It’s not much to look at – sleek, black and about the size of two decks of cards - but this little box may represent the greatest threat the television industry has faced. A large part of this threat is explained by the logo embossed discreetly on the top of the box - a stylised apple missing a single bite.
It’s called the Apple TV, but should not be confused with the fabled television set that Apple has long been rumoured to be working on.
This little device essentially hijacks your TV and turns it into an internet-powered entertainment screen, able to stream content directly from Apple‘s own iTunes store as well as online services such as Netflix, Hulu and YouTube.
That might seem like a non-starter for bandwidth-starved South Africans, but the Apple TV can also stream videos directly from any device running iTunes (including iPads).
Both devices simply need to be connected to the same wi-fi network and, bingo, you’re watching your entire digital video collection on your TV.
Reasons for worrying
So why should the television industry be worried? Reason one: Apple is making a lot of money selling its devices while they are (mostly) losing money. IHS iSuppli, an industry analyst, reported that only two of the top five television manufacturers in the world made a profit last year. That implies tens of millions of high-end TV sets were sold at a loss. Ouch.
One of the reasons for this slump is that younger people are simply not buying as many television sets as in the past. A key differentiator between Millennials – the generation of people born roughly between 1980 and 2000 – and older generations is that they watch almost no live television. They watch popular TV shows, yes, but they tend to rent or download them.
This trend presents a huge problem to free-to-air broadcasters that rely on advertising to cover most of their costs. They can still make some money from online rentals but, like the music industry, they realise this will put the likes of Apple and Netflix at the centre of the industry and shove them to the fringes.
Engaging in “cord cutting”
Premium television channels, with their dutiful subscriber bases, are better insulated from this trend. But as the remainder of Millennials reach working age (in 2018 or 2019) they are more likely to engage in “cord cutting” – eschewing monthly subscriptions in favour of the all-you-can-eat buffet available online.
Another reason for the TV industry to be worried: none of them understand the first thing about software or interfaces. Using the Apple TV is as intuitive and pleasurable as picking up an iPad for the first time. It’s quick, easy and, above all, beautiful. Compared with the menu systems on most TVs and DVD players, Apple is like something out of a sci-fi movie.
But it’s more than just an interface problem. While most competitors have been distracted by the enormous success of its phone and tablet business, Apple has been quietly building a vast content acquisition and delivery network. Add that to the hundreds of millions of people around the world who trust Apple with their credit cards, and you have a company that could soon challenge the likes of Disney for dominance in the entertainment industry.
But Apple isn’t the only giant company stealthily invading this market. Amazon, best known for peddling cheap books on the internet, has its own global content network and its own huge database of credit card-wielding customers. Its Amazon Instant Video service is already available on hundreds of devices from set-top boxes and game consoles to internet-enabled TVs.
The next logical step for Amazon is a set-top box of its own to rival the Apple TV, and indeed it is already working on one. The launch date is still somewhat vague, but it’s likely to be before the end of this year. A few years ago we might have questioned whether Amazon should be getting into the device market, but the success of its Kindle line has proven it has the know-how to compete in the space.
What about the woebegone television manufacturers? After a wave of much needed consolidation, the best companies such as Samsung and LG will survive. But they will need to push back against the tide by learning the hard lessons about software and interface design.
Samsung has made a great success of its smartphone business by adopting Google’s Android operating system. It is now trying to do the same thing with Google TV – a piece of video streaming and management software that aims to be the Android of televisions. That said, when a search engine company is starting to move into your market, it’s time to get worried.
So will any of this matter to South Africa? Will there be a wave of “(satellite) dish smashing” as youngsters abandon DStv in favour of Apple or Amazon, or even Google? Until broadband prices come down, the answer will be no, but it’s quite likely that prices will halve again within a few years.
A decent uncapped broadband connection at home costs between R700 and R1 000 a month. Were that to fall below R500, it would become very competitive with MultiChoice‘s premier bouquet, which costs about R650 a month. Netflix offers an all-you-can-eat package for just $8 (about R70) a month that substantially duplicates DStv’s entertainment offering, without the annoyance of having to wait until something is screened to watch or record it.
The trump card for MultiChoice will be its unparalleled sports content. Few sports-mad locals will be willing to cut any cords or smash any dishes if it means they lose access to their beloved SuperSport. But that trump card will only hold for so long. Like everyone else in the television industry, MultiChoice will eventually need to have an answer to the Apple and Amazon juggernauts inexorably rolling on to its turf.
Do you want to take a bite?
Here’s how to get set up:
What do I need?
* A TV (or other large digital screen) with at least one free HDMI input port.
* A wi-fi network (most ADSL routers are also wi-fi enabled).
* A reliable broadband connection to the internet (preferably 4Mbps or faster).
How much does it cost to set up?
About R1 200 for the Apple TV itself, plus the cost of an HDMI cable (about R150 to R300, depending on length).
Do I need a degree in rocket science to set it up?
No, the instructions are very straightforward. Plug one cable in, connect to your wi-fi network and you’re done. Yes, really.
Where can I get one?
Most Apple resellers, including the local iStore, will have stock. You can also find them online, but beware of grey imports.
Is there a monthly fee?
Not for the Apple TV itself, but you will need to pay for content from iTunes. You can also subscribe to services such as Netflix and Hulu, but you’ll need a friendly geek to help you to set up a “proxy” that fools these services into thinking you’re in the United States. Or Google “how to watch Netflix in South Africa”.
Source: Mail & Guardian