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Why Apple’s iTV Needs FaceTime

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While there’s excitement over the supposed 99-cent TV show rentals on the new iTV, my belief is that won’t be enough to make iTV a success. As I write in my weekly analysis over at GigaOM Pro, there are a few other important things Apple needs to do to make this device more than just its hobby.

Besides the need for creative price bundles for shows and TV-optimized apps, Apple iTV needs FaceTime.

Those who follow GigaOM Pro know we consider video communication a big opportunity. In fact, we forecast the market will go from practically nothing today (less than half-a-million TV-based video calls in 2010) to 2.7 billion TV-based video calls in 2015.

Ok, it’s big, but why should Apple be involved in this market? It’s quite simple, really:

  • First off, it neutralizes Google and Skype. Google will most certainly push video chat into Google TV, and Skype is already pushing hard into this market. As we’ve written over at GigaOM Pro, Skype’s SkypeKit platform is Skype’s attempt to introduce its VoIP and video communication, as well as potentially other services and applications, onto CE platforms.
  • Second, it brings in a whole new demographic. While my mom and dad haven’t purchased an Apple product since the Apple IIe of my youth, I’m pretty sure they would consider a good, low-cost video-chat device like an iTV. Why?  They can’t get enough of talking to my kids on Skype video, and I am sure that there are millions of others like them who would embrace high-quality video chat on TV.
  • It’s a differentiator from the cable company. Sure, Apple didn’t get all-you-can-eat $30 video subscriptions, but video chat done right could be hugely popular, and given how slow traditional cable providers move, Apple can establish themselves with a very addictive service while Big Cable spins its wheels.

I’m not entirely sure Apple will introduce Facetime next week at their big event, but they should. No one has been able to do video chat in the living room right just yet and, at least for the next six months, it’s Apple’s market for the taking.

Read the full post here

Image Source: flickr user james.thompson

11 Responses to “Why Apple’s iTV Needs FaceTime”

  1. Wow. Was this article about iTV or GigaOM Pro? Seriously, how many times can you mention the paid version in such a short article?

    … And this was the third article in a row that I’ve read that had obvious “As I write in my blank blank over at GigaOM Pro” scattered inside.

    We get it already, GigaOM has a paid version, it’s just that in this particular economy, not everybody can afford the “full post”. Increasing the number of times you mention it isn’t going to help.

    Love the site Om, but sheesh.

    • @Mel – unless you’re reading only the 5 weekly update crossposts we do Per Week, it would be hard to read 3 in a row with that reference pattern.

      The number of times we mention/ratio hasn’t increased – it just looks like you’re looking to read or are reading only the one of 5 of the hundred or so posts we do each week where we use the formula you referred to above.

  2. Ken Kenwood

    >>”But iTV as a separate box does not bring enough value for me”
    It hasn’t been released yet!!!! What are you talking bout??????? Oh, unbeliever……

  3. The concept of iTV is flawed from the start. Very few people will buy it, even with more content and Facetime. We have Skype, Hulu, Netflix by the way. Jobs knows this. So, the best thing for Apple to do is to release iTV as a TV set, and like a Mac, equipped with a webcam and microphone. Since they want to make Facetime a standard, they could license it to other TV manufacturers. But iTV as a separate box does not bring enough value for me to buy it and dedicate space for it on my shelves. Merged with a TV set would make it totally different because I need a set in the first place, therefore I’d view this as buying a TV + embedded extras, all-in-one. You see, Apple don’t even have to convince us to acquire a TV set, we’re naturally doing it already. We’d just need to get their “revolutionary” TV and this is where the extras will make the difference: iTunes and Appstore connected, Facetime, pictures, music, videos, Internet, you name it…

    • @AK – I’m not convinced Apple would do a HDTV. The economics of the HD TV market don’t fit Apple’s recent model of the last few years:

      -they like products with high-turnover consumer cycles (phones, computer are 2-3 years; TVs are 6-7 years),
      -they increasingly like products priced to go mainstream in a short time frame (an Apple HDTV would likely be $2000, out of reach for most consumers)
      -The like simple product lines w/out alot of SKUs (TVs require lots of variations due to screen sizes, resolution, and soon 3DTV vs. non, etc)

      I just don’t see it. Add in the fact Jobs knows the living room is a graveyard for so many companies, that he’d hedging his bet w/a OTT set top. A line of connected HDTV is a bigger bet I don’t think he’ll make, at least not yet.

    • You may be right what we have Skype, Hulu, and Netflix. However, there is a large segment of the public that will really connect with the all-in-one Apple device that can do all of these things from one unit. Especially with older generations getting up on the “cloud”. This unit will make it easier and less intimidating for them to do so.

  4. Brandon

    Facetime? Really? What Apple needs to concentrate on with it’s iTV is making it worth buying in the first place, not some hyped up bonus feature. So far it doesn’t really offer much of anything that would make it worth purchasing…with or without facetime.

    • @Brandon – the product’s not out yet, so it naturally doesn’t offer much :)

      But more seriously – there are quite a bit OTT video delivery boxes, and Netflix is rapidly making their service/and subscription – a must have. 99 cent rentals is not that compelling, but combine good TV apps based on iOS, some creative video rental bundles and FaceTime, and that becomes a fairly compelling and differentiated offering, particularly at $99.