The Real Deal with the video iPod

David Card of Jupiter Research links to a Mark Cuban post about the real significance of the iPod video announcements.

It’s not about portability, it’s about breaking down release windows — or not — and re-engineering the consumer-paid vs. ad-supported nature of Amuhrican TeeVee.

And he quotes Mark:

And this isn’t about watching video on Video iPod screens. Its about downloading video to iTunes software and its competitors, and all the places it does and will reside. All will be playback devices.I expect that either a 2nd tier of pricing will come along from Apple for full screen quality that is designed to play on a TV rather than an iPod or half screen on a Laptop or PC, as competitors compete by enabling higher quality and full screen playback. All of which will further expand the market. The future of network television got immediately brighter yesterday. All because Bob Iger had the brilliance to say yes to giving consumers his content , where , how and when they want to consume it.

Both David and Mark are quite right. The real story of the announcements that Apple made are that consumers now have a choice of downloading legally content that previously they could get only illegally. Just as iTunes Music Store made it simple and easy to download audio programming legally, so Apple has done it again with video.

There’s just a few flies in the ointment, though, that make it less than a foregone conclusion that Apple will win this one. First of all, there’s the quality: while the video content looks pretty decent on the iPod’s screen, there are plenty of reports around the web that it’s not so great when blown up to TV-size. That’s something that Apple must address, and quickly: while most consumers couldn’t tell much difference between AAC at 128k and CD, they’ll easily see the difference between a TV programme recorded on a PVR or computer and the current video that Apple is selling.

Second, Apple needs to make FrontRow available for all Macs, and especially the Mac mini. FrontRow isn’t as comprehensive as Microsoft’s Windows Media Center, but – in standard Apple style – it does what it does very well, and it’s a good “living room distance” interface. Making it standard on all new consumer Macs makes sense – and I see no reason why Apple shouldn’t make it a free download to everyone else.

The third issue that Apple has to deal with is the complexity of the media rights landscape worldwide. Transferring this service to countries outside the US isn’t a simple process of negotiating with the territorial rights holders, as it was with music. For example, suppose Apple wanted to make Lost available in the UK. Lost is made by ABC, but in the UK it’s been bought for broadcast by Channel 4. Channel 4 has bought a package of rights that allows it to broadcast and repeat the programme in the UK, in return for which it pays lots of money and promotes the programme, which in turn will ultimately lead to more sales of DVDs and more revenue for ABC.

Now how does ABC make available Lost to UK audiences? Who gets the money? How much does Channel 4 get, how much does ABC get? You can imagine the negotiations.

Then add in the question of question of residual payments. These are rights that actors get for repeats of shows they’ve been in – and some way would have to be made of accounting for these and distributing monies for downloads. And then there’s the fact that rights holders for TV shows are much more diverse than for music. Whereas, by negotiating with a handful of record companies, you could cover off 80% of music, rights in the TV industry tend to be held by in whole or in part by the production company that made the programme – and there are hundreds of these in the UK alone. Unless Apple looks for a blanket agreement with someone like PACT, it will have major problems with rights negotiations.

  • Dogger

    You have even underestimated the problem with the quality. It’s not iTunes Music Store vs. CD quality that is the correct basis for comparison. It’s iTunes Music Store vs. Napster.

    With music, Apple offered the customers the opportunity to pay for exactly the same MP3/AAC quality they were downloading for free.

    With TV, Apple is offering the customers the opportunity to pay for a fraction of the qualty they were downloading for free.

    320×240 files are unheard of on ‘The BitTorrent Channel’. They’re a thing of the distant past. Sizes today generally range from 600 horizontal pixels to 960 pixels. Without matching at least the low end of this range, any online TV content for monitor-sized playback is dead in the water. Period. End of story.

    So the Video iPod is the only valid playback target for these video files. It is, in fact, all about the Video iPod. Any further quality of service is at the pleasure of people with a vested interest in not disturbing their advertising model. TV networks have a much stabler, more plum position than record companies. Their product is already free, and in consumers homes. I don’t think the economics are there to push many more studios than ABC to the table.

  • Dogger

    You have even underestimated the problem with the quality. It’s not iTunes Music Store vs. CD quality that is the correct basis for comparison. It’s iTunes Music Store vs. Napster.

    With music, Apple offered the customers the opportunity to pay for exactly the same MP3/AAC quality they were downloading for free.

    With TV, Apple is offering the customers the opportunity to pay for a fraction of the qualty they were downloading for free.

    320×240 files are unheard of on ‘The BitTorrent Channel’. They’re a thing of the distant past. Sizes today generally range from 600 horizontal pixels to 960 pixels. Without matching at least the low end of this range, any online TV content for monitor-sized playback is dead in the water. Period. End of story.

    So the Video iPod is the only valid playback target for these video files. It is, in fact, all about the Video iPod. Any further quality of service is at the pleasure of people with a vested interest in not disturbing their advertising model. TV networks have a much stabler, more plum position than record companies. Their product is already free, and in consumers homes. I don’t think the economics are there to push many more studios than ABC to the table.

  • http://tapeitofftheinternet.com paulpod

    Great post, good comment. I’m pretty sure the two issues there are connected. The quality is deliberately low because the content owners will have demanded that it does not even scratch their DVD sales or TV rights. Apple will have pointed out, I am sure, the arguement that 320×240 minitv for $2 is not even comparable to the free stuff, but made this move to prove their point.

    Like the Motorola ROKR phone, this is Apple making an early land grab for new territory, but without wanting to appear to *need* it – “iPod is all about music” and demonstrating to the people in their way (mobile phone manufacturers and operaters, tv networks and rights holders) that unless you do it Apple’s way, it won’t work. Hence TV, not the big fish, movies.

  • John

    I disagree with Dogger. While I’d like to see the resolution improved, to the general public, the most important factor is simplicity. How easy is it for Jane Q Public to get her content is the question. If the quality is reasonable, they won’t care that it’s 320xThis or 720xThat until better quality is offered with the same ease of use. Fundamentally, people are lazy and don’t want to work at getting their entertainment – that’s what entertainment is all about. If Apple makes it easy, provides plenty of content (that’s another critical component), and inexpensive – it should sell. As more of the country goes broadband, they’ll up the quality.

    Now, if they get enough content, I’m prepared to drop or reduce my current cable tv service which is about $50/month and go download for those programs. The only thing I’ll really need from cable is sports channels – ESPN & USA (some tennis & golf).

  • nick

    With TV, Apple is offering the customers the opportunity to pay for a fraction of the qualty they were downloading for free.

    Exactly. Some people go to BitTorrent for network shows because BT releases are usually based on the HD feed. It’s strange, because Apple has pushed HD video through its production tools, displays and QuickTime, but seems loathe to put it into practice. Or perhaps the content-providers don’t want to damage DVD sales? Which is both tight and dumb.

    So Apple is in an odd position here: on the production side, the future is HD; on the consumption side, it’s 320×280. I don’t think that disjunction is sustainable.

  • Kai Cherry

    Actually, people are (again) confusing computer display resolution with tv display resolution, and are completely overlooking the TV Out aspect of this new iPod.

    High bitrate 320×240 downloads from the iTMS look *quite good* on a standard 480i NTSC television. TV resolution just isn’t that high.

    Furthermore, for user-created video, users have the option of up to 480×480 2.5mbps MPEG4 video. This is the resolution used by DirecTV and works well.

    It isn’t really about viewing on the computer, but from store-to-tv in a portable package that can be shared back to tv.

    As for the Bittorrent sources…sure a lot of them are *based* on the HD broadcast, but are put on line in SD and labeled “HD”…they are not full 1280x720p video files.

    I’m *pretty sure* Apple’s encodes are from pristine source as well, and downconverted. :)

  • Scott

    I think people may be going overboard on the resolution thing. We need to keep in mind the intent of the video offered. The iTunes Music store in no way promotes any of the video as high quality 1080i stuff. But, more importantly, there is a very serious bandwidth issue most people seem to be ignoring. A 45 min. Lost episode at 320×240 weights in at about 198 MB. That’s a pretty hefty download for almost everybody. And before the bit torrent guys come back with a na-uh, a 1080i Lost episode would be in the GB range: can you really imagine ten of thousands of people trying to download multi-GB files all at the same time from the same servers without bringing the internet to its’ knees? Maybe you’ve got a T1 connection, but I don’t.

  • Anna

    Bought a Pixar short from iTunes, ran it in 1) my powerbook and 2) plasma TV connected to the PowerMac. With the powerbook, it does look dinky (very small), but really not so bad. Running it with Quicktime (so that I can expand the picture full screen), I can see some artifacts, and the edges around the images are not too sharp, but again, it’s not bad.

    On the plasma TV (50″ NEC), it looks just fine full screen. Again, there’s some sharpness lost around the edges, but eminently watchable.

    Will I build a library of iTunes TV shows? Nope, not if I can buy DVDs or get BitTorrent. Will I buy from iTunes? You betcha. It takes in the order of hours and days to download something off bittorrent (I normally leave the computer on all night downloading stuff). If I missed a show I’m following, and I can download it in a matter of minutes the next day, I’ll do it. We don’t watch TV shows for the quality, although watching CSI in HD is really nice. For the soaps and other dramas and comedies, we don’t much care about how sharp the picture is. We just want to follow what’s going on. If I miss an episode of Gilmore Girls, I don’t want to wait a whole season for the reruns to start. And it’ll take about a week or so before the torrents even show up with respectable download speeds.

    With respect to the resolution, my husband and I are watching Pixar’s Boundin’ full screen on the plasma right now, and it looks just fine.

    I think Apple is going to score on this one. They’re selling convenience more than anything. If they start selling the TV shows I watch and somehow miss an episode, then iTunes Music Store is definitely first on my list when it comes to downloading if I just want to catch up.

  • dggraphics

    I can attest to the fact that the .m4v videos that Apple is selling via iTunes music Store look just great on a regular television set. I downloaded an episode of the show NIghtStalker to test it out. While the show itself probably won’t win any emmys it’s viewing quality was good. 320×240 non-interlaced scales up just fine on a TV. On a HD TV or Computer monitor the quality is still pretty good, depending on what the resolution is set at. At 640×480 the picture quality is still excellent, there is hardly any evidence of pixellation, the H264 codec provides excellent image quality. Even fullscreen at my monitor’s native resolution of 1920×1200 the show is still very watchable, while I wouldn’t want to watch it sitting at my desk, from the couch 4 feet away from my screen, the imperfections fade away. On a scale of 1 to 10 for downloaded videoquality I would have to give it at least a 7 and go as high as 8.9 depending on how you are going watch it. Check it out for yourself, i’m sure you’ll be surprised. On a side note; The shows cannot be exported or converted to a different format nor can they be burned to DVD so you can watch them on a conventional player. So if you buy the series of a show you can only back them up as data. Hopefully they will give us that option in the future, but they probably won’t as it will circumvent DVD sales. The lost 1st season on DVD is about $50 while iTunes has the Series for download at $34. Anyway it’s a pretty good system. Hope more networks will hop on the band wagon.

  • http://www.ambivi.com Wes McGee

    I think people are forgetting the most obvious competition that Apple has right now in this brave new medium… television itself. Cable has been dragging its ass on VOD, but I can imagine that this development will speed them along. If this happens, you can pretty much download TV shows directly to your TV and watch it whenever you want. VOD will always be easier through TV than through iTunes. I don’t think there is as much demand now, or will there be much demand for portableness that isn’t already provided by DVDs and the like.