Over the summer I read Walter Isaacson's bio of Steve Jobs. Toward the end, Jobs claims that he finally figured out how Apple can be successful in the television market: "I've finally cracked it." But of course he does not reveal the strategy to Isaacson.
One of the more interesting anecdotes from Jobs' biography shows his thought process concerning the mobile phone -- a piece of equipment he derided with a four-letter fecal expletive. You could easily say the same thing about the customer interface with television. Also with the growth of cloud computing, we should be able to watch anything at anytime we want. Try doing that now with the typical cable box!
Last week, there were multiple press reports (here is one from WSJ) hinting that Apple aims to shake up the TV industry the same way it shook up computing, music players, music distribution, mobile phones and tablets. Apple is reportedly in discussions with both cable companies and entertainment producers. This case study of market entry will no doubt be a fascinating one.
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What's going on with inflation?
2 years ago
Watch what you want whenever you want... The struggles we watch DirectTV have with Viacom to agree on appropriate costs to air their channels, Time Warner with the NFL network, etc... there isn't enough differentiation between current television options out there to justify significant changes in spending (I don't care if you call your DVR "the hopper" it isn't worth $20 a month to me). The supply side of elasticity to a change in fees is very high it appears in the competitive landscape that exists today.
ReplyDeleteBut if consumers could watch what they wanted, when they wanted, integrate TV with their iPad, iPhone, computer and layer in apps to add another layer of value...that could not only drive a paradigm shift in the market for what people prefer, but it could make the elasticity of demand for apple TV relatively inelastic. $400 phones, $800 tablets, and computers that cost 2X the price of a comparable PC are continuing to dominate the market place. Apple will be able to afford to pay whatever it takes to have these channels available. This might even drive up the price for the current suppliers in the market, making their products even less desirable.
Americans go to work, they sleep, they eat, and they watch TV. Using the 80/20 rule means that people should be willing to spend more money on TV if it adds significant value. If they get it right I think it will change the way we consume this product in general - even if it cost twice what typical TV options cost today.