Apple’s ‘iCloud’ Just Might Be Netflix’s Achilles Heel.

Apple took a long time to get the Internet. Geeks were still installing FTP clients and web browsers for years after Apple belatedly included TCP/IP and PPP to their OS and, when Apple finally did integrate the Internet into Mac OS, it was in a very tacked on kind of way. A browser, an app for making web pages, eventually a few vertical online stores. I think that’s all about to change tomorrow a the WWDC.

The upcoming ‘iCloud’ announcement will vault Apple into the music cloud business, pitted against Amazon and Google (and a few others, but they are the 900lb. gorillas in the room). Apple has been in the business of selling movies and music for a long time now. Far longer than Google and longer than Amazon, at least digitally (no physical plastic CD). Now they will announce ‘iCloud’.

There have been many guessing at what this will look like and include, and I’ll make a few guesses too and I’m sure not all of them will be correct. But its fun nonetheless to postulate. Netflix is unquestionably the king of movie rentals by far. They have the breadth of product, elegance of delivery online and a reasonable cost/subscription plan. Apple is the king of online movie ‘purchases’. Based upon the fact that Apple has been building out a $1B data center in maiden N.C. , it is more than possible that they have infrastructure to support ‘movie’ lockers. That is, you buy a movie and can now store that film remotely in your cloud ‘locker’. This is the one thing that Netflix (at the moment) can’t replicate very easily.

First, it does not have the infrastructure in place (at the least own the facility) even though they host through Amazon’s EC2.  Yes, they can build it out there, but it would be costly.  Second, to my knowledge ownership is a digital right that must be negotiated and exists separately from a pure rental right with the studios. Something that is NOT easy to get from the Hollywood majors – and I know because I’ve been there before several times before. And third, Netflix core business premise is rentals – it has never been the place we turn to purchase a film thereby making it even harder to shift consumer habits that so far lie with an Amazon or iTunes.

This IMHO, could be considered an Achilles heel for Netflix. Not that they couldn’t get here, but perhaps they will get here AFTER Apple does. And first mover advantage is HUGE online and especially in the entertainment space. An storing your movies is altogether another issue – especially once you begin storing your movies in a cloud. They are NOT easy to move (file size is 750megs -1gb or more compared to a typically small 4-5mb mp3 file) nor would you want to. Right now, people are complaining about how you need to upload your MUSIC files to Google or Amazon’s music cloud offering. Imagine what they’d be saying about uploading movies? Again, this is all a guess of mine. Some other thoughts and guesses about tomorrows announcement by Apple MIGHT be:

 

• Your Mac, Windows, or iOS device can sync with all or part of it in the same way that your iOS devices sync with your computer’s iTunes library today because your music library exists in the cloud now.

• Continuous syncing of iOS devices in real time. The implication is never having to plug your iPhone or iPad in to your computer again. You won’t need a computer to sync anymore.

• One login using your Apple account: On any Mac, sign in as a guest using your Apple account credentials and you’ll be brought to the same desktop you get on your personal machine. Files will be downloaded from the cloud (or your home network) on demand, and you’ll have access to all the apps you’ve purchased via the Mac App Store, downloaded and installed on-demand, and removed securely, along with your data, upon log-out.

• Play music on your mac, then with a tap shift the music to your iPhone when you’re on the go. A sizable portion of the playlist will quickly transfer over so there’s no reliance on continued wi-fi access or 3G streaming. A ‘cloud’ benefit.

Lion and iOS 5 will change the playing field for many. It will be interesting to find out exactly how Apple will do this and when tomorrow at WWDC (Worldwide Developer Conference). You can watch it live here on Monday, June 6th at 10am: http://www.macrumorslive.com/.

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It’s the pirates who are on the right side of history.

In Praise of Piracy – a well written article and one you might want to read, by Jon Evans.

http://techcrunch.com/2011/02/05/in-praise-of-piracy/

then visit this site:   http://www.dontmakemesteal.com/   –  a Digital Media Consumption Manifesto

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And you thought Twitter was just for ‘I’m eating lunch’.

I’ve been a user of twitter since its inception and I’ll admit I didn’t get it at first. I mean, why do I want to waste my time telling anyone where I am or what I’m eating for breakfast? Or reading what they eat for lunch?   I’ve watched Twitter grow up now for sometime and it has seen some massive growth. So, it cant be from everyone telling everyone else such mundane and useless information. There has to be something here that means so much more. And there is.

Back in the days when I first jumped aboard the web, prior to the first dot.com meltdown, you had Netscape (R.I.P). I used NS as a place or ‘portal’ as they called it to find out the weather, news, events, movies and other things that was scattered throughout the internet. Actually before NS, I used BBS boards. Useful, but a bit boring and graphically plain and in 1 or two colors, its was sloooow to use and a terrible user experience. But then again, that’s all there was until NS appeared.  (Can you say 28k and 56k baud squelching modems)?  And then AOL and Yahoo came along which was a step up from NS. It started collecting ‘links’ for us.

Our browser (netscape) allowed us to bookmark our favorite places so we didn’t forget them. I used to have way too many. And then really simple syndication showed up (RSS) and that was pretty awesome. Sites created an RSS ‘feed’ which was a link of sorts. We then had RSS ‘readers’ and presto, web sites and readers could ‘feed’ us what they updated without us going back to the site to load it up every hour or two. A syndication of information of sorts, quite useful and all of a sudden EVERYONE has an RSS feed.   Then we had ‘shared’ bookmarks. The concept of shared online bookmarks dates back to April 1996 with the launch of itList. Within the next three years, online bookmark services became competitive, with venture-backed companies such as Backflip, Blink, Clip2, ClickMarks, HotLinks, and others entering the market. Then Delicious in 2006 along with reddit, newsvine and dig showed up. All of these allowed us to share what we thought was cool and interesting that we found on the web.  Collaborative tagging so-to-speak.

And then came Twitter. I found that the best way to use Twitter is to consume and drink from twitter and not to necessarily feel so inclined to ‘tweet’ incessantly. With my RSS reader, I have to launch it and peel through (and find) the feeds ‘I’ have chosen to read. With twitter, if I follow people who are smarter than I am, they find things that they ‘tweet’ about and ‘tweet’ them out. Even the ‘re-tweeting’ of things becomes a beacon and new river of new information for me to see and learn from. Think about it –  using smarter people and friends to find cool things to discover and read about on the net in just a short 140 character ‘tweet’. No long story to read, a quick blurb and a link. If I think it may be interesting, I’ll read it. Sometimes I don’t even need to read the article – its encapsulated enough in a tweet. And, yes I get to see what is most obvious about twitter delivered to my mobile or ipad, which is the current trends and events that happen somewhere on the planet which CNN and ABC never get to first anymore. Its usually someone with a mobile phone who ‘tweets’ it. (Think the jet in the Hudson river in NYC).

Yes Twitter can be used as a marketing tool and is all the time – sometime too much so. Twitter’s usefulness as a ‘free’ loudspeaker or podium for their services /software/business can work against people more often than not as its abused so much so that way. But as a way to consume snippets of information from around the planet for even short periods of time from people who are experts at one thing or another that you are NOT an expert at, is pure serendipity. There’s no other tool like it today.

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The Day the Studios and Theaters Stood Still

Sometime in the near future there will be an explosion heard only in the entertainment trades and whispered and talked about between studios, marketing executives,  theater owners and DVD retailers. The FCC gave everyone permission to enter this pissing match and what a pissing match it will be.

If you ever go to the movies (and many of us do) with more than 1 person – so two people attend a film and you have a child where you needed to hire a sitter, you might not be going to the theater so quickly anymore. Well, maybe you still will. Time will tell this one. Soon, a mere 6 weeks AFTER any movie starts playing in a theater, you will be able to watch it at home in the comfort of your ‘Aunt Fay’s couch’ (nod to Steely Dan) on your nice large LCD flat panel TV.  To help you To help you visualize what this means in numbers, there are about 115 million television households in the US. Approximately 100 million of them are currently cable, satellite or IPTV subscribers. Through these cable boxes (although not every one of them, only the ‘digital’ households that have a set-top box) you will be able to purchase the very same film that was JUST in the theaters 6 weeks ago on cable for $24.99 – called premium V.O.D. – video-on-demand.  BUT, the movie studios will be able to activate a technology to prevent films sold through video-on-demand cable systems from being copied.  This is the ruling that the FCC just allowed in May 2010 after a two year battle with the studios.

Right now, theaters get an exclusive period — 120 days (4 months vs. 6 weeks), on average — to serve up new movies. Then the releases appear on television video-on-demand services at a price of about $4.99. Now the studios want to offer us new movies on video-on-demand services about 45 days after they arrive in theaters.  But, you can’t keep a copy or make a copy (your DVR, VHS or whatever won’t work). Just like a theater, once its over, its over.

So, if you are more than 2 people (+ a baby sitter), and unless you are dying to see the film on a BIG screen, I guess you might wait a few weeks.

So, what’s the big deal? For starters, the theater owners, have made it clear that releasing a movie early on video-on-demand services — thus cutting into their window — would be the equivalent of declaring war. They feel people will be more reluctant to buy movie tickets, at an average cost of almost $8, if they know they can catch the same film just a few weeks later in their living rooms, and for less money than it costs to haul the whole family to the theater. The average moviegoer spends more than $3 on popcorn and soda and the like, the cost of Friday night at the movies for a family of four can easily reach $45 – $60 — or much more in cities like New York and California.   And theater owners say this doesn’t take into account second-run and discount theaters, and that there are big exceptions: “Inception,” for instance, was still raking in millions in theaters 10 weeks after its release.

Next up, DVD retailers are fuming – Best Buy and Wal-Mart have told the studios they will retaliate against anyone who tries early-release V.O.D. because of the threat it poses to DVD sales. Huh, what DVD sales? The DVD is going the way of the CD in case anyone hasn’t noticed. Blockbuster just filed for bankruptcy. DVD sales for the year are expected to total about $9.9 billion, down 30 percent from their peak in 2004  (about $13 billion), according to Adams Media Research.

Who is the big winner here? The Studios (or so they think) because as much as 80 percent of that early V.O.D. revenue goes to them, therefore movie executives see a new way to compensate for their dwindling DVD business. And the studios are aware that consumers are growing impatient about being unable to access all movies whenever and wherever they want. An early video-on-demand option might prevent some of those frustrated customers from turning to pirated copies.

So where’s the flaw in this plan? I have a couple of thoughts. First of all, the pay-per-view business has been an anemic business since its inception on cable in 1984 when Request TV, Viewers Choice and The People’s Choice (yes, this was my company back then). Part of the problems was with the windows given to PPV movies, part was the terrible job the cable operators did to market these films to us, part was the billing mechanism (it was archaic) and part was the fact that the VHS back then and soon the DVD was simply an easier option. Not to mention you could rent the same film on VHS/DVD so much earlier than on PPV and then buy a copy to own, to watch again and again.  Second problem is that you can’t keep a copy of what you fork out $24.99 for. This just begs for pirates to hack the system (and it will happen and supposedly already has). So forget the studios argument that an early video-on-demand option might prevent some of those frustrated customers from turning to pirated copies.  Maybe at first, but I have no doubt pirated copies will turn up on the streets all the same – now just earlier and better quality DVD copies.

The fact you can’t keep a copy is just self-defeating. Instead, what the studios SHOULD be doing is giving everyone a ‘cloud’ storage locker for say, $ 10.00-20.00 a year. Once you pay $24.99, the film goes straight to your locker. Then, its kept there to be watched as many times as you want for as long as you keep the locker subscription current each year. Sure, pirated copies will still happen but there is a much better chance that people will be more willing to pay the $24.99 IF they can watch it over again, anytime, and on any ‘authorized’ device you own (i.e. mobile phone, Galaxy ‘Tab’, iPad, etc).  Apple does great job with ‘authorized’ devices and computers.

I’m sure a studio would say ‘well, then your friends can come over and see the same film without paying for it because its in your locker’. Well, its in YOUR locker, not theirs and they can come over anyway under the present scenario. And this is the same ridiculous argument studio exec’s made in the early years of the PPV business.  It didn’t stop anyone back then and only help stifle the PPV business – a misjudgment they appear are doomed to repeat once again.  Will they ever learn from past mistakes?

So, will you pay $24.99 to watch a film at home you can only see one time?  You might if it’s a title you don’t really care to much to see in the theaters. Would you have seen Avatar that way?  NOT ME!

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Cloudy With NO Chance of Meatballs for $24.95

Someone over at Sony must be watching too many 3 Stooges episodes late at night to think up a promotion like this.

What a terrible value for consumers. I guess their DVD outlets complained so instead of changing their thinking they upped the 24hr. ‘rental’ price. Yes, that’s right. If you’ve got a Sony Bravia TV you too can rent ‘Cloudy with a Chance of Meatballs’ for the incredibly fair price of $ 24.95 for a 24 hour term. Don’t everyone rush at once. And, those renters will be proud to know that they got to see the film BEFORE their friends got it on DVD….ooooohhh. Sony thinks that there’s a rush to see THIS film 28 days before you can see it or buy it on DVD (Jan 4th, 2010) for less than $24.95 and own the plastic disc and box? I feel really sorry for the suckers who rent it on Jan. 3rd, 2010 the day before its DVD release. If they wait just 24 more hours they can OWN it for less.

Sony, why not offer consumers something of value? Netflix list of 20 Sony films for free? 3-6 month pass to EpixHD online? Something on iTunes? Anything? This is ridiculous.

Cable operators are OUT of room…no kidding!

Holy cow Batman!! We ran out of room?

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So what’s a programming service to do when they don’t have channel space to put even their own cable offering on the air? Punt! How do you do that? Well, there’s a little under-the-radar company in San Jose that provides ‘web-infused’ TV. They produce a magic box and some magic proprietary software to the cable operator for FREE. That’s right, 100% FREE. They install it for them and maintain it for them. What does this give the operators? It gives them many more additional cable channels. What does it give the cable subscriber at home (read: you and me) ? More channels on their channel line-up. And its all seamless. It just looks like another channel. The channel or channels are controlled and surfed with the same remote that you were given when you signed up for cable. But here’s the best part. It also delivers the Internet on a channel all controlled by the same remote. You want to watch videos on YouTube, see what’s on Blip.tv? Its all there and easy to find and maneuver. No box for you to hook up, no additional NOTHING. I think this has a lot of potential for growth. They will be launching in a large system back East shortly. So, if you have a fairly robust website that you want delivered on cable TV to millions of cable TV subscribers, you can do that now. They are other pieces to actually how you get launched but its all do-able. Exciting times. I’m going to brush off some of my old cable channel concepts. They might just fly now.

This just in…Google and Simon Fuller to debut TV show online

Good Monday Morning…on the heels of my last post comes a rumor just a few hours ago that Google and Simon Fuller (American Idol fame) are collaborating on a new TV show to debut online. (think ‘prom queen’ Prom Queenbut even more production values added to the mix). Now that’s what I’m talkin’ about!