Perspective: Why Apple can't do to video what it did to music

From Hollywood to New York City, media executives have spent the last two years fretting that Steve Jobs could wreak havoc on the video distribution business the same way he upended the music industry.

The hand-wringing can end; the Apple juggernaut won't be able to do to video what it did to music.

Flashback to October 2005: Apple's music store was plowing through previous barriers of consumer behavior and industry politics to build the only successful online music store. So successful, in fact, that in the present, iTunes sells about 20 percent of all music sold in the United States. It came as little surprise when iTunes created the video iPod and announced it would go after the video market in a big way.

Now, two years later, the bad news for Apple is that the company's media distribution strategy is not going to work in video like it did in music. MP3 players, including the iPod, are valuable from the day you buy them because your entire CD collection provides immediate content to fill the device. The video hardware business is different. Unfortunately for consumers, the movie industry won't let you rip DVDs to iTunes, and therefore any one of the many devices Apple has recently added video to, including the iPhone, iPod Touch (essentially an iPhone for people with Verizon calling plans), iPod Nano video, and Apple TV. This means you can spend $299, as is the case with the Apple TV, and still not be able to transfer any of your existing video library to the device, forcing you to buy video from iTunes.

This might not be so terrible if all the videos you wanted to watch were on iTunes. But even after all the major movie studios agreed to participate with Wal-Mart Store's online download store in early 2007, most of them have still not agreed to sell new releases through iTunes--either from fear of building an Apple monster, or because of exclusive commitments to other partners in paid TV or elsewhere. That's why, despite the back catalog of movies that Paramount, MGM, and Lionsgate feature there, the result is a stunning lack of movie content for purchase.

MP3 players, including the iPod, are valuable from the day you buy them because your entire CD collection provides immediate content to fill the device. The video hardware business is different.

To make matters worse, the one bright spot iTunes had going for it--the TV show download business--is stalling. NBC announced this fall it would withdraw its content from the iTunes store when its current agreement expires at the end of this year. Content that NBC Universal CEO Jerry Zucker has claimed on the record accounted for 40 percent of the iTunes video store's sales, while only bringing NBC an anemic $16 million in revenue.

Not to mention that the value of an expensive video device is dramatically lessened since there are now easier ways to watch the TV shows you want, when you want to watch them. By the end of 2007, Forrester Research estimates that 26 percent of homes will have a DVR, and the 52 percent of the population with a broadband Internet connection can watch TV shows for free from every major network. NBC Direct will even let its fans download shows for offline--read: airplane--viewing.

All of this adds up to one conclusion: don't let the Mac geeks posting angry blogs against NBC fool you. Any supposed backlash against NBC will not materialize since NBC has made its content available, for free, on NBC.com and has plans to do so on six other major portal sites through Hulu.com, as well as via NBC Direct download and over cable VOD. Without NBC's content, iTunes is only 60 percent of a store.

There are additional obvious things Apple can do, like changing from a download-to-own model to a pay-per-view movie model, a strategy that Hollywood has embraced and that also solves long-term storage problems for consumers. However, the real innovation comes if and when Apple funnels more Web video--both professional and user-generated--into iTunes. Envision ubiquitous "download this to iTunes/iPod" links that go beyond those few Web videos formatted as video podcasts.

Of course, the only way to download Web video without getting sued is to let Web video providers embed ads in the video streams that iTunes will capture. Have no doubt, the 6 million U.S. households with video-enabled iPods would be welcome target customers for top video sites' advertising ambitions. And this would allow iTunes to grab a piece of what my marketing colleagues at Forrester predict will be a $7.2 billion online video ad market by 2012.

But even while cashing in on ad opportunities, Apple shouldn't lose sight of the fact that the purpose of all of these improvements is to make all of its high-price, high-margin video devices become worth their price tags to another few million customers.

Media executives on both coasts can continue to arrange their deck chairs since there is no Apple iceberg visible ahead. Yes, there are still pirates in these waters, but the bigger long-term problem is complacency. They shouldn't let a lessening Apple threat cause them to slow the pace of innovation. As we know from fickle audiences in the past, if you do not serve them, they will wander--to competing content, certainly, but also to competing consumption models.

Biography
James L. McQuivey is a vice president and analyst for Forrester Research.

More Perspectives

[samkass]

Agree, but for a different reason

I think Apple's pretty much done everything right by the consumer for video. The point about it being legally questionable to rip a DVD you own onto a device you own is unfortunately a good one (the music industry must be kicking themselves here), but that's only a symptom.

The real cause of the anemic online video industry is the greed of the companies involved. Apple was able to get the music industry together to fight rampant piracy, because there some money was better than none. With video, the piracy industry is still nascent and the media companies aren't scared. That will change.

As video piracy picks up and sites like hulu.com continue to fail, I think Apple will be the only game in town set up to really give consumers what they want in an online marketplace. The recordable set-up box is too fragmented an industry for one company to control (TiVo, XBox, PS3, others), and watching video on a computer will always be niche. But handled video with large amounts of storage (ie. video iPods) are still a homogeneous market owned by Apple. Thus, I still think that will become the rallying point when the video content owners start getting pushed up against the wall.

The only alternative is something like Amazon.com, and trying to sell without DRM in a way where it still works on iPods. I don't see that happening, but even if it did Apple would benefit from it.

[AnthonyNYC]

Maybe True, except HTPC was discounted here.

Well, interesting reply, but I wanted to comment on how you discounted people with HTPC (home theater PC's)which is basically just running a wire from a Vista PC to your flatscreen in livingroom. When you say watching video on your PC will always be a niche, I disagree. As more and more PC enabled HDTV flatscreens are sold, people will hook them up to their PC's and see how easy it is to enjoy movies in the livingroom over the internet for free or with sites like Netflix (online streaming movies). I do it all the time now, and know of plenty of people who just started also.
So don't discount the internet and the PC to TV model just yet.
Thanks,
Anthony

[rcrusoe]

arranging their deck chairs

I agree, iTunes probably can't be as powerful in video as they
are in music. Too bad, because the movie industry really needs
someone to save them.

DVD sales are in steep decline. Most people only watch a movie
once or twice. Those that have small children that like to watch
the same show over and over have several options - the most
popular being Netflix and your favorite free ripping program.

IMO, viewing movies via streaming websites is a acceptable
solution only for geeks that can't get a date.

I had started buying several TV series via iTunes in hopes of
ditching cable when NBC pulled out. Fortunately, I have friends
who record many of my favorite shows for themselves are are
happy to give me copies - sans advertisements.

iTunes could have guaranteed the movie industry a proven
outlet that could have brought in needed revenue. By rejecting
it they have assured that a large portion of their customers that
would have made purchases via iTunes will be now be getting
their content for free elsewhere.

[AnthonyNYC]

Are you seriously considering ditching cable over this?

You said you were going to ditch cable in protest to NBC pulling out?
Wow! That's dedication to iTunes video.
If I ditched cabled, I would have no internet, phone or tv, since I didn't the phone company years go and have never been happier!
Anyway, I own 3 ipods, none do video, and I wish iTunes was never complicated with video, IMHO they messed up a good thing, as I hardly use iTunes anymore and can't remember the last time I ordered a song using it. I think companies are never satisfied with success and improve stuff that people enjoy until they mess it up enough where people realise it's no longer the product they originally wanted. Ie..iTunes! It wasn't iVideo when i originally purchased it. They should have kept video a seperate product with it's own software.

[davidwb45011]

Movie Industry Hasn't Hit Bottom Yet

Perhaps the reason Apple hasn't been able to pull off the same
trick with video is because the industry isn't desperate enough
yet. But I think it will be soon enough. DVD sales are down and
the industry hasn't yet realized that a) most of us don't want to
watch video on our computers, b) we don't want to be tied to a
specific location, a specific time, or a specific device, c) we
don't want to browse multiple websites to get our video, and d)
we don't want to be told how we are permitted to use what
we've paid for.

iTunes has been successful because we are paying a reasonable
price for a reasonable product. We control how we use it, within
reasonable constraints. We can watch it when, where, and with
what device we choose (okay, so we have to choose an iPod, but
who wouldn't?). What NBC is offering is none of that. The other
network sites are offering none of that. The movie industry
(overall) isn't offering that.

iTunes doesn't need the industry nearly as badly as the industry
needs iTunes. Just as most of us fill our iPods with the music
we got on CD, we can fill them up with the video we get from
DVD. And, of course, this totally ignores the power of torrents.
Just wait...the day will come when the industry either looks to
Jobs to bail them out or they'll adopt Jobs' vision. In either case
it is a win for the consumer.

[jfitch]

Um...

First, who is 'we'? second a) you don't want to watch anyting on your pc, but you'd rather watch it on a tiny screen? b)specific device? can I download from itunes and watch on my creative? and don't say 'creative sucks, itunes rocks'..that's called open architecture, which apple is not. LOL

[theotherallen]

not true.

while this article gives the general facts-it doesn't and even
appears to dig deeper into the case of NBC removing its content
from iTunes.

NBC fails to remember how the iTunes model saved the very
popular (now) The Office from being cancelled after one season.
While ratings were drastically low for cable television viewing,
iTunes sales of the show were exponentially larger, prompting
NBC to retain the show for future seasons.

NBC also demanded that Apple nearly pay double the wholesale
price for the shows, a factor that would drive the price for
consumers to nearly $4 a download.

My final point, is that while the may have only made $16m, how
much did posting that content on iTunes cost them? While I
don't know any figures, I cannot imagine very much whatsoever.
It is still $16m in revenue for them, with little to no effort on
their part. They should be proud of their successes on iTunes,
instead of being greedy and "taking their ball and going home".
They're making revenue on the ads, but still posting their shows
for free. And their NBC direct platform doesn't support Mac,
alienating a large portion of the digital world.

[jfitch]

um...

,..."And their NBC direct platform doesn't support Mac, alienating a large portion of the digital world". Really!! I'd like to see your statistics...LOL

[AnthonyNYC]

I think Mac users over value themselves as a whole

I enjoyed your comment until the last line when you stated by not supporting the Mac, they are alienating a large portion of the digital world.
When in actuality, Mac users are in fact still a small percentage of the digital world. But they do aspire to be a larger group some day, that's good.
But as a business decision, they are a tiny piece of the big pie. At least as of 2007 still.

[tomreeves]

Restart Hand-Wringing

From my blog:

The ability to watch video on hand held devices is another
distribution channel. One that currently is composed mainly of
iPods. It is a rapidly growing channel. It will displace old media
distribution strategies. How that happens is dependent on
decisions such as NBC's decision to pull content from iTunes.
Consumers will simply substitute content.

One fact that no one mentions: The length of the average "1-
hour" prime-time TV show is 42 minutes. On iTunes, I can pay
$1.99 to reclaim 18 minutes of my time and attention that
otherwise would have watched commercials. How can network
TV compete with those economics?

pwnership.com

[catch23]

Quite simple really

Your 18 minutes aren't worth a nickel.
Pure and simple. A vast majority of the public will take free with commercials over $2.00 for something they will watch once (or once in a while) every time.

And the alternatives are growing rapidly. TiVo is becoming easier to offload to a computer/hand held.

Personally, I use GB-PVR and ComCut. it automatically records, cuts out commercials, and trans codes and syncs to my Zune. I rarely have to lift a finger.
You should be able to do the same thing with Elgato if you own a Mac.

[jmcquivey]

On paying to reclaim 18 minutes of time

Great point on the 18 minutes, Tom. And for about 9% of the online population, you're right, these people are willing to pay extra for that privilege. The TV networks know this, so they have only kept about 4 mins of commercials in the typical online version of their shows. The tradeoff is between time, money, and convenience. iTunes is great on time, decent on convenience, and weak on money.

[Seaspray0]

and potty dancing

"On iTunes, I can pay $1.99 to reclaim 18 minutes of my time and attention that otherwise would have watched commercials."

That gives you 18 more minutes to spend watching such facinating programs like star search or survivor man but be prepared to "hold it" since there will be no commercial potty breaks.

[Renegade Knight]

Since Video Is Different...

Your analysis that it doesn't work like music is right, but at the same time the conclusions may not be quite right.

DVR's are great and a PITA at the same time. Thinking in terms of DVR's though is the right thing to do. A Net DVR that downloads an eppisode (the one you want) while you are away, then plays it on TV in high def with commericals may be the first thing that starts taking off. Not TV but Net TV. I don't need streaming, just the option. Movies I can download slowly while I'm at work. I only need to watch it once, but so what if I tape it like I did with VHS?

Apple TV is closer to the future than the video Ipod though Apple TV that exports to iPods, TV's, Laptops and everthing else are what's it's really going to take.

[bbelnap]

Legality is irrelevant

I disagree with one of the main points of this article. It's irrelevant whether the movie industry will "let" users convert their own video content to iTunes or any other PMP. Instead, factors like the speed of transcoding and media format are the limiting factors of the video library transfer.

About a decade ago, as a freshman in college, MP3s were a rather new hit. Napster had just started and thousands of college students forged into legally questionable territory as they converted their CDs to MP3s. It was a lengthy process, requiring an hour or two per CD and multiple programs to complete. MP3 players were a shadow of a thought. Over the course of a year, one-click programs would rip any CD to MP3 though tagging was still manual. Rapidly, the speed and ease with which CDs could be converted to MP3s increased. Quality was acceptable. Then the MP3 player was born. Today, you can rip a CD to MP3 in 5 minutes.

The same is not true with video, however. The quality issue is huge, and the time, space and processing power required to transcode a video is equally huge. I argue that if I the average user could put a DVD in a drive and have a movie ripped to iTunes in a few minutes more users would do so (legality aside for the sake of argument). But it does not. It can take more than three times the length of a film to rip it to a portable format. Even then, the quality is only passable.

But the format is another issue. Who wants to watch a feature length presentation on a two-inch screen!

I think the legality issue is less important than the two points above. MP3s face similar legality issues, and labels have tried to stop them (Sony's rootkits case-in-point), but because of the ease of conversion, companies have adopted an 'if you cant beat em, join em' attitude. The recent pushes from companies like Apple and Wal Mart against DRM have shown that the legality issue can (and will) be overturned as the market exercises its will.

Even if it the legality issue were completely clear on the conversion of video, Apple would still face barriers in the time required to convert video and the diminished experience of the video format on a portable device.

[jeph4e]

Size matters not

I watch feature length stuff on my nano at the gym and on the
road.

Apple is the only one I can grab something and upload it w/o
difficulty

[scarface74]

Is it Really that hard

There is a free open source program for Macs, Windows, and Linux where you just put the DVD in and choose a preset and hit convert.

Anyone who wants to convert a DVD to iPod can just search for "iPod to DVD" and figure it out in 5 minutes.

As far as speed. My low-end 1.66Gz Core Duo Mac can convert a movie to high quality MPEG at 100-120 frames per second. A film is only 24 fps and a tv show is typically 30fps. That's three to four times faster than the length of a movie.

[rolandk10]

Agree

Although alot of younger people don't mind watching tv on a small device, I paid alot for all the theater equipment, plasma screens etc in my house. Why would I want to go to worse-than-broadcast quality movies? I have some of these portable devices and I've tried watching TV on them. It's a pain. Especially if you want to watch with multiple people. A built in video/audio out would be welcome so I don't have to haul around a docking station or a video camera. It would be nice if I could just use it like I would for music. Plug it into any tv and hit play.

Also the point about encoding. Of course you can cut down the time by cutting resolution and features but as above, I don't want to. If it's free like on NBC.com, the I'll take what I can get but if I'm to pay for it, I want the best quality. Plus, unlike audio cd's, DVD's come with special features that I really enjoy and I want those too.

My point is, while there is a certain amount of demand for tv on 2 inch screens, it would appear that many more people would prefer to use our nice new expensive HD screens and play content that will actually wow us.

Personally, I don't think Apple has anything to do with this trend one way or the other. The only reason they are relavent to this topic is that they were already in position from iTumes and the music to move towards video. It appears the masses are speaking and don't like the current trend in the video.

[proadventurer]

I just riped 2 movies to iTunes

I now have the bulk of my DVD collection and most of blockbusters on my computer. It's pretty easy - but not as easy as ripping a CD and takes up a heck of a lot more space.

[tomreeves]

Time Is Money, After All

My 18 minutes might not be worth a nickel to you, but it does
indeed have value to me. I will pay $2 to make all the
commercials go away and watch video where and when I want.

Bits is bits. I can get lots of them for free from iTunes or other
places. I will substitute free, or cheap and easy, for difficult and
expense most of the time. Torrents are easy too, or so I have
been told.

If old media wants to be difficult and expense, good luck to
them.

pwnership.com

[jeromatron]

AppleTV + Handbrake

It's kind of an unsolvable problem - how to make content available but protects against rampant sharing, but also is flexible for new devices and other ways to consume it.

As for me, I have an AppleTV and use Handbrake to rip movies.

The whole thing about having a dvd that includes a crappy version of the same movie is very short-sighted - what happens when devices change? It's a crappy version or the original on the disc.

[lantzn]

Mad YEAH!

"All of this adds up to one conclusion: don't let the Mac geeks
posting angry blogs against NBC fool you. Any supposed
backlash against NBC will not materialize since NBC has made
its content available, for free, on NBC.com and has plans to do
so on six other major portal sites through Hulu.com, as well as
via NBC Direct download and over cable VOD."

I'm one of those angry Mac users and rightly so. Before NBC
pulled out I was watching commercial free shows like Battlestar
Galatica, The Office and Heroes I downloaded to my Mac on my
HDTV using an Apple TV in the comfort of my living room. My
wife HATED and refused watching anything on our computer
with a 20" display. She fell in love with our Apple TV setup.
Now I ask, how can I do the same with NBC's offering.
Commercial free, nope, download to Mac, nope, watch on my
HDTV using ATV, nope.
I've asked others on the forums and most have said use
Bittorent, Limewire or Acquisition. Guess what I don't think NBC
would prefer that. Well guess what, they don't care about me
from what they've shown.

[docster87]

yep

Since NBC will not sell us their videos, well I guess that forces us to
STEAL those videos from them, thus reducing their holy profit and
increasing bad behavior.

SMART MOVE NBC!

[mike.gw]

Hey James L. McQuivey

Who sponsered your research project?

[jmcquivey]

Nobody sponsored this research

Fair question from mike.gw on my research -- I'm happy to report that nobody sponsored my research. Forrester pays millions of dollars a year to conduct independent research like this so that we can see things as they really are. All my clients appreciate that independence, as do I.

James

[Ian Kirkland]

The real problem

is that the purchase of video is basically counter-consumer.
Very few of us actually purchase video, movies or tv shows, to
watch repeatedly. This, of course, is for two reasons. One: the
content is often not worthy of repeated viewings. Two: the
content is not worthy of repeated viewings.

Simple. The first major player that offers a subscription model
of rental video with HiDef and good sound playable on the best
equipment of any kind- iPod, computer, Apple TV, and HiDef
TVs- will gain an instant audience.

I pay a flat-rate for web access. I can download all night and
enjoy all day, evening, weekend. Storage is getting cheaper and
cheaper.

It's time to change the distribution model.

[coryschulz]

I agree

I don't care to pay anything for TV shows. I like the Office, but I would never pay even a dollar for it. I don't need to watch it more than once.

Also, I have an iPhone and I don't really use it for watching videos. I don't think I ever would. I prefer to watch videos on a large TV screen. And I prefer to watch high quality videos, not the lower quality offered by Apple TV. If I'm going to pay for something it better be the best quality available. Also I like that I can take a DVD and borrow it to a friend, and then borrow it to a different friend. It's more portable.

Apple would have to upgrade Apple TV quite a bit and allow me to back up DVDs on it at full quality. Offer high quality movie rentals through iTunes at a reasonable price. Some type of TIVO/DVR feature would also be nice. I also think they should make a remote for the Apple TV that is more like the iPod Touch, where it could bring up a keyboard so I could search for a movie online or enter in a channel number to record or pause or play a movie. There are still a lot of things Apple could do to sell movie rentals, but I doubt it will ever replace DVD sales, as DVDS offer more options.

[marks47--2008]

too much credit

Steve didn't kill the music industry, he just pulled the life support
plug on the record business. The profit model for all but the top 50
or so artist had already shifted to live performance.

[jltnol]

Wrong!

While it's clear Apple hasn't been able to make Video work as
well as music, I think it's a jump to conclude that Apple has done
something wrong. Too early? Yes, I'd agree with that idea.... but
the reason iTunes and music works so well, is, as one poster
said, the ability to pay a fair price for a fair product, and enjoy it
the way you choose to enjoy it.

As far as I can tell, none of the NBC sites with with Macs, and
even for the MS crowd, the restrictions seem pretty severe.

I don't mind PAYING for movies, either to rent or to own, but if I
do EITHER, I want to be able to decide when, where, and how I
view the content... you know... like the way video content on
iTunes works now.

[badasscat]

iTunes does not sell 20% of all music

It drives me crazy how some people seem to be under the mistaken impression that music downloads are even close to the popularity of CD's. According to the industry's own figures, last year "album" downloads (an album being defined as 10 tracks, not necessarily an actual album) were about 5.5% of the total, with CD's making up the remaining 94.5%. That means *all* digital download sales - both single tracks put together into groups of 10 and actual albums, and from all retailers put together, including iTunes - only totaled 5.5% of the market.

This is why the music industry continues to lose so much money as CD sales drop, even as download sales rise. The point is downloads are still a minuscule segment of the market - the market for CD's is still 20 times larger and last I checked, iTunes didn't sell any of those.

This is Apple's real problem. Forget about "doing to video what it did to music" - Apple hasn't even done to music what a lot of people think they have. They are not nearly as successful of a retailer as they would need to be to have any real clout. They happen to be the largest retailer of downloads, but that's like saying I'm the largest retailer of pocket lint. There's just not a big market for it outside of its niche.

[jmcquivey]

The real facts on iTunes

Thanks for the perspective. Globally it's true that downloads are a small piece of the market; unfortunately in the US, your stats are simply off. iTunes is the third largest retailer of music in the country behind Wal-Mart and Best Buy. It sells more music than either Amazon and Target. It is more than doubling this year and did the same last year. A very conservative estimate puts iTunes music store at $1.7 billion this year, roughly 20% of the $8.5 billion the industry is sinking to as CDs continue to dive. The facts are in: iTunes is one of the most important music stores in the US, one of the most important music markets in the world.

James

[Fat Drunk and Stupid]

LOL??? SOLVES CONSUMER PROBLEMS

QUOTE: "There are additional obvious things Apple can do, like changing from a download-to-own model to a pay-per-view movie model, a strategy that Hollywood has embraced and that also solves long-term storage problems for consumers."


Consumer storage problems are a thing of the past WHEN YOU TAKE THE OPTION TO STORE CONTENT AWAY FROM THE CONSUMER!

BRILLIANT!

[docster87]

NBC = GREED

Why pay $5 to watch something once if you could pay $10 and
watch it every weekend for years??? Renting is NOT the answer!

NBC pulled from Apple to increase their profits. NBC cares not
about customers - they would rather give their overpaid CEO a
million dollar bonus this year. I only make 30 grand (before
taxes!).

Where the freak is the production costs of DVD's and booklets
and gas for shipping video downloads? I just don't understand.

I do not have cable TV. I get my favorite shows off iTunes and
lucky for me - I don't like NBC's current programing anyway. I
don't want to watch TV in a little bitty box on my huge monitor
off a web site - I want to watch TV full screen or pop it on my
iPhone.

You argue that iTunes needs NBC more than NBC needs iTunes.
Let's check back in three years - I bet it is the other way around.
Since I don't have cable, I'll learn to watch (AND COLLECT AND
REWATCH) what I can through iTunes. I like iTunes a lot better
than NBC.

I agree the selection is limited since one cannot LEGALLY rip a
DVD into iTunes, but NBC = GREED is not the answer. merely
renting video downloads - I'm sure Hollywood likes that since
that creates MORE profit, but I enjoy watching videos multiple
times throughout the years. I'll buy more hard drives. I've
currently got 100GB of movies, 125GB of TV shows... and those
numbers are growing.

NBC is not creating goodwill for customers. NBC only cares
about overpaying their CEO. Perhaps I'm 100% wrong, I'll admit I
can be wrong - but I just do not understand why NBC would pull
from Apple because NBC wanted to charge MORE for a product
that is mostly just extra profit to start with. To me that is NBC =
GREED and I plan to distance myself from NBC as much as
possible.

[ImRaptor]

Private business

"but I just do not understand why NBC would pull
from Apple because NBC wanted to charge MORE for a product that is mostly just extra profit to start with."

What's to understand? NBC is a business out to make money, same as Apple. You want to watch your shows how you want, and don't understand why NBC is not catering to you and making less money because of it.
I'd like an iPod touch, but Apple charges to much for it, it's like they are trying to make a profit or something. But dammit, I want one so they should ignore their fundamental business practices and try and make less money.
And if they don't I guess I'll take a page from docster87: APPLE = GREED

[R. U. Sirius]

What a Steaming Pile....

Seriously, this is the worst research report I have ever seen, and I have seen tons of them. Obviously this guy was paid by NBC to write this garbage, and equally obvious, we ain't buying one word of it.

Newflash Forrester Researcher: we don't care about NBC, Jeff Zucker, or any of the crap they produce. Take it off iTunes, there's plenty of other content out there to occupy our entertainment gene.

[Ilgaz]

Let me tell why, people can SEE, they aren't stupid

If you offer a thing which has lower resolution than PAL/NTSC
with only 2 channel Stereo sound with comparable DVD price...
They will buy the DVD.

I was at Asia, BluRay with 1080P resolution and 6 channel or 8
channel PCM uncompressed audio started to appear at shops
and people buy them. Why should they buy iPod or Apple TV
movies?

The key is P2P. As long as they don't embrace P2P Technology,
they won't be able to provide something comparable to HD DVD
or Blu Ray. As they are busy conspiring the P2P instead of using
it, every "online movie" company will fail.

[RompStar_420]

I agree

As much as I like Apple, some of their products suck. They don't make always winners. The Apple TV sucks! And as much as I love the iPod (I own 2 of them), I rather always buy my music or movie collections of a raw disk of the highest quality at the time of the technology at the time of purchase available to me.

The internet can't support the bandwidth necessary to be able to sell the same type of quality that you can get on a disk, and with so much crap on the internet, with how it is expanding, I am not sure when that would happen.

Eveyone would need a fiber optic cable into their house to get that at the speed that the customer would want it at, and I don't see that happening anytime soon. Plus all the gateways and routers from the root on up, would have to pass packets using light switching and not electrical signals, also a ways off.

I have never purchased a single song using iTunes or any other sales channel, I always buy it in the Store or on-line, as long as I get it on a disk.