In talking about what made his game so different, Wayne Gretzky used to say that “a good hockey player plays where the puck is. A great hockey player plays where the puck is going to be.” It’s a great insight into the strategies that, with his talent, sportsmanship and drive, made Wayne a legend in the game. Steve Jobs used this very quote in the almost offhand, but profoundly important announcement at the close of his 2007 Macworld keynote, changing Apple Computer to simply Apple.
Some 18 months later, which would be now-ish, that new direction is becoming clearer, although some analysts are still a bit bewildered by what it all means. Case in point, Forrester Research produced a comical report this week that breathlessly anticipates Apple’s introduction of clock radios, digital picture frames and on-site service. Slow down, space-man, you’re blowing my mind! I can’t believe people pay in the hundreds and sometimes thousands for these reports.
One thing Forrester does get right is that there are many aspects of home life that Apple can touch with digital lifestyle products. Along with Microsoft, Apple has jealously been trying to wedge its way into the living room, getting some of that sweet engagement time that has traditionally been hogged by stereos, televisions and game consoles.
AppleTV is its way in, and after languishing for a year or was was re-positioned for wider appeal in the couch-potato market by adding movie rentals and un-tethering the device from the need to already own a Mac.
With a smooth iTunes Store experience, movies to rent or buy on demand and an eye towards the trend of wider screens and HD capability, AppleTV seemed well on its way to grabbing a huge chunk of media purchases and rentals.
This week, Apple was handily out-skated by Netflix. If you haven’t heard, Netflix released their own hardware+online service offering, and while it seems a bit shaky out of the gate it pushes AppleTV back onto the premium shelf. Let’s take a closer look at how these products measure up.
Faceoff
Fortune does a good job of rounding up the critical aspects of the AppleTV and Netflix offerings.
From this and sundry other sources, the Netflix experience sounds very beta:
- no on-screen movie selection (queuing is done on your computer via the Netflix site),
- high-octane broadband is a must or the quality is YouTub-ish
- a dusty 10% of the library is available.
But these do sound like debut jitters for what seems to be a strong product with a much simpler technological proposition than AppleTV: unlimited movies, instantly, across the internet for a $100 box and 9 bucks a month. You can explain everything it does in one breath. You can’t do that with AppleTV.
Now, I’d give away the cutest baby animals you can think of before I’d give away my AppleTV. But understanding its capabilities and getting it set up to take full advantage of what it can do is no mean task for those who don’t really dig getting to know a device.
Netflix offers a predictable spending model that lets potential customers do the math and realize that a month of all you can eat from their service compares with about 3 movies from Apple for the same price. Moreover, the Netflix model offers zero cognitive friction over making the choice to order a movie. In the iTunes Store model, every movie is a separate sale, and a separate, cost-weighted choice. In fact, the more a Netflix box customer watches, the lower the cost of each movie rented.
Fortune is right to call it an apples and oranges comparison, and while I’m a happy AppleTV camper, what Netflix has going is a damn good orange. One so good that it may have shut Apple out of the wider rental online rental market.
It’s amazing to watch big players move through a market that’s in serious flux, and even more so when they produce compelling and well thought-out products. I wonder what else is going on in home theater these days. You know, outside the Internet…
About those Platters
With all this action in the online space, where exactly does all of this point for the DVD format in general, High-def or otherwise? DVD rentals doesn’t exactly look like a growth market, and I’m probably not alone in wondering whether Sony’s Blu-Ray format victory will be overshadowed by the Internet eating the non-console-game portion of their winnings for the next few years. The future they fought so hard for seems already be fading into the past.
Like those ironic pictures of a , unaware that an even-bigger fish looms behind him. Pessimistically, Blu-Ray’s only chance seems to be to swim and grow fast enough to get enough players in homes and hope that those PS3 buyers are also movie renters who love their video stores. Otherwise Apple, Netflix and others will claim the majority market, leaving DVD rentals a cold shadow to online delivery. And then the internet will collapse, and we’ll see who’s laughing. Or maybe I’m just channeling Sony’s fearful wishes at this point.
In hearing and reading various stories about the Netflix release this week, I heard a great quote from the Netflix CEO that I can’t find for the life of me online, but went along the line of “We called the company Netflix very consciously. There are very clear reasons we didn’t call it DVDs by Mail.”
Talk about skating to where the puck is going to be.
Spring is in the air, and to celebrate I joined in the annual pilgrimage to Austin for the South by Southwest Interactive conference. This is my second year attending, and though knowing the lay of land makes many things easier, every day still has more than one can possibly take in. The days full of sessions, packed with more food for thought than a week’s reading in regular times. The nights are filled with events, many offering free drinks. Since it’s rude to refuse a drink, one must take pains to visit them all and not risk offending the hosts. In between, it’s a carnival of BBQ, which isn’t so great if you’re vegetarian, but makes for good memories for the omnivorous. 
By way of 
