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October 13, 2005
Steven Jobs stars in remake of the Iger Sanction
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By now you have read Apple’s news yesterday about a video capable iPod. I am using that phrase because Steven Jobs himself said that it was really a music iPod with video thrown in for free. It seems obvious that while the master showman basked in the buzz generated by the video iPod idea, he was unwilling to say that the video business model would pan out.
It is important to note a few things.
The success of the original music iPod did not require Apple to create new consumer behaviors. Portable music has been with us for decades and MP3 music downloading is also common place. What Apple brought to the table was what Apple does best – made it mainstream, made it easy, and made it ‘cool’ to own. In the process they also became a significant conduit of music distribution.
Portable video is a behavior that has yet to mature and I don’t know if even the Apple juggernaught can will it into existence. On a side note, cell phone video enthusiasts that believe that their handhelds will become the next television device should pay attention.
Is the portable video concept new? No. There have been other attempts at video and they have yet to catch on with the public as MP3 players did pre-iPod. Even the mighty Microsoft has not succeeded in this yet.
Will the public pay $1.99 to watch Desperate Housewives? Doubtful. Comcast with it connection to millions of televisions in HDTV in Technicolor splendor could not get consumers to spend anything for video on demand. Even the pay-per-view business, which is easier than video downloading, only generates hundred of millions annually.
Can Apple continue signing up content owners to sign onto its distribution channel? Sure. Recently even this blog ran a posting about how CBS Chairman Les Moonves would release CSI for video on demand if he could get $0.99 per episode.
Will a video iPod change consumer video habits? I say no. But if anyone can get a generation of mobile video watchers kick-started, Steven Jobs can.
An interesting outcome to contemplate is what happens if the video on demand conduit resonates well with consumers but not the $1.99 download fee. You can already feel the marketing sharks circling in the water; wondering how to make the medium ad supported instead.
“This is video on demand without the problem of cable operators,” said Tim Hanlon, senior VP, Publicis Media, noting that “Apple has trumped Comcast” in the area of on-demand programming.
My prediction is this: the video feature will feel cool, but don't expect any change in the television/movie distribution landscape anytime soon. More likely the popular content will be free video-podcasting clips provided by repurposing news and sports and by individuals having fun.
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