MacDailyNew reports that Forrester Research is betting that video downloads don’t have a future. Although they suggest that paid video downloads will increase this year, generating about a third of a billion dollars in revenue, they’re predicting that this market will evaporate. Currently Apple, Amazon, Microsoft, and Walmart all offer paid video download services. The problem is apparently that sites like NBC and CBS offer free streaming media, where they receive ad support and they control the content and the audience.
Forrester also seems to think that Apple TV will switch to an ad-supported broadband service provider. The video content will shift from iTunes paid episodes to YouTube and Google video content as well as ad-supported streaming from the major networks. And that movies-on-demand providers such as CinemaNow and Movielink will partner with satellite and telco service providers, going back to more traditional on-demand video.
Seems to me that Forrester is guessing that everything will be running quickly to return where it all used to be instead of moving forward into new models. And I’m not sure that I agree with any of this.
I mean, take Apple TV. Everyone agrees that there’s still missing components: no High Def iTunes offerings (yet) and no video subscriptions (yet) and limited movie selection (so far) and no iTunes shopping or Web browsing (yet and yet). But does that mean Apple should turn it into a $300 funnel for free-to-Internet video? I don’t think so. I’d imagine that long before Apple turned Apple TV into a crappy WebTV redux that it would make it into a high-def PVR.
Consider external USB hard drives and an Apple-TV-friendly EyeTV system. They’d give you a relatively cheap High-Def TiVo alternative long before Apple replaced it with a crippled WebTV-esque service, right? I mean, let’s do the math. High Def Tivo means an expensive unit plus an expensive monthly fee. Apple TV is $300 plus $100 for a high-def tuner plus an external USB drive at, say, $100. So for $500 you’ve got fabulous high def TV PVR. You’ve got that now, of course, if you don’t mind adding in a Macintosh to the equation, sitting in another room with a router. And you can already buy content on demand from the iTunes store, even if it’s not yet high def. Forrester doesn’t seem to see that there’s more to Apple TV than the iTunes store.
But speaking of the iTunes store, as I’ve written before, I’d really like to see a video subscription model. I think Netflix has gotten it right–and is continuing to get it right by expanding from their disk delivery service by adding a video download model. I’d much prefer an all-you-can-eat approach to video subscriptions but I think the “check out N at a time”, where you pay more for larger values of N, is also a healthy approach.
Netflix also gets it right by offering both movies and TV shows. If it’s on DVD, you can rent it, watch it when you’re ready to watch it, and then send it back so someone else can watch it. It doesn’t matter what the content is. Compare and contrast with iTunes, where there are essentially separate TV and movies stores. I don’t see Paramount or Universal adding ad-supported movie services to their websites any time soon the way that the networks are doing.
Finally, more and more people are cutting the wires. They’re opting out of cable and satellite. Sure the numbers are very tiny right now but they’re growing. With Internet-delivered video, consumers are now discovering that they have a choice outside the satellite/cable monopolies. Just like those people who dropped their landlines and switched entirely to cell phones, consumers are discovering that with PVRs, free-to-air high-def video and online download services, they can choose what they want to watch, when they want to watch it. I’m guessing that appointment television is dead and it just doesn’t know it yet.