As expected, Apple yesterday announced its updated Apple TV appliance and its new streaming-video service, moving directly into competition with other home video rental businesses.
Nothing that Steve Jobs announced yesterday was revolutionary. We already have video-streaming services and devices. However, most analysts believe that yesterday was only a precursor to Apple launching a smart TV (iTV) in the late fall, just in time for the holidays.
I believe that we are at the beginning of a monumental battle for control of home entertainment by dozens of big companies across the tech, teleco, hardware, content and distribution landscape. I have been waiting for this for 20 years -- the notion of the "digital home" and the "information superhighway" that inspired me to enter the "new media" industry back in 1991.
Where will the battles be fought? Who will be the key combatants? Here are my thoughts:
Consumer Electronics Hardware. Apple is going to launch a "smart" TV. They have to. As Steve Jobs readily admits, very few Americans are going to buy a stand-alone set-top box. We are too used to getting one for free as part of our pay-TV package. We are already seeing Samsung, Sony and LG adding intelligence and connectivity directly to their TVs. We are going to see set-top box companies like Microsoft, Google, TiVo, Cisco and Motorola integrate more into TVs. Intel is using its ubiquity to find a place at the table for the chipmaker. What's at stake? The access point for enjoying video at home, and control over how Americans spend more than four hours per day per person.
Video Rentals. Netflix, Amazon, Blockbuster and now Apple are all now offering digital video-rental services. Existing premium pay-TV companies like HBO and Showtime are already making moves with "TV Everywhere"-type services to play here as well. Cable, satellite and teleco operators have been in the video-on-demand business for years. What's at stake? Tens of billions of dollars of annual video subscriptions and pay-per-view sales.
Content Delivery Networks. AT&T and Verizon want to get paid for delivering video into the home. So do Comcast and Time Warner Cable. So do DirecTV and Dish. So do folks like Akamai, which built its business in online content delivery. What's at stake? Lots and lots of money. Even if their businesses are only dumb pipes, they will be providing the "picks and shovels" for the Gold Rush. Those with "intelligent pipes" will do even better.
Ad/Content Technology Platforms. I have a bias here, but it is clear that as Web-like technologies migrate to the TV platform and other consumer electronics, we will see more Web-like platforms, tools and services become essential ingredients in the new ecosystem. We've already seen moves from Google and Microsoft, with Google TV ads and Admira respectively. Apple will certainly use its iAd platform to serve TV as well. We have digital TV ad infrastructure start-ups like Visible World, Black Arrow and FreeWheel. Akamai may play here as well and we will see many more.
What's at stake? When TV's tens of billion dollars of advertising becomes digitized and data-enabled, new systems will be required to deliver and measure it. The major companies with those capabilities will accelerate ahead of the pack. Those without will fall behind.
Data and Insights. Data will be an enormous driver of value in the emerging digital home video ecosystem. Companies like Nielsen, TNS/Kantar, Acxiom, Experian and Rentrak are already moving aggressively to add value to enhanced TV services, as well as new market entrants like TRA Global. What's at stake? If this market develops anything like the Web, we will see data and its intelligent application provide both the fulcrum and lever to shift tens of billions of dollars of ad, marketing and commerce spend.
Content. Of course, we can't forget about content. The shoes have already begun dropping here. Comcast is buying NBC Universal. A proxy fight is being waged for Lionsgate.
Content-driven experiences are ultimately at the core of the home video market. What's at stake? It's clear that high quality content -- whether studio-produced movies and TV shows or live sports -- continues to command viewers' attention and their wallets. Those that can exclusively control the best package of content will have an enormous advantage in this fight. They will own viewers' hearts and minds, not just their devices.
