Friday, October 14, 2005

Video ipod

Okay, you've all heard by now that Apple is coming out with a video ipod, and is allowing people to download stuff through their iTunes Music Store, right? I'm not completely sold as to how successful these new things are going to be (I'm trying to visualize every person I see with the trademark white headphones also staring at a screen as they walk down the street). But I have to agree with Mark Cuban on this one: it's a great business move for Apple, but it will be completely different than the current iTunes-iPod relationship.

Before I go further, here's Mr. Cuban's take on the issue, it's good:
It is a business marvel. Bob Iger has gone contrary to what every current and previous TV network head has and would have done had Bob not turned the industry on its head with his announcement with Apple yesterday. Bob Iger has saved Network TV.

How ?

By completely changing the economic model.

When a show is produced for primetime network TV, its traditionally sold to a network at a given license fee. More often than not, particularly for non reality shows, that license fee is less than what it costs to produce the show.

The hope by the production company is that if they can produce good ratings for the network, not only can they increase the license fee after the first deal ends, but they can also sell the episodes in the future as part of a syndication deal and maybe even make some money back with DVD sales.
I'm deferring to Mark on this one - he's got a bit more experience and knowledge than I do. I also have little to no knowledge of what's on TV right now either (I still haven't seen a single episode of "Lost" which everyone's so hyped about). And there are still live TV events (sports, mostly) which will still draw the "old-fashioned" TV viewers, so commercials will still be "effective" (though once apple comes out with a wi-fi enabled ipod, will ANYONE still get cable?).

Hold on. While I was typing that, I convinced myself that this video ipod was cool. I don't know how. I need to get back to work anyway. I'd personally rather have a nano. Maybe all those ipod owners will sell their old ones and buy these, driving the price of the old ones down. Yeah, that's the ticket.

EDIT: Sorry, I lost my train of thought. What I was getting at is not that people will actually want to watch things on their ipod, but rather be able to use it to store media (that they pay 2 buck a pop for) and connect to a TV, monitor, etc. Unlike the ipods, where it was such a hipnewcool device at the time that people just had to get them, and then they (literally) HAD to use iTunes, and Apple was trying to make some money from selling songs. The goal is to get the customers to use iTunes to buy video, but the profit margins come from people continuing to purchase ipods. The jury is still out as to whether Apple is going to become a media distribution company - my bet right now is still "no" - not enough of a profit margin. Then again, music and TV are very different - can you convince viewers of a particular show to shell out $2/week for a new episode? Now I'm just rambling, sorry...

EDIT2: For a better list of Apple's announcements, check here.

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