What if Apple held a movie party, but only Disney came?
Comment Apple offered a hostage to fortune when it chose, as the teaser for the launch of its movie download service today, the tagline ''It's ShowTime!"
Headline writers only needed to find one significant "No Show" for the pun writers to have a field day. Unfortunately for Apple, the "No Show" turned out to be quite hard to miss: Hollywood itself.
Five of the six major corporations - Universal, Viacom, Sony, NBC Universal and Fox - have chosen not to grace the service with their content. Compare this to the launch of iTunes Music Store three years ago.
Three years back, the iTunes Music Store sent strategists at the big four labels scurrying back to Hollywood to rethink their digital strategies - even though Apple's digital sales today amount to little more than a drop in a bucket, and the labels are left trying to downplay the quite remarkable resilience of DVD sales. The real significance of that event was that Jobs did something that had eluded entrepreneurs for years, by forcing the big four labels to agree on a single price for digital song downloads.
There's a wonderful, and surely apocryphal tale about that event for which we make no apologies for repeating - for if it isn't true, it should be. It's already passed into digital music mythology. As the launch date for iTMS neared, negotiations between Apple and the big four dragged on. They'd already gone on for months - but with each label setting a different price, and attaching complicated clauses of its own to the deal. Jobs simply threw the paperwork in the bin, the story goes, and went ahead with the launch anyway. Contemplating an avalanche of publicity some days later, the labels decided it would be too embarrassing to withdraw, and so decided to get their revenge at a later date.
Apple showed its hand in 2003, but the movie studios weren't going to fall for the trick.
Apple announced today that it will allow US broadband users to buy, at a price much higher than a Blockbuster rental or a straight DVD purchase, an inferior VGA-resolution movie copy - one that only plays on Apple's proprietary hardware. Consumers will be able to enjoy this "on demand" service with fulfillment times of only half an hour - that's the time it takes to download one of these low-res movies. A gift to amnesiacs, perhaps, if no one else.
All in all, this is exactly the kind of tentative, marginal deal you'd expect if a movie studio Vice President took control of a computer company as a weekend hobby. It doesn't send any worrying messages back to the board in LA, and it allows the studio's publicists to show how they're like, really, forward thinking about digital content. That plays well in Variety with the shareholders. Meanwhile, the studio keeps all the aces - including the most important luxury of all, the price.
Alas, now that Apple is run by a board member of the Disney Corporation, such announcements may become the norm. And there's not much Apple or any other PC company can do about it, unfortunately, because the technology simply isn't there.
HD-TV screens are already here, even if the broadcasts aren't. And by Christmas 2007 many ordinary homes will have had a taste of HD-resolution DVDs thanks to the PlayStation 3, which comes with a Blu Ray drive built in. To get this "on demand" you need extraordinary bandwidth, and while some cosmopolitan Europeans are enjoying 24mbit/s download speeds, it's a small number indeed.
Only Verizon FiOS customers can enjoy acceptable HD-on demand download speeds because they've got fiber - and Google, thanks to its insidious lobbying under the banner "Net Neutrality", is doing its best to nuke the business model behind that. Apple seems to know that we need Quality of Service outlawed by clumsy "Neutrality" legislation, and we need every ounce of bandwidth to get HD movies into the home (where they can be transcoded into an iPod-ready format) - and it's wisely stayed above the fray. But given the way the chips may fall, we may be doomed to the slow lane for some considerable time.
Nor did Jobs offer much in the way of home "convergence" magic that could conceivably give a broadband-connected PC any advantage over a set top box. Apple did give a preview of "iTV" - a $299 set top box, but it does exactly what Wintel's set top box already does - and make the viewing of PC content possible on that great HD-ready TV of yours in the living room - and that hasn't exactly caught the world on fire. It's a catch-up, rather than a leap forward.
How do today's announcements add up, then?
Context is everything, and unfortunately, there's a whole subculture of brass polishers and palm throwers, who wish to see every Jobs announcement as one of apocalyptic portent. Such professional boosters tend to overlook the details that sink a deal, details that Jobs - who isn't stupid - shows every sign of being aware of. The most entertaining of these hypesters, Robert X Cringely, has been predicting Apple will own the movie downloads business for years now, and only 18 months ago confidently predicted that "the movie studios will play along, too". We now know they won't - or only their terms.
Apple's publicity extravaganzas are traditionally designed to showcase Steve Jobs' omniscience and foresight - not his dependence on unfriendly strangers, the inadequacy of the networks that PC technologies rely on, and Jobs own market share - altogether that isn't much of a bargaining chip.
Well, as we've made clear, even well-connected PC bosses can't move mountains, and they can't shift the Hollywood Hills up to Cupertino. Los Angeles studio bosses are a lot wiser about the limitations of Silicon Valley and its technology today - giving rise to the thought that in 2003, Steve Jobs may have played his hand too early.
The opportunities remain as they were. The frustrations, you could say nightmares, of the "converged" living room - why do we need two hundred and fifty remote control buttons, spread over four or five remote controls? - look like they should be easy to fix and look like a job for an Apple, fixing them won't be easy. Apple was once able to turn the task of operating a personal computing from one that required knowledge of CP/M command line tasks into a visual metaphor. It's harder when you can't get the applications, and can't send data down your own bus. The broadband providers own that, are that's why they're the king makers. ®
Sponsored: Becoming a Pragmatic Security Leader