Blog Post

How Will Apple Compete With “On Demand”?

I continue to hope that Apple has more tricks up its sleeve in regards to iTunes and the sale of TV shows or movies, because while I do find the occasional missed episode or special to download, iTunes is not becoming my go-to destination for video the way it has for music. And after recent experiences with Comcast’s On Demand service, it’s clear the chasm to cross is a big one.

Comcast On Demand blurs the lines between pay per view and TiVo. If you’re unfamiliar, the On Demand premium cable service lets you view a wide variety of network TV shows or films for free, any time you want, assuming the episode has already aired. For newly released movies, the cost is a low $3.99, and shows are available immediately. But in contrast to iTunes, you are renting the show, and don’t “own” it forever, or have the option to take it from the TV to another device, like the iPod. A different use to be sure, but one I think Apple needs to keep in mind.

For example, on Sunday night, I rented “Night at the Museum” with Ben Stiller and Robin Williams, for the aforementioned $3.99. The show started immediately, without waiting for download, or taking up space on my computer. In contrast, iTunes doesn’t even have the movie available. If it did, the standard new release price is $12.99, and a download could be 1.5 gigabytes for the 1 hour 48 minute feature.

And while free options were limited, I could catch up on the last month’s worth of CSI Miami, The Office, Law & Order Criminal Intent and other shows without cost – much like TiVo’s famous Season Pass.

In this case, the advantages of On Demand over iTunes are clear. Less cost, less time to product, and elimination of utilized space. And the issue of renting versus owning media in the video space is a much bigger deal than with music. While I continue to buy an album a week or so from the iTunes store, I’m just not buying video. Once it’s watched, it’s done. Will Apple adapt in the face of nimble competition like NetFlix and Comcast On Demand?

14 Responses to “How Will Apple Compete With “On Demand”?”

  1. I realize I’m not at all representative of the general public, but I just ditched cable TV service altogether. After doing the math, I realized that given my particular viewing habits, it actually made more sense to watch video online and purchase through iTunes where necessary, rather than shell out for cable service each month. I have Comcast’s broadband service, but not the cable service.

    Comcast’s service may work just fine, but you’re assuming that people already have the cable TV package. While that’s true for most people these days, as broadband speeds (gradually) increase, the rationale for keeping cable TV gets weaker.

    Also, as others have pointed out, VOD and video purchases are likely more complimentary than in competition with each other. The ability to take a downloaded movie and pop it in my iPod makes it quite valuable to time/place-shifters who don’t like being tethered to the TV. But when you are sitting in front of the TV and have a spur of the moment need see Ben Stiller, VOD may be the way to go.

  2. Lucky13

    Comcast recently offered a free box with free installation. Prior to this, I had only the most basic of cable service. Movies on Demand has been great…when it actually works. Errors have been frequent, with pauses and freezes and choppy images. I’ve yet to order a pay movie…just the free offerings to this point. If the glitches could be fixed, they’d have a customer.

    I’m not sold on the AppleTV concept at this point. It seems too limited and too time consuming. Also, the whole portable video scene doesn’t interest me, whether on an iPod, iPhone…

  3. Even though I love iTunes I don’t use it for video downloads at all. I want to watch my shows on my 48″ Flat-screen without shelling out the money for an AppleTV. My cable provider is offering Movies on demand for a reasonable price. Personally I don’t think it’ll take off as quick as the music downloads. Time will tell.

  4. The interesting thing about the whole media-on-demand phenomenon is that it really is just a precursor to the next generation of media delivery subsystems.

    As the Cable-on-demand vs. iTune video downloads, essentially pay content on demand. It really is just a matter of time now before some company or other offers entire catalogs of movies / shows etc. for one low monthly fee. At which point, everything is on demand and would no doubt be streamed to my set-top box from whichever service provider I choose to use.

    I think as the cable companies move closer and closer to the state at which they are providing unlimited bandwidth to the home, it will become a market for content providers vs. carriage. This is a similar revolution as is currently taking place in the telephony world today with the VOIP vs. wire services.

  5. SidinKeyWest

    On Demand is not portable, I can’t take it with me on business trips. That is the difference in the two delivery models. BTW, I watch most of the movies on my MacBookPro inflight and in the hotel room (when there is time.

  6. I think Apple is only going to offer products where it has a significant competitive advantage.

    Comcast OnDemand, as you describe it, is the perfect solution for renting movies. If you see a movie and never want to watch it again, it’s ideal.

    Apple’s approach requires that you download the movie before seeing it (or playback will be poor), and then you get to keep it.

    These seem to me to be complimentary approaches; sometimes you will want to own something, and other times you’ll want to rent. Comcast is the cheapest and easiest way to rent, because you don’t need to download the movie; it comes up in full speed and real time.

    Of course you could always TIVO your ComCast OnDemand movie and record it that way – although illegal, that sounds like something plenty of people will do in practice, and then it’s the best of both worlds.

    That may be the real threat to iTunes.


  7. nosedive51

    I forgot to mention I picked up an Apple TV over the weekend. I wasn’t sure if I would like it or not but I’ve really enjoyed it so far. With reality shows dominating the summer (which I hate) I see myself purchasing a number of complete seasons I didn’t get a chance to watch over the fall and winter.

  8. Nosedive, I have seen a number of complaints around issues with OnDemand, and have seen how it doesn’t compare favorably with TiVo. But I have also seen it work very well, like this weekend, and I don’t see that Apple can compete here with today’s offering. iTunes is a download to own scenario, and the time to download isn’t trivial, regardless of price differences.

  9. Darth Zippy

    The $3.99 On Demand price is for a rental. You get 24 hours to watch whatever you have rented and then it is gone. The $12.99 iTunes Store price tag buys you the movie; you own it. Comparing the two prices is a bit misleading.

    True, there is a ot of ‘free’ content availalbe via On Demand; free in the sense that once to pay for the monthly Comcast cable service, AND if the free content belongs to a premium channel, like say, HBO, then as long as you have payed the extra monthly charge for the premium channel, yeah, THEN you get youe ‘free’ content. If people coughed up $70+ a month for iTunes Store access I’m sure there would be plenty of free content.

    On top of that, add in the extra monthly charge for an HD cable box, plus the fact that On Demand movie rentals in HD cost $6.99, not $3.99. Then, come to find out the ‘Night at the Museum’ is only available in Standard Def, so you end up with a movie not in its OAR.

    On Demand has its advantages, but it still has a ways to go. And until we reach that day when everything is free, all the time, to anyone, ‘owning’ the media will always have its place.

  10. nosedive51

    It sounds like your OnDemand experience is much different than mine. My OnDemand errors out 90% of the time I try to access it and if I do manage to get to the menu the menu is horribly slow to load and often times errors out. If I get to shows the selection is horrible and unorganized and it never has the most recent shows of anything. The last time I tried to watch a movie it crashed several times to the point I stopped watching. I can see lots of potential with the service if it only worked and reliably had shows.