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  • Video and the iPod: A Toy or a New Business Model?

    November 5th, 2005

    All right, let’s face it: Apple is hot stuff. The stock price is soaring once again, and Wall Street is expecting, well, miracles. It’s not just the prospect that iPod sales will total 37 million as of the end of this quarter, if sales go as predicted. It also means that more people out there are using iPods than Macs, even with the most optimistic estimates of the Mac user base.

    But there’s more. Just as Apple made legitimate music downloads a successful business, the same may be true for videos. Of course it’s very early in the game. The iPod with video capability (or “ViPod” as some of my guests on the radio show are apt to call it) has only been on the market just a few weeks. But video downloads reached the one million mark in just 19 days. It’s not just the latest episodes of “Desperate Housewives” or “Lost,” but music videos from your favorite acts as well.

    At this point, I suspect it’s too early to tell if the thrill will last once the novelty wears off. I mean how many of you really want to watch a video on a 2.5-inch screen? As for me, well, I’m in the process of reviewing a brand new 60GB iPod, so I’ll have to let you know if I can develop the habit. I suppose commuters who take public transportation, or sit in the passenger seat in a car pool situation, might appreciate the ability to catch a TV program missed the night before, assuming that there is enough content. And there’s the rub. The decision of Disney to license a handful of the shows from the ABC Network to Apple is very much a test. There’s not much of a selection–yet. But things can change if the other networks decide to get involved.

    Right now, I’m sure a lot of TV executives are watching and wondering what Steve Jobs has wrought. Today, you can watch a TV series on the original network, a network that carries the repeats, or buy the DVD. In each case, you get the full standard definition version or, in the case of some broadcasters, a high definition option. But Apple’s videos are no better than VHS in quality, at 320×240. Now that’s not as bad as it sounds. Many of you enjoyed movies on VHS for years and didn’t stop buying or renting them until the vastly superior DVD format came along. So in a sense Apple’s grand experiment is a throwback to yesteryear.

    It’s not really as bad as it sounds. If you’re not watching that video on a large screen television, it should be perfectly acceptable, so long as you don’t look too closely. And certainly it’s more than sufficient for the iPod’s tiny screen; in fact, the picture seems surprisingly bright and crisp and doesn’t seem near as small as you’d expect, if you hold it at a normal distance from your yes. But do you really want to pay $1.99 per show for a reduced resolution product? Sure, you pay 99 cents for a compressed music file, but the quality reduction isn’t near as significant, and, in fact, it’s close enough to CD quality to satisfy most of you, unless you’re really picky and have an expensive audio system that can showcase the usually subtle differences.

    As it is, buying an episode of a TV show is strictly for broadband users only. We’re talking about a huge file here. For example, I downloaded the premiere episode of “Night Stalker,” the remake of the cult series of the 1970s. Yes, I paid for it too. No freebies from Apple here. Now I have plenty of bandwidth from my ISP, with downloads of up to nine megabits, so waiting a few minutes to retrieve that episode, which lasts a bit over 43 minutes when commercials aren’t included, was not big deal. But it weighs in at 209MB, and that’s a pretty heavy load any way you put it if you’re bandwidth-challenged. Now imagine retrieving a file that’s genuine DVD quality, and consider it’ll be several times that size. Now you get the picture and that is definitely no pun.

    But Apple’s executives have a knack of predicting the future. Today downloading even the low resolution version of a TV show is still something that can require a little patience. A DVD? Possible, but a bit of a stretch. And I feel for those of you who are still saddled with dial-up service. Yes, it’s fine for email and accessing most of your favorite Web sites, and it’s also true that, even with low-cost broadband options, some of you aren’t located in areas where service is available.

    Steve Jobs and crew, however, envision a time where broadband is cheap and almost universally available. Download rates of ten or fifteen megabits or more will be the norm, with greater speeds available if you’re willing to pay a little extra. It will be possible to buy the high definition version of a movie or TV show and receive your copy in minutes. Today there’s plenty of trading in illegal product, and the studios desperately want to get in on the action once the infrastructure is there.

    If Apple’s grand experiment succeeds, you’ll see that long-awaited overhaul in movie and TV distribution, and Steve Jobs wants to be the gatekeeper.



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