Thursday, September 02, 2010

One Apple Nugget No One Mentioned

With thousands (maybe millions) of other Americans, I watched Apple's press event yesterday with awe and admiration. It was kind of fun to predict what Steve Jobs was going to say before he actually said it, based on rumors and my own intuition. While there were many comprehensive reports, articles and blog posts today all about the products/services that were showcased by Mr. Jobs, there is 1 angle/perspective that I don't think has received much attention.

What is significant to me, is the fact that Apple publicly acknowledged that it's original TV launch strategy and business model was flawed somewhat, leading to the PR/marketing nightmare of "hobby" being associated with the product. However, unlike its predecessor, the new Apple TV is clearly acknowledging that consumers prefer to stream online video, rather than download-to-own...with or without DRM. This is a huge behavioral and media consumption shift that cannot be ignored any longer by all of the players in the value chain. This is the future. Adapt or die.

So far, consumers have showed little interest in purchasing TV shows, and Apple's $.99 cent rentals may not drastically change that attitude, but I'll wager that mainstream America quickly hops on board the train, 1 dollar at a time, because the overall value proposition (price, ease of use and a closed system) is now more in tune with the demand curve that is exponentially growing beyond the early adopters. (Case in point, over 61% of Netflix's 15M subscribers "streamed" at least 15 minutes in Q2 this year, up from 37% in 2009.)

So, in my humble opinion, they made the correct tweak. The highly affordable rental price per show and the $99 hardware price are killer sweet-spots that will resonate loudly with the mass market, especially after their Marketing team trumpets the coolest Koolaid and the competition feels the squeeze and quickly becomes the latest roadkill (sure am glad I didn't buy my boxee or Roku yet...)

1 comment:

strachota said...

I'd have to disagree Todd. While the $99 price point is very attractive, the device is only a Roku with a better interface. Other than hooking up to a TV, there is nothing "TV" about the device. I either get my TV for free now, or pay an arm and leg through cable or satellite, so why would I possibly spend $0.99 on something I wasn't smart enough to record with my DVR or even my VCR--if I still have one).

I think it very funny that they even market the show Glee--which will be rerun 400 times this year just in case I didn't see it the first time around.

I think Apple is still running on it's charm, rather than true invention or customer needs, and just like it's predecessor devices, this one will survive only on it's new low price point, not it's new ingenious way of making me pay for content which I already have. Nice try Apple.