Posts tagged Netflix
Shortly before he died in 2011, Steve Jobs uttered four exciting words to his biographer, regarding Apple’s plans to revolutionize the television experience: ”I finally cracked it.”
Since his death, everyone’s been guessing what exactly “it” was—or is. Year after year, analysts continue to believe Apple will build a physical television set, but as CEO Tim Cook says repeatedly, Apple already has a television solution. It’s called Apple TV.
Originally designated as a “hobby” project called “iTV” when it debuted in 2006, Apple’s set-top streaming media center hasn’t changed much since its second generation model debuted in 2010. But the next update, likely due later this year, might just turn out to be the television experience Jobs had envisioned.
The current-gen Apple TV functions like most set-top boxes: It streams movies, TV shows and music from providers like Netflix, HBO, ESPN, and even Flickr and Vevo. But if Apple’s $99 black box is going to distinguish itself from countless similar streaming offerings—especially Google’s $35 Chromecast—Apple needs to take a page from a different pioneer in order to offer something truly different.
Taking A Page From Netflix
How did Netflix’s streaming service get so successful? It didn’t just offer instant gratification—it offered low risk instant gratification.
For a monthly membership fee, Netflix customers get a no-hassle to browse through movies or TV shows. Unlike other online movie services that force customers to pay for each movie or program they rent, even if they don’t like it, Netflix subscribers can start watching a movie, change their mind, and start watching something else—without paying twice for it.
Netflix doesn’t always boast the most popular or critically-acclaimed movies, though its selection is improving as the company signs more streaming deals with studios and distributors. But customers love Netflix anyway because they can watch as much as they want without repeatedly taking out their wallets. And that’s the key.
How iTunes Can Transform The Apple TV
Apple doesn’t own Netflix, but it does have its own secret weapon: iTunes.
People already use iTunes, the most popular media player in the world, to store their music, movies and TV shows, but iTunes also houses the biggest multimedia vendor in the world—the iTunes Store.
That isn’t to say it’s intuitive to use. Both iTunes and the iTunes Store are available on the Apple TV, but the iTunes Store is divided into three separate apps for “Movies,” “TV Shows” and “Music.” This fragmentation is both unnecessary and confusing, especially since Netflix has been able to consolidate its offerings in an easy-to-use manner.
But Apple has a bigger problem to fix. And that’s its pricing structure.
Let’s say you want to watch a newly-released movie on your Apple TV. Currently, new movies from the iTunes Store cost at least $20 to own or $4.99 to rent. But if you rent a movie, you have 30 days to watch it, and once you start watching it, you only have 24 hours to finish it. Compared to Netflix, which allows you to watch as many movies as you want—as many times as you want—at a much more reasonable price ($7.99 a month), the iTunes Store is downright medieval.
Of course, that sort of pricing structure made sense back in the days of Borders and FYE, when DVDs sold in stores for about $20. But those stores went out of business for a reason: We aren’t living in that age anymore. With torrent files and P2P services, people can download movies or TV shows in minutes, for free, and own them forever. It’s mostly not at all legal, but it is difficult to stop without policing the Internet to a degree that just about everyone but Hollywood executives finds distasteful.
The iTunes Store’s 99-cent songs proved an excellent deterrent to online music piracy when it they debuted in 2003. Apple needs to push ahead with a similarly revolutionary pricing structure for streaming media. It needs to embrace the Netflix model to make the iTunes Store—and, by proxy, the Apple TV—a winner in the streaming age.
How It Could All Work
Imagine this: For $10-12 a month, your Apple TV gives you total access to the entire iTunes Store. You get all the new movies and TV shows right after they air, and you can watch them as many times as you want. No more rental rules and restrictions. You still have the option to purchase these titles and keep them in your personal iTunes library, but your monthly fee just lets you stream those titles whenever you want.
If this were main feature of the next Apple TV, would you pay for it?
That would be a great start. But the next-gen Apple TV also needs improved, simplified software and the ability to connect to more platforms. The key to all of it, however, is search.
The biggest problem with the Apple TV—and possibly the reason why there’s no available Apple TV API or software development kit for developers yet—is there’s no way to efficiently search everything that’s available on your Apple TV. Currently, if you’re looking for a particular movie or TV show, you have to search every applications separately, which is a big time-waster.
Apple has the technology in hand to fix this, not least thanks to its 2012 acquisition of the app search engine Chomp. But Apple could also easily take a page from Microsoft’s Xbox One and enable voice search functionality with the aid of Siri. It could even take things a step further and start offering cross-service recommendations to users, much the way Netflix does for its customers.
Apple TV also needs to expand its media offerings. While it offers 40 different “applications,” the platform is still essentially closed. Opening it up via an “App Store” for the Apple TV could lead to a flowering of entertainment options for users, similar to the way the iOS App Store surprised users with what you can do with an iPhone or iPad.
The Unveiling And Release Strategy
A new Apple TV, with a revamped iTunes Store and overhauled search system, might be unveiled in March or April, but it sounds like Apple will wait until September or October to release the new hardware. That’s a good thing, because it can definitely use a long window like that—not just to build anticipation for the system, but also to ratchet up the pressure on reluctant movie studios and pay-TV distributors.
Here’s the problem: Apple has been reportedly trying to close deals with these companies for almost two years now, so far without success. Apple faced similar resistance among music studios wanted to introduce the iTunes Store—particularly with Sony Music, was the final holdout among the five major record labels.
In the same way Sony stubbornly refused Steve Jobs’ initial offer to join the iTunes Store, pay TV distributors know they have the same kind of leverage against Apple—they own the rights, after all. Today’s negotiations with cable providers are further complicated by Comcast’s bid for Time Warner Cable, which would create a single pay-TV behemoth that would undoubtedly rather call the shots than dance to Apple’s tune.
But that’s why Apple might be willing to introduce the new Apple TV service before all of the deals are signed and sealed. If Apple introduces the service and it’s an immediate hit, that’ll put pressure on the remaining holdouts to get in while the getting is good. And it could be at least seven months between the unveiling and release dates for the Apple TV, which is a long time for any resistant company to refuse an offer from Apple.
Booting Up The Next Apple TV
The next Apple TV might not be the ultimate TV experience at first. According to the Wall Street Journal, cable-company resistance might force Apple to settle for offering only the five most recent episodes of current-season shows and blocking users’ ability to fast forward through those programs for three days after they air. (Apple originally asked for full seasons of TV shows as well as live programming.)
But any deal is a move in the right direction for the Apple TV, which has remained static for so long. As Netflix demonstrated, it’s not necessary to offer every movie or show on Earth to succeed. The most important factor is a financial model that makes sense to people and respects their desires as consumers.
Apple already owns a broad multimedia platform, connections with all of the “right” movie and TV companies, and a piece of hardware to fit it all. With improved search and a revamp of its archaic rental model for movies and TV shows, Apple could finally inch closer to the living room experience Steve Jobs once dreamed about.
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Netflix CEO Reed Hastings has a blunt message for Internet providers: Don’t mess with net neutrality.
The video streaming service could be uniquely vulnerable should net neutrality, the principle that carriers should deliver all Internet traffic without discrimination, falter in the wake of an adverse court decision last week. Netflix may be the biggest user of Internet bandwidth on the planet, accounting for close to near a third of peak Internet traffic in the United States.
Simply by degrading its video streams or levying surcharges for the bandwidth they take up, cable and telecom companies could theoretically neuter the service. Netflix users, of course, have already paid for that bandwidth, which hasn’t stopped ISPs from making noises about getting companies like Netflix to pay for it a second time.
Hastings professes unconcern about that possibility, though he also isn’t shy about flexing a bit. In his letter to shareholders today, the Netflix CEO essentially warned that if cable or telecom try to play hardball, users will riot:
Unfortunately, Verizon successfully challenged the U.S. net neutrality rules. In principle, a domestic ISP now can legally impede the video streams that members request from Netflix, degrading the experience we jointly provide. The motivation could be to get Netflix to pay fees to stop this degradation. Were this draconian scenario to unfold with some ISP, we would vigorously protest and encourage our members to demand the open Internet they are paying their ISP to deliver.
The most likely case, however, is that ISPs will avoid this consumer-unfriendly path of discrimination. ISPs are generally aware of the broad public support for net neutrality and don’t want to galvanize government action.
Moreover, ISPs have very profitable broadband businesses they want to expand. Consumers purchase higher bandwidth packages mostly for one reason: high-quality streaming video. ISPs appear to recognize this and many of them are working closely with us and other streaming video services to enable the ISPs subscribers to more consistently get the high-quality streaming video consumers desire.
In the long-term, we think Netflix and consumers are best served by strong network neutrality across all networks, including wireless. To the degree that ISPs adhere to a meaningful voluntary code of conduct, less regulation is warranted. To the degree that some aggressive ISPs start impeding specific data flows, more regulation would clearly be needed.
Shorter Hastings: It’s your move, Internet providers. And if you screw up, prepare to face the wrath of your customers—and possible federal regulation.
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As the 2014 Consumer Electronics Show rapidly approaches, Samsung, LG, Sony and others are ready to release their latest and greatest televisions with support for 4K, which was officially deemed “Ultra High-Definition,” or “Ultra HD,” by the Consumer Electronics Association (CEA) in October 2012.
With four times the resolution of standard 1080p, 4K displays have consistently been among the main attractions at CES the past few years, but the next-generation display standard has suffered from a lack of content providers—until now.
YouTube on Thursday said it plans to showcase 4K videos for the first time at the 2014 CES in Las Vegas, which runs from January 7-10. YouTube’s 4K videos will be streamed with Google’s new VP9 royalty-free video codex, which, according to YouTube global director of partnerships Francisco Varela, will improve video streaming and be available in hardware from more than 19 different manufacturers.
Netflix, which gave its users a taste of Ultra HD when it added seven 4K videos to its catalogue in late October, also has some 4K-related announcements for this year’s CES, as the Los Gatos, California company has already stated its intentions to offer 4K streaming in the first half of 2014.
With YouTube and Netflix ramping up their respective 4K inventories, will 2014 be the year Ultra HD breaks into the mainstream?
What’s Stopping 4K?
The 4K format is indeed ahead of its time — and that’s not necessarily a good thing.
For reference, a 4K Ultra HD display is defined as one that has a resolution of 3840 pixels × 2160 lines. If you thought your 1080p HDTV was slick, a 4K display technically has twice the pixels and truly creates a breathtaking viewing experience. If you are curious, you can go to Best Buy and check out the display models to see what all the fuss is about.
Televisions with 4K support are not common, and they’re not cheap, either. Seiki Digital might offer with its 50-inch 4K LED TV for $769, but the majority of UHDTVs from the big-name retailers like Samsung and LG start at about $3,000. A few particular high-end models, including Samsung’s new 85-inch Smart 4K TV, range up to a whopping $40,000. The 110-inch model of that same Samsung 4K TV costs a panic-inducing $152,000.
The other downside to 4K is that ultra displays require ultra juice—that means fast hard drives, and even faster connectivity. Normal HDMI cables might result in a choppy picture, so for the smoothest possible picture, consumers will want to purchase an HDMI 2.0 cable, which runs 4K at a fluid 60 frames per second. Unfortunately, the new standard was only announced four months ago and will take some time to become commonplace.
And, of course, there’s the content. Netflix and YouTube are attempting to address the lack of native 4K content in 2014, but content creators will find that 4K video cameras are far from cheap. Furthermore, there are no movies or TV programs filmed in native 4K, and the current fix for upscaling non-native content—filling in the pixels to address the lapse in quality—creates a distracting, grainy result.
When Will 4K Become The Norm?
The 4K TV won’t likely outsell the HDTV this year, but Ultra HD may become the standard by the end of the decade if two things can happen: Content providers, especially television channels, create more content in native 4K, and Ultra HDTVs would also need to be sold in variety of sizes and price points. New technology must be affordable to the masses if it is to become mainstream. As of now, 4K televisions are expensive and impractical luxuries.
The price of the average flat-panel television reached $1,224 in 2012, which was largely driven by the variety of screen sizes and advanced features, according to IHS iSuppli. But even though the average TV price was over $1,000 in 2012, respondents across all age demographics in a 2012 survey from Alphawise and Morgan Stanley Research said they only paid $800 to $900 on average for their current televisions.
The world outside CES may not be ready for Ultra HD, but here’s some hope for those hoping 4K makes a splash this year: The GoPro Hero3 Black Edition is one of the few relatively affordable 4K-ready video cameras at just $399, and Polaroid (yes, that Polaroid) on January 1 announced its plans to sell a 50-inch 4K TV for just $999.
Top image: “Fuzzy Flowers” by Dan Rowinski for ReadWrite
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