Aside from the integrated graphics chipset (discussed at length here and here), the most oft-asked question since the Intel Mac mini’s introduction on Tuesday has been: “whither the DVR?” Earlier, Derik posted a quote from Apple VP Phil Schiller saying that Apple isn’t trying to replace TiVo.
I think that’s true, but I think there’s more to it than just playing nice. Being the weekend, I’m going to feel free to indulge in what we call a little extended entry. Read on below for why I don’t think we’ll be seeing an Apple DVR any time soon, and what I think we might get instead (hint: it’s not the Macintosh TV seen at right).
We’ve seen it time and time again: the patented Steve Jobs reversal. “Oh, nobody will want to watch video on their iPod.” “Who wants a cheap headless Mac?” “Chocolate and peanut butter? You, sir, are out of your mind!”
Okay, I may have made that last one up. You get the picture, though. As a company, Apple’s not just about making slick computers, or a great operating system, it’s also about making decisions that are sound, businesswise. At the moment, the Apple DVR is very much not.
The top of the list, number one, can’t-ignore-it reason that Apple won’t be making a DVR is simple: cannibalism. Not Hannibal Lecter “with a nice chianti” cannibalism, but sales cannibalism. Apple has already entered the time-shifted TV market with a little mom-and-pop operation they call “iTunes.” That $1.99 an episode price point is gold for Apple. It’s the gift that keeps on giving. Every time someone downloads an episode, bam: Apple gets paid. And while the content providers probably wish they could push for higher prices, at the moment, even they seem to be satisfied because the iTunes store is doing a bang-up business.
Now, let’s take an alternate world where Apple did indeed introduce a DVR in the latest Mac mini. Mac fans around the world rejoice in ecstasy, proclaiming that salvation is finally upon us, etc. What could possibly go wrong?
Well, for starters, wave goodbye to downloadable TV on the iTunes store. The obvious reason first: why would you shell out $1.99 for a DRM-locked episode that you can record on your new Mac mini DVR for nothing? That’s just silly from the consumer’s perspective, but from Apple’s perspective, it’s the destruction of a perfectly good revenue stream.
Apple has built a reputation of being able to walk the very fine line between advancing technology and keeping content producers happy. In the DVR scenario, these same content producers are going to be sitting around and scratching their heads as to why they’re teaming up with a company that is letting users record their content for free.
That said, there may be some models that could work here, but they start infringing on what the consumer wants. Sure, Apple could follow TiVo’s lead and incorporate banner ads that show up when you fast forward through commercials, or enforce draconian restrictions on what users can record, or how long they can keep it. But how many people will opt for that when they could have a nice DRM free solution from the likes of El Gato? Third party companies have no incentive to stay out of the content providers way. Apple does.
Far more likely to me seems the suggested AirPort Express with video. Not only does it logically extend a foothold that Apple already has, but it meshes quite nicely with what Phil Schiller said: “This is about taking the media from your computer and accessing it via the TV.” Broadcast, as a medium, is becoming more and more antiquated. Many people say that once they’ve gotten a DVR, they ignore scheduled programming almost entirely. The future of television is on-demand, and right now, Apple’s one of the strongest, if not the strongest player in that market.
But as I said up top, we’ve seen the Steve Jobs RDF flipped from “suck” to “blow” before. It may be they just haven’t figured out how to make an Apple DVR profitable and palatable to consumers and content producers alike. But if anybody’s capable of it, it’s probably Apple. So if Steve shows up next month with an Apple DVR, well, I won”t be going to Vegas any time soon, that”s for sure.
The other big obstacle I see is what TV format does Apple choose if they do add DVR? HDTV (ATSC-OTA)? NTSC (OTA)? CableCard? Analog Cable? QAM Cable? DirecTV? Dish?
The last two are closed systems so very improbable.
My hope would be a dual ATSC-OTA and CableCard, but I don't know what the cost implications would be. Perhaps they can squeeze some $$ out by going to a MacMidi, a larger box, standard stereo width, bigger/cheaper hard drive and drop the Super-Drive (throw a bone to the content producers).
You are absolutely right. But with time, apple always ended up doing what they say they won't do.
I disagree on two things:
I think if Apple sold so many DVR/Computers that it impacted the iTunes sales they'd be pretty happy. Plus you could buy on demand with the remote, they might even sell more. I'm not sure what % of the video sales is TV vs. videos...
If they supported HD which none of the TiVo's but the satellite models support (I think) they'd be selling these like hotcakes.
"Sure, Apple could follow TiVo's lead and incorporate banner ads that show up when you fast forward through commercials"
None of my TiVos show banner ads when I fastforward during commercials. (I think the ex-competition used to do something like that).
And a comment: Make the PVR subscription based but SO cheap no one will complain and let them apply part of the $20 a year cost to some videos or something. Now they sell a few and keep people hooked.
A subscription model is an interesting idea, Gary, but I wonder if it would fly. The only subscription based model that Apple currently employs is .Mac. They've vehemently been against subscription for music downloads in the past.
HD support would be a big kicker. TiVo is due to release their Series 3 with HD support sometime this year, I believe, but it is currently supported by the satellite and some of the cable boxes out there. Granted, I think that would further cannibalize iTunes sales, since Apple only sells video formatted for the iPod there. Which is an interesting gap in the first place, since if you expect most people to hook up their new Mac minis to their HD TV, and then download a 320x240 video from iTMS to watch on it, they probably aren't going to be very happy.
Dan, it may cannabalize iTMS sales to some degree, but I highly doubt anyone is using it to get the majority of their shows. The cost is simply too prohibitive. If you watch more than a couple shows regularly, iTMS quickly overtakes a cable subscription in cost.
Networks are unlikely to care that Apple offers both iTMS and a DVR because they're already getting their cake out of advertisers and cable/dish companies. I'd even go as far as to suggest that most iTMS purchases are gravy for networks as those purchases are by users buying up old seasons and episodes, whose earning potential as a broadcast show has elapsed and disappeared. A DVR can't be used to get old seasons or even content in the past that wasn't already specified to be recorded.
You even acknowledge that the quality and pixel size of the iTMS wares are unlikely to satisfy most users.
Now is the time for Apple to pounce in the DVR market while TiVo is floundering and the various broadcast services (cable/dish) are still struggling to make quality DVRs.
I don't see it as a step back, but rather as a necessary interim step until Apple can deliver all your TV content through iTMS at a reasonable price, a la a subscription On Demand type service.