Apple ups the stakes with convergence play
What about digital rights management?
Alongside the well-publicised launch of the iPhone, Apple has now pre-announced two of its major plays into the converging consumer digital media marketplace. The other was Apple TV, unveiled last year and available next month. Although pre-announcing is something of a departure for the company, it's clear Apple will be handily placed to deliver a seamless digital experience, going toe to toe with Microsoft and its integrated Xbox/IPTV combination.
Although it currently offers only a relatively complete solution for the US market, where movies and TV shows are available via the iTunes store alongside music, it is fair to assume these new facets of Apple's business model will eventually achieve a global reach. So, what are the implications?
Content in your own iTunes library, or that of your friends, can be streamed to the AppleTV box sitting with your TV. For £199, Apple's download-to-hard-disk approach can potentially insulate consumers from the format wars of Blu-ray and HD DVD, as compared to the other hedging tactic of buying a dual-standard player from LG that's not yet available and will cost over $1,000. In order to do this, however, it has to raise iTunes' current 640 x 480 resolution up to the High Definition resolution of the Apple TV: 720P (which is 1280 x 720 pixels).
Apple TV offers a legal video streaming solution for copyrighted content which is not possible with other services like Amazon's Unbox, which also has a user agreement that's a poster child for everything wrong with much of the industry's approach to digital rights management. For a discussion of Amazon's service look here (be warned the article title contains an expletive).
One of the downsides of the hard disk approach is the need for media to store the large video files. Storage only costs about 25p per gigabyte, but there are more complex issues, especially for consumers, including the question of backup, since you are more likely to lose data due to a hard disk crash than have a fire burn up your DVD collection. I don't actually know if it's possible to insure against loss of a content library, although one option would be if Apple leveraged its closed proprietary system to offer this capability through some form of registration, something Amazon does support.
The thorniest issue is, of course, piracy. The content owners have put a lot of effort into AACS and other encryption techniques on both competing High Definition DVD formats, HD DVD and Blu-ray. The internet forums are buzzing as we speak due to the successful copying of HD DVD and Blu-Ray disks (by hacking player software rather than breaking the AACS encryption). Hackers are already writing a Java UI for the code and creating a library of recovered disk keys. The industry's only potential response to this is the draconian option of "revoking" players or already issued disks, an action that could send thousands of consumers back to their electronics stores with units that won't work without firmware upgrades to their decryption software.
Most experts would agree it is impossible to produce a piracy-free product for a mass consumer audience. The fact that AACS has not been beaten, but the players themselves have been successfully hacked allowing the piracy of content and potential posting onto peer to peer networks, is proof of this. The better option might be to come up with a business model, like iTunes, that satisfies the vast majority of users who are happy to pay a reasonable sum for content they own (i.e. which persists and is portable between different players), and which has a reasonable level of copy protection. Apple's MPEG-4 codec does just this, streaming music and video content in a protected format from the computer with iTunes to the Apple TV.
The only thing missing from Apple TV is the ability to record shows onto its hard drive, However, it's possible some enterprising programmers will find a way to make this possible using the unit's USB service and diagnostics port. While this may be a weakness compared to the growing ranks of hard disk recorders from the likes of Panasonic, no doubt iPod users will take the plunge in the expectation that Apple will deliver another killer app for digital entertainment.