The launch last night of the video iPod by Apple created much hoopla, but with the ability to download TV shows limited to the US, how will this work in the UK? And what chance will independent companies have to create and sell video to owners of the device?
First, some background. Portable music players were around before Apple CEO Steve Jobs got involved in digital music, but four years after the launch of the first iPod, Apple now owns 75 per cent of the MP3 player market. Now that Apple has staked a claim to the portable video market, can the company duplicate its success with music in the vast wasteland of television?
A UK version will initially offer music videos from artists including U2, Duran Duran, Gorillaz and Maximo Park for £1.89 – plus animated shorts from Pixar.
For one thing, Apple hasn't gone off and tried to create a video-only version of the iPod, said Roger Kay, president of Endpoint Technologies. The new iPods are really just an evolutionary step from the photo iPods introduced last year, he said.
And Apple has also overcome what analysts saw as the most difficult roadblock – a content relationship with a major production company in ABC, said Richard Doherty, principal analyst with The Envisioneering Group.
Other companies, such as Creative and Archos, have developed portable video players that can play video recorded from a television or downloaded from the Internet. And fledgling services such as Movielink and others allow users to download movies and television programs to their PCs or Macs.
But iTunes has around 200 million users, mainstream users who have already gotten used to Apple's music download model, said Sam Bhavnani, senior analyst with Current Analysis in San Diego. "That's a very big audience they can go after," he said.
A choice of devices
The new iPod’s biggest competitors could come from different markets. Movies and collections of TV shows can be purchased in UMD format for Sony’s PSP portable console, and sales have apparently been healthy. While much larger than the iPod, the PSP has the added advantage of a screen of higher quality and resolution, and it central ability to play games. However, it currently doesn’t have a download service. Broadcasters also interested in selling content via mobile phone networks.
The iTunes television shows can also be watched on PCs or Macs, which might be more appealing to many users, Bhavnani said. However, the comparatively low-resolution of the shows (320-x-240 pixels) will make them pretty much unwatchable at full screen, and is unlikely to eat into sales of DVD boxsets, for example.
The real payoff could come later, when movie studios get on board, Kay said.
"What's more interesting, ultimately, is the premium content from Hollywood. Who gets the first-run movies over a computer?" Kay said. Movie studios will watch Apple and ABC's performance carefully as they attempt to figure out their own digital distribution models, he said.
Should Apple enjoy the same success in television that it did in music, it will have the inside track at movies, Kay said.
It should also be possible for independent companies to sell programming destined for the new iPods (or other devices such as the PSP) in the same way that independent music companies such as Warp Records’s Bleep.com and eMusic have been selling MP3s. If these appear, it would provide a potential revenue stream for smaller production companies, who may not get a look-in with iTunes.
Both mainstream and independent sellers offer opportunities for new media companies.
“As more of these portable entertainment devices appear there will be a greater demand for encoded media,” says Julian Day, managing director of new media and DVD authoring facility DGP. “This could present opportunities to new media companies if they can offer all the flavours of encode that the client needs.”
Day also notes that the iPod is just one of many portable devices that are capable of video playback, with mobile phones also being another output medium. With different screen ratios and codecs separating the devices, flexibility, security and speed will be the key to success.
The mass acceptance of portable video is still some way off and short-form mainstream content is the current driver of the technology – though the exact details of what sells and what doesn’t has yet to be ascertained.
“Right now we are seeing a big uptake in portable video across music, action, comedy and episodic TV,” says Day. “This will grow as the access and price becomes easier and more attractive. The studios are all trying a variety of genres on the new devices to see what sticks.”