A version of this piece was published in Marketing in 2008
Apple have sold over 3 billion songs on their iTunes website since its launch in 2003, making the company a major force in the global music business – a position Apple is keen to leverage in the TV space. But the launch of Apple TV last year was met with indifference, mainly because the box couldn’t access the iTunes service – sales predictions of 1–1.5m units proved ambitious, as the box barely scraped past the 400,000 mark.
But Apple TV’s back, and the recent launch of version 2 led to a 17% slump in Blockbuster’s share price, as Apple dropped the price, and enabled the box to access iTunes without the need for a computer – at the same time offering a free software upgrade to existing owners to give them the same functionality.
The combination that proved so powerful in music – beautifully designed players with access to a vast online library of content – is what Apple are keen to follow in video, offering downloads to your computer, your mobile or your laptop.
But there is a missing ingredient which could offer the key to Apple replicating the success in TV that they’ve had in music. To make iTunes successful, Apple didn’t insist you had a Mac – you could run it on a PC, a necessary step given the Mac’s small market share.
Apple’s challenge here is getting connected to the TV. With an installed base of just 400,000 Apple TV users, the vast majority of iTunes users are accessing the store through a computer, which whilst they might hook up portable devices, they generally don’t connect to the main TV in the house. But the king of TV-connected entertainment devices is Nintendo’s Wii – seven million sold in the US alone. Releasing a version of iTunes for Wii (and for other platforms like Playstation and Xbox) could jumpstart iTunes into major distribution for TV content.
The battle for space under your TV is well and truly under way.
In the UK, Sky have had a long run free from effective competition. But last year Freeview overtook Sky, boosted by the popularity of digital PVRs, and together with a resurgent cable industry under Virgin’s leadership and the launch of BT Vision, a much tougher fight has emerged for what goes under the TV here.
It isn’t just the usual suspects who are battling for space. Microsoft’s Xbox gaming console already offers movie and video rental in the UK, whilst Wii has the capability to follow and Playstation3 has a Blu-Ray high Def DVD player built in.
Meanwhile, on the internet, Project Kangaroo is set to bring together the BBC, ITV and C4 on one software platform, and if Auntie can avoid the politicking that so badly delayed the iPlayer, it could do for online TV what Freeview did for broadcast – in turn, finally providing a reason to hook up a PC to the telly, and adding another box to the list of contenders.
There at least seven different types of box you can use to access TV on your TV set (excluding offline devices like DVD players and PVRs), dozens of different suppliers of connectivity and thousands of suppliers of content.
The world of TV is set for a revolution, and with it, the way we use it as a means of communicating brand messages. As the distribution of TV shifts from broadcast to addressable, there are wide-ranging implications for how advertising on it is measured, traded and delivered.
So far, the proportion of TV delivered in this way is small. But this isn’t going to be a slow burn medium that grows gradually over several years, because many of the devices already exist in consumers’ homes. All they need is a reason to connect them – and when they do, the marketing on TV is going to change forever.