The next Apple event will take place on 1 September, and according to market rumours, the company will present the new version of Apple TV, under the name iTV. The device will run the iOS as operating system and Apple’s own A4 chipset (based on ARM technology). Earlier rumours in May suggested this ‘iPhone without a screen’ will sell for as little as USD 99. In reality, Apple TV is a media player (a type of set-top box) that brings content from the PC to the TV. While on the market already for a number of years, the product has never become a mass-market success. Apple CEO Steve Jobs described Apple TV last May as a ‘hobby’. The new iTV (assuming the name is not a problem for British broadcaster ITV) is expected to come alongside a new video service, at least in the US. This will offer TV epsidoes for USD 0.99, with no commercials. Apple is reportedly in talks with various producers, such as CBS, Disney (ABC), Fox and NBC for the service. The new box would also offer access to the App Store. In short, the iTV will help shape the transition from media player to OTT box, by offering a choice of content delivered via the internet (over-the-top) to the TV.
Apart from the iTV, Apple is also expected to launch a new iPod Touch with its FaceTime service for making video calls over Wi-Fi. This suggests that video calls can also be brought to the TV. Skype has a similar strategy, through agreements with TV makers LG and Panasonic. Its software, the client, is built into the TV, rather than a separate box, but the principle is the same. It’s only a question of time before Google also gets in on the act: last week Gmail was anhanced with VoIP and this autumn Google TV is expected on the market. Not a box, but a software product that can be built into a box, TV or other device. And just like Apple wants to support the iTV with TV series, Google is working with YouTube on a deal with producers to make full-length films available on YouTube (YouTube.com/movies). YouTube, and more specificaly the special version YouTube Leanbank, is already an important part of Google TV (see our Research Brief ‘Google TV’).
If Steve Jobs does use the occasion to show a new Apple TV (iTV), it’s tempting to say this could be the making of the OTT market, the same as what the iPhone earlier did for the smartphone market. However, there are still a number of obstacles along the way, from competitors of all sorts:
- Google, which has a large ecosystem already, including an operator, US satellite TV provider Dish;
- new box makers, such as Boxee, Sezmi and PopBox;
- existing box makers, such as Amino and Humax;
- operators already developing their own boxes, such as Telstra with its T-Box (June 2010, manufacturer: Netgem) and UPC with a Samsung box (April 2011);
- Hulu, the American catch-up TV service from NBC, Fox and ABC, which recently launched a premium version, Hulu Plus, accessible via an app from the iPhone, iPad and Sony PS3;
- TV Everywhere, the American cable operators’ initiative to allow subscribers to access their content (TV and VOD) not only at home but also everywhere else they have a broadband connection;
- Sling, owned by EchoStar, which the same as TV Everywhere offers ‘place-shifting’ by making individual content available via broadband worldwide.
In addition, Apple will need to get the cooperation of the content industry and the operators (for the distribution). Apple captured the music market with iTunes, and the film and TV world will want to make sure the company doesn’t pull the same trick again. Furthermore, it should be remembered that iTunes is a download service, while iTV will need to be a streaming service. Google, with its open platform, seems to have better chances here. But also for Google, it’s a question of lining up enough content (such as films on YouTube) and distribution partners (at the moment it only has Dish).
The ‘high-level’ conclusion could be that the OTT market is no longer just for hobbyists and start-ups, as a number of big names make themselves heard: Skype, Apple, Google. They are all making the transition from the PC to mobile and now TV in order to complete a ‘three screens’ strategy. The OTT market is complex and moving quickly (see the above bullets). Operators are searching diligently for their role in this new market. (A question we will address on 13 October at a our conference ‘Breedband NL 2010’ in Rotterdam.) Let’s see first what Steve Jobs really comes up with, but it seems very likely that the iTV will no longer be just a hobby for Apple.
