Cultural Insularity and Apple TV

I find it odd that in all of these (valid) criticisms, and in others I've read, no one brings up what I see as the single biggest problem with the Apple TV: the fact that any content you acquire is tied to Apple's box.

Apple has only two options if they want to avoid the continuation of the irrelevancy their box has already fallen into: 1) Produce a competitively priced Apple TV model, or even better 2) Allow Apple video on other boxes, while simultaneously producing a high-end, best-of-breed box of their own.

While everyone focuses on option #1, I don't think would really solve their mess. It'd obviously slow the bleeding, cuz folks would buy a $50 box just on the brand name. But in a world where content you acquire from Amazon or Vudu will play on a Switzerland box like Roku, (which, while everyone focuses on the Fire TV, is the clear market leader), or more importantly on any smart TV, while Apple content won't, it makes the entire ecosystem around the Apple box sensible only for folks who never purchase content. (And even if you just rent content, what if you want to finish watching on your bedroom TV? Now you need two Apple boxes, where with a rental from Amazon or Vudu you'll have options on that second TV.)

In short, the real insularity that keeps the Apple TV non-viable is their refusal to let your content be platform agnostic. I understand they do that to try to drive folks into buying their box, but they've got it backwards. By silo-ing iTunes content to only Apple boxes, they ensure the box's appeal is limited to Apple ecosystem freaks only.

Just making the box more price competitive wouldn't solve the problem. (That's Google's strategy, and I don't think it's going to get them anywhere either. But at least Google has a backup video strategy in YouTube.)

It'd go against everything in Cupertino's DNA for them to pick option #2, but in this particular game, letting content be platform agnostic rules all. By not doing that, they're firing 90%+ of their potential customers before the game even starts.

@Chucky That is a great point.

Andrew Pontious:

Arguments why people buy things other than Apple TV (same basic thing, much lower prices) SO MUCH apply to rest of product line.

I concur. However, I can at least make a cogent argument for Mac, iOS device, etc. even if I were to personally choose an alternative. I don't understand the Apple TV at all. Ex 1st and 2nd gen owner here.

Contrary to other people's arguments, I'm not even sure the current interface is that much better than the other options. Roku, Fire TV, some of the better built-in TV options (which increasingly include integrated Google Cast, Roku, and Fire TV) all work pretty well, so other than AirPlay or Apple video content, I don't see much value.

Me:

Here's the pitch. "What if every TV was an Apple TV?" $35 AirPlay receiver. Any existing iOS 5 device can now send content to any HDTV/Display. Since everyone is banking on AirPlay as the killer feature, why not go all in with the technology?"

Strip it down and sell AirPlay dongles for $35. Apple can keep their margins on iPhones, iPads, and Macs. Notice iOS 5....yeah, that was while ago. Posted that tidbit on an Apple oriented forum back in November 2011, during a conversation about how lackluster the current Apple TV 2 was compared to it's competitors. I feel like the Apple TV conversation is never ending. Before the Apple TV 2 came out, I had a similar debate regarding how lackluster the Apple TV 1 had proven. It's an every two or three year event. :)

Chucky,
Yes, Apple should make their content available on other platforms. If they don't want to loose out on a 30% cut from those platforms, then make a web portal for ordering.

Strip it down and sell AirPlay dongles for $35. Apple can keep their margins on iPhones, iPads, and Macs.

@Nathan Seriously. Surely someone thought of that internally 10 years ago. I would love to know why they decided not to do it.

"I would love to know why they decided not to do it."

Frankly, cuz it doesn't make sense for the shareholders.

My advice to Apple above about allowing access to iTunes video content on any lean-back platform that will have them is because I think it'd help shareholders. It's not the depressingly normal Apple complaint these days of: geez, this should be changed to benefit users.

Apple is smart from a financial POV to use lock-in to force folks into buying Apple TV's. My criticism is that they misunderstand which lock-in benefits them, and which lock-in hurts them in this particular market.

IMHO, freeing iTunes video content from lock-in would help enhance the Apple TV ecosystem in such a way that would actually end up allowing them to sell more boxes at a high price. OTOH, using the iPhone integration lock-in to force folks into buying Apple TV's is just smart business, even if it sucks for users. And AirPlay is the most compelling part of the iPhone integration stick they have to beat potential Apple TV customers.

@Chucky I think with cheap, ubiquitous AirPlay receivers they’d sell fewer Apple TVs but more iTunes content and more iOS devices, for a net win. And if an AirPlay-only stick is a threat to the Apple TV then they must be wrong about the future of TV being apps.

"I think with cheap, ubiquitous AirPlay receivers they’d sell fewer Apple TVs but more iTunes content"

Hmm… I'm not sure I understand you here. Are you saying they'd sell more iTunes content because folks would then beam it to their TV ala Chromecast? If so, I don't think the $$$ equation works for video.

At least in my understanding, (of which I'm not 100% sure), the margins on video sale/rental are pretty damn low because of all the competition. If that's true, I'd strongly assume the bulk of services profit on an Apple TV comes from Apple's cut of when you subscribe to a service via the box, rather than from iTunes video content.

Also, there's the important concept that people aren't really into beaming professional video content in the lean-back for a pretty wide variety of reasons. I could write more on this, but for just one example, think of how Amazon Prime coming to the Apple TV is a big deal, when you've been able to AirPlay it to an Apple TV all this time.

The incentives / economics of audio are different than video, which is why Apple has been willing to license cheap audio AirPlay solutions.

"and more iOS devices"

I understand you on this one, but IMHO, I don't think it'd really move iOS devices. You'd have to accept that more than a tiny, tiny sliver of folks are buying Android devices instead of iOS devices just because they can beam video content to a TV without having to purchase Apple's expensive box, and I don't see it.

Leveraging the hell out of the iPhone's commanding heights is Apple's core strategy these days, I think we can all agree, and it basically makes sense as a business strategy to me. (At least if we ignore the long-term, which shareholders do.)

"And if an AirPlay-only stick is a threat to the Apple TV then they must be wrong about the future of TV being apps."

I can't make sense out of this one at all. Seeing an AirPlay-only stick as a (severe) threat to the Apple TV doesn't seem incompatible in the least with the OTT future folks are currently envisioning. It just means Apple TV would have an even lower market share of folks who are watching OTT in the lean-back than it currently does.

@Chucky Yes, or possibly to a TV they are visiting. This might not be their primary way of playing content, but it goes with your idea of making the content platform agnostic.

An AirPlay receiver isn’t just about playing video at home without an expensive box. It would mean that any iOS device could project apps onto TVs everywhere.

What’s OTT?

"What’s OTT?"

Over The Top. IP based TV that is currently, at least, driven by balkanized apps. Aka - the opposite of the multicast folks get from a cable sub.

"Yes, or possibly to a TV they are visiting ... An AirPlay receiver isn’t just about playing video at home without an expensive box. It would mean that any iOS device could project apps onto TVs everywhere."

Sure. And it doesn't have to be only a $35 dongle. A Google Cast receiver is built right into a lot of TV platforms, so you can beam your Android phone at a TV without even needing to bring a dongle with you. Apple could do that too.

The problem here is, when you get right down to it, AirPlay is what Apple is selling most folks with the Apple TV. I mean, why buy an Apple TV over a much cheaper Roku, Fire, or just using a TV's built in platform? (Not to mention there are full-fledged game consoles with an OTT platform in Apple TV's price range.) Some of Apple TV's customers are just brand addicted folks, of course. But beyond that, is the UX really that much better? Is the app platform really that compelling? No. It's just an AirPlay tax they're paying.

So if Apple gave away AirPlay, I genuinely don't see a future for Apple TV. (I don't see a future for Apple TV as things are headed today, but Apple could still do things to regain momentum. But if they gave away AirPlay, I think the Apple's aspirations in the lean-back would be fully dead. And it's obvious from the $1B content investment that Apple really wants to be a player in the lean-back, even if their strategy in this space sucks.)

The viable version of your idea is not to make a $35 AirPlay dongle. It's to make a $40 underpowered full Apple TV stick, just like Roku and Amazon do. That way, Apple would be leveraging AirPlay into getting lots of folks to use their lean-back platform. (This is the solution favored by most of the criticism of the new Apple TV, since it's ultra user friendly.) But as I noted in my first comment in the thread, while that could stop the bleeding for Apple in the short-term, they'd still need to make iTunes video content platform agnostic too, or it won't save the platform in the medium-term.

"it goes with your idea of making the content platform agnostic."

I do see the obvious similarity. But I continue to see a fundamental difference. Letting iTunes bloom on a thousand lean-back platforms doesn't jeopardize Apple's market share in the lean-back space, IMHO, would actually increase it, and may well sell even more expensive Apple TV boxes. AirPlay is the opposite. AirPlay is the crown jewel that Apple needs to leverage in some manner to get people to use their lean-back platform. The problem is that their strategy on what to use that leverage for has sucked. Apple should have a very easy path in the lean-back market just because of the leverage of AirPlay. (They don't have to spend as heavily on free content as Amazon does, for one example.) But Apple just doesn't understand the market…

In short, whatever path is taken, and there are many, it doesn't make sense for them to separate AirPlay from their lean-back platform.

@Chucky

In short, whatever path is taken, and there are many, it doesn't make sense for them to separate AirPlay from their lean-back platform.

Sure, no reason not to include playback in the dongle, i.e. the equivalent of the Apple TV 3. No apps or games.

I wouldn't mind paying more for an Apple TV if the experience were better, but between the remote and the constant problems with apps or the device itself malfunctioning, it's worse for my parents than the cheaper alternatives.

I joke with friends that I need to do a hard reboot on the Apple TV more often than I did with my Packard Bell running Windows 98... but honestly it's not all that different. Netflix and Sling have constant issues where after a day or so, they refuse to load the interface or stream video unless I force quit from the task switcher. Sometimes the problem persists and I have to reboot the Apple TV, or manually uninstall and reinstall the app. Instead of a hassle-free entertainment device, it's something I've had to *administer* on a near-daily basis for nearly two years now.

So, out of frustration, I got a $40 Roku Streaming Stick and set up Netflix and Sling for the parents. That was over a week ago... no problems reported since.

"Sure, no reason not to include playback in the dongle, i.e. the equivalent of the Apple TV 3. No apps or games."

No apps? You mean it wouldn't support all the other OTT services? (You can see how sparsely I follow the Apple TV despite following the OTT market pretty damn closely, as my unreliable recollection is that the Apple TV 3 only played iTunes and Netflix. The Apple TV has just been a irrelevant device in the OTT market for a pretty long time now, only worthy of note as an AirPlay receiver.)

If I am indeed reading you correctly, we're right back to the problem I just posed: they'd be selling an AirPlay dongle (that would also let you access iTunes content) separate from their lean-back platform. It would toss away their AirPlay leverage, and quickly destroy their lean-back ambitions completely.

I'm sure it would make a subset of users quite happy, but if I were running Cupertino, it wouldn't make any sense to me whatsoever. It's no significant improvement on the AirPlay-only dongle from the Cupertino POV.

Now, if you're talking about a cheap, underpowered dongle that does play the full panoply of OTT services, that starts to approach a viable strategy. But it also presents a bunch of significant problems from the Cupertino POV that I can go into if you're interested.

@Chucky The Apple TV 3 had a slew of built-in apps for all the common services, just no support for arbitrary third-party apps such as games.

If the Roku stick can have apps (i.e. Channels in Roku parlance), technically so could an Apple stick. I still think a simple casting stick would be fine. Or Apple could go three deep; casting only, mid priced box with casting and apps, high priced boxed with casting, apps, and games. I don't think Apple really gets games, so that's likely a moot point, but I threw it out there anyway.

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