Apple TV – 4th Time’s the Charm for Industry Disruption?

If it weren’t for Philo Farnsworth, inventor of television, we’d still be eating frozen radio dinners.

 – Johnny Carson

 

Apple TV Small

 

Apple debuted the Apple TV product over eight years ago in Jan 2007. Over the years, Apple introduced 3 generations of the Apple TV to lukewarm response. Perhaps this lack of success is what prompted Steve Jobs to position the Apple TV as a “hobby”. The go-to market challenges associated with regionalized cable operators, hard negotiating oligopolistic studios, mish-mash of government regulations, consumers’ unwillingness to pay for a set top box, etc. certainly did not aid innovation in this industry.

For 8+ years Apple kept honing the Apple TV “hobby” and released their 4th gen New Apple TV a couple of weeks ago. In the latest iteration of the Apple TV with its new-fangled tvOS, Apple finally did a copy-paste of the AppStore ecosystem from iOS onto the TV. That opens the innovation flood gates of 3rd party developers to let a “million flowers bloom” for the TV experience. My fingers raced to click the Buy button on the first pre-order day!

I am not going to bore you with yet another review of the product – you can find that on NY Times, CNET & Engadget. Instead, here is my take on Apple TV’s potential (and Android TV, see PS below) to change & disrupt a few industries:

 

Casual Gaming: For the first week of the launch, Apple prominently featured the Asphalt 8 game on its TV AppStore. When my 11 year old son saw the Asphalt 8 icon on the TV, his eyes lit up and his jaw hit the proverbial floor. For the next hour, I could not pry the Apple TV remote from his hands while he raced his tricked out & nitro’ed McLaren P1 GTR through the streets of the London while the home theater speakers pumped out the visceral chest thumping roar of the McLaren. Quite a sensory experience that you don’t get on iPhones and iPads! Apple deliberately invested quite a bit on their graphics and game development frameworks/SDKs to make this possible.

While these $2.99 tvOS games may not be a threat to billion dollar franchises like Halo, the landscape of the casual gaming industry (think sub $20) will definitely change. In the coming years, the publishers of lightweight games on the game consoles will have a hard time convincing their customers to pony up $10-$20 for a game console title while similar games can be had on a multi-purpose Apple TV for $1.99 – $4.99. Over time, I expect these game publishers to migrate to the Apple TV gaming platform (& Android TV, see PS at the bottom).

 

Online Learning: After dinner, when the family has gone off to sleep, I have some difficult choices to make – read, watch Netflix from the comfort of a sofa or do something productive & cerebral with the laptop. It’s hard resisting the siren song of the sofa & remote!

With apps like TED & Coursera on the New Apple TV, it’s easier to engage in something more cerebral while comfortably ensconced in the sofa. Suddenly the Machine Learning course in Coursera doesn’t seem as daunting as it does on the computer. Given this ease of learning from the sofa & the TV, I expect more consumer traction for the online learning industry on the TV.

 

Cable TV Industry: This is going to take a few years to play out. Barring the exception of Tivo and DVRs, the cable TV experience has been more or less static for the last few decades. An average American household pays $86/month for cable TV – for which you get a few hundred channels most of which you never watch. With the availability of HBO, ABC, National Geographic, Disney etc. in an ala-carte model on the Apple TV, cord-cutting is now easier than ever before. However, before TV consumption over IP becomes mainstream, a lot of work needs to be done by Apple to improve the user experience. The current model of app switching on the TV is nowhere as convenient as channel surfing with your set top box!

This decoupling of content providers & cable operators probably bodes well for the content providers as well. Once they have their channel as an app on the Apple TV (or Android TV), their market availability is worldwide – they probably don’t need to worry about negotiating with dozens of cable operators worldwide!

 

What other Disruptions?: Unlike mobile phones, tablets and laptops that offer a personalized compute experience for you, an app-enabled smart TV offers a new model – a shared (for you & everybody around you) compute experience from the comfort of a sofa. Try the gorgeous AirBnB app on a TV and you will know what I mean. The voice search via Siri is also pretty nifty – I’m looking forward to Apple opening up Siri to third party developers. What new opportunities (or disruptions) that creates, only time will tell. I for one, am quite looking forward to that!

 

PS: The New Apple TV & Google’s Android TV are very similar positioned and compete neck to neck. Given that, the above commentary applies equally well to the Android TV. In fact, the combined forces of these 2 behemoths probably double the chances of industry disruption!

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