releasing a new iPhone-OS based Apple TV, there was a lot of excitement. I didn't really buy into the new Apple TV hype. Now, we know it's not coming, or if it is, it's not going to amount to much. We know this because Steve Jobs told us so.
At the D8 Conference, Jobs said, "The problem with innovation in the TV industry is the go-to-market strategy. The TV industry has a subsidized model that gives everyone a set top box for free. So no one wants to buy a box. Ask TiVo, ask Roku, ask us … ask Google in a few months. The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines innovation in the sector. The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it. But right now, there's no way to do that ... . The TV is going to lose until there's a viable go-to-market strategy. That's the fundamental problem with the industry. It's not a problem with the technology, it's a problem with the go-to-market strategy ... . I'm sure smarter people than us will figure this out, but that's why we say Apple TV is a hobby."
Jeeze Steve, wake up already. The old satellite/cable model is ready to die a horrible death. That's why TiVo, Roku, and, yes, soon Google are all in the TV set-top business. It's why Sony and all the other Blu-Ray DVD and high-end TV companies are sticking Wi-Fi into their devices as fast as they can so users can get to Netflix and the other Internet video sources.
It's funny in a way. Jobs gets that the old PC model is now on the decline, thanks in no small part to Apple's own iTouch, iPhone, and iPad. I completely agree with him that we're in the post-PC era. But, he doesn't seem to get that the cable and satellite TV companies are poised to make their own plunge.
It's really very simple. Right now, you probably pay $50 to $100 a month for over a hundred channels ... most of which are full of boring junk. Sure, DVRs (digital video recorders), which cost extra, make finding and watching TV moderately enjoyable. But, what if you could watch only the shows you wanted to watch, when you wanted to watch them, and you didn't have to pay anything extra for them once you have your Internet TV box?
Sounds pretty good doesn't it. Millions of people are already doing it. Hulu claims it already has 3-million people a day watching TV on its service. Netflix has more than 14-million customers and, starting with its last quarter, more than half of them are watching television and movies over the Internet (PDF Link). Oh yes, and Netflix is profitable.
I'd like to make an analogy to Steve Jobs. I remember when newspapers and magazines ruled the written-media world. Then, the Internet tore all that apart. Today, in my business, not a week goes by without another news story appearing about how one print publication or another is laying off staffers or going out of business. Why? Because the Internet has made it so darn cheap to deliver content. Why in the world Mr. Jobs, would you think that the same thing isn't already beginning to happen to the satellite, cable and local OTA (over the air) channels.
I guarantee it will happen. The cable companies' future lies in being ISPs (Internet Service Providers) not in delivering content. As for the satellite companies and the local TV channels, they're in real trouble.
You don't have to believe me though. Check out what the Pew Internet and American Life Project found in 2009. Their online video survey showed that even then of those who "watched television shows and movies online, 23% have taken the next step to connect their computer to their TV screen." There's your market Jobs.
Apple can still grab a big part of the Internet TV pie, but if they keep treating Apple TV as a hobby, instead of the next generation of television, they're going to lose tens of millions of customers to the Rokus, Netflixes, and Googles of the world.
