Apple: Sizing Up the Critical Failure Points of the TV Industry

| Particle Debris

If you're an Apple executive, how do you size up the TV industry? How do you find the competition's critical failure points? How do you marry Apple's expertise in hardware and software integration with a vision for the user experience? How do you ensure that a TV product will have people waiting around the block at 6:00 AM on launch day All these factors and more will play into the, for now, rumored Apple TV project.

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When I worked for Lockheed Martin, I was exposed to the idea of critical failure points in a combat situation. What this means is that, through intelligence collection and analysis, one determines the weakest part of the enemy's defenses such that the destruction of that component leads to a domino effect. The whole defense systems breaks down.

One good example of this is how the U.S. in past wars has placed emphasis on the destruction of the enemy air defense radars and anti-aircraft sites. Once these sites are jammed or destroyed, air superiority can be achieved. Against less than sophisticated ground forces, the battle is then soon over. Fighter jets with Hellfire missiles beat tanks every time. So how does this apply to Apple?

There are two parts.

First, I imagine that Apple executives are well aware of their own strengths. For example, I previously wrote about some Tim Cook remarks in "How Apple Keeps Surprising Us in Unexpected and Delightful Ways." Some of the comments I included are:

  • "We don't just pack in feature after feature."
  • "We think deeply about experiences we want to create."

So it's a safe bet that Apple knows how to design great products and deliver an awesome customer experience.

Secondly, for a well-designed, well-conceived, well-engineered TV product that delights the customer to succeed, it must also press some very important customer hot buttons. It must tap into the technical currents of the modern TV customer. In a sense, it must exploit the critical failure points of the industry. And there are a lot of them. Every week I read about them.

In the technical news debris below, I've referenced a few exploitable industry failures from just this week, and you can read about them in detail. However, here are some more global thoughts.

  • Netflix, Roku and Apple TV have shown that TV viewing must be easy and on-demand.
  • A family of easily integrated products creates a sense of coherence, utility and generates loyalty.
  • Keeping the customer up to date with the latest and greatest technology, all the while, continuously making things better works beautifully. Customers love easy and modern.
  • Social networks play a role in discovery, recommendations and sharing.
  • Retail stores with real people who can help make a huge difference. The cable and satellite companies must maintain an expensive fleet of service people and trucks to provide support, and when it comes time to save money, the inclination is to leave the customer abandoned.
  • No one really wants to watch a parade of commercials that disrupt the immediacy and flow of good entertainment. Apple TV would always win here, except that the prices for TV shows are kept artificially high. A DVR remains cost effective. This is a tough problem for Apple.

My guess is that Apple has been taking its sweet time with its TV project to not only build great hardware and software—the next generation beyond the current Apple TV—but to also figure out how to even better press the "I'm annoyed" buttons of the average TV viewer, like figuring out how to select the right component for input to the HDTV with a complicated remote. That's why some observers, including me, believe that Apple will integrate the display with the next generation Apple TV electronics. One gets success by default.

Success will not depend on having vast contractual agreements for content to deliver. My take is that the content holders think that by restricting Apple's access to massive amounts of content and playing one delivery channel against the other, they can maximize revenue and protect conventional carrier partners, that is cable and satellite. That may not be an ironclad defense.

When that magical combination of industry critical failure points, experience with the current Apple TV and next generation Apple technology come together, Apple will have a successful product that makes good money. It won't destroy the rest of the content delivery industry right away, but it will start a domino effect that will be hard to recover from.

Apple did that to Microsoft with its iPad. Microsoft still hasn't recovered. Apple did it to RIM/BlackBerry. That war is now game over. Apple will keep doing it.

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Tech News Debris for the Week of September 30

What do consumers want in video entertainment. PricewaterhouseCoopers study says they want it "cheap (ideally, free) and easy." One element that stood out was the need for instant gratification, and so that's why on-demand viewing is highly favored compared to broadcast in which one has to, gasp, wait for the scheduled time. There's much more, including a discussion of social media, recommendations and discovery in Home Media's "Follow the Customer."

How the customer decides to watch video content is far too important to be left to chance. There are too many channels of information out there, all rich with references to possible video content. One very good way to herd the customers into your content is to create a more formal relationship with them via a set-top box. And so, without a doubt, Amazon wants in on that mechanism. "Report: Amazon Readying a Set-Top Box."

With the popularity of the Amazon Kindle Fire HD and now HDX series, it's sensible for Amazon to create a family of integrated products, just Apple has done so successfully. While the cable and satellite companies have built some nice iOS apps, they run on an iPad.

On another front, Dish Network is continuing to win cases related to its Hopper DVR that allows the machine to automatically skip commercials in recorded programs. New York District Court Judge Laura Swain wrote: “There is, thus, no factual basis upon which Dish could be found liable for direct infringement of ABC’s right of reproduction.” The subtext of these decisions, of course, is that the networks are free to decline the renewal of carriage agreement contracts with Dish. The risk there is that the customers are driven into alternate delivery methods and/or cord cutting. Read more here: "Judge: 'Hopper' is a Better DVR."

Customers don't see why they should be forced to watch commercials.  Neither do judges. You're either swimming with and leveraging the currents or fighting them.

In my own case, I found that the whole ecosphere and relationship with the customer created by Apple, combined with the way it treats the customer combined with emphasis on the latest technology creates a great sense of loyalty. On the other hand, cable and satellite carriers historically have not been able to create a great customer relationship. Their products are isolated and poorly integrated into our lives.

For example, I can back up my iTunes library to another drive. I can sync movies and TV shows to my iPad.  With a modern DVR, the content is imprisoned. If the DVR's hard disc fails, I lose everything.

As a result, cord cutting is as easy and painless as a phone call. If you missed it, here's a link to my story: "Mac Observer Why We Rent Movies from Apple and No One Else."

In a similar vein related to product design failure, David Pogue with the New York Times has weighed in on Samsung's smartwatch, the Gear. The headline, "A Watch That Sinks Under Its Features," and part of the final summary says it all: "Nobody will buy this watch, and nobody should."

Finally, one last item departs from this week's theme. Have you ever wondered who does the voice of Siri. CNN says it's voice actor Susan Bennett. Here's the story: "'I'm the original voice of Siri'."

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Rope failure and family viewing via Shutterstock.

Comments

Lee Dronick

I just asked Siri if she was Susan Bennett and she responded with “I can’t answer that.”

CudaBoy

The big hurdle is how to get around commercials. Commercials won’t go away, it’s what makes the world (including now unfortunately the Web) go around.
I use software to skirt them on my TV but pleasing the sponsors while letting the consumer bypass annoying interruptions every 12 minutes will be the key.

Lee Dronick

Cuda, I think that there are some real creative, enjoyable, and effective commercials out there. I admire one of quality that gets its message across within 30 seconds. True that there are lot of horrid ones too.

Anyway if I am paying for the content, such as ShowTime and other so called premium channels, then I don’t feel that I should see any commercials. Generally I don’t, but some non broadcast channels have them. I can live with that, if I don’t watch them for critiquing purposes then I can take the time to go pump bilges. Also the local commercials are of interest to me, I want to know if Spouts has cantaloupes on sale.

CudaBoy

Couple good points Lee sp. the local aspect and the creative aspect per sé.
I got real cynical years ago about being marketed to in general and specifically every nanosecond on commercial TV and now the web so I “blank out” automatically if any marketing hits my senses.  I DO like creative commercials as an art form especially european ad agencies, and I am a print/web ad artist to boot but man - there has to be a better way. I was thinking if you could as part of the TOS agree to marketing of YOUR CHOICE maybe something could be worked out. I really can’t stand the endless Big Pharm ads where side effects are just hideous, yet no ads to help people how to NOT NEED that poison. I could choose for example Automotive, Beer, Guitars, Apple etc. thus making sponsors happy - I’m sure there will be plenty of Levitra fans to make that poison co. happy. So, you must agree to marketing of your choice but then you can watch them in a chunk, not parsing out a show every 12 minutes. This would apply to Apple TV’s version of “commercial TV”, not movies or cable shows. Do something to not parse TV shows every few minutes and writing and production would get better as well - I’d be all over that if Apple could get the networks on board - abc obviously would be on board 1st. This kind of dealing would be in Jobs wheelhouse.

Lee Dronick

I find the pop-up internet ads to be quite annoying and will turn me against the product and service. Put the ads down the right column, a banner or footer that doesn’t cover any content, and not too many in line. People are talking about the zoom effect of apps opening in iOS 7, but the strobing and garish colors of many ads are just as bad.

wab95

John:

I like your angle on the critical failure points. In my opinion, the shortest path to unmasking critical failure in the industry, and breaking the stranglehold of the cable provides, is ‘pay for what you want and only what you want’ with tiered pricing to match. The first company that can manage that, even if on a limited scale, will address one of the Mose consistent demands of consumers, at least amongst those who are vocal in the blogosphere.

From what I can discern, at least amongst those who are regular tv watchers (I’m not one of them), this is a chief complaint, as we say in the medical field. After this, I think that simplifying and harmonising the soft and hardware is secondary, even if necessary, icing on the cake.

Finally, as you’ve argued before, I believe that Apple is best positioned to summit that peak, and the industry is deathly afraid of allowing them any access to critical assets that will enable them to do so.

Frank Lowney 1

Netflix also presents some negative examples,  Up until recently, I used the NetFlix app on my iPad 2 with an Apple HDMI adapter and HDMI cable to watch streamed movies on my big screen TV.  It worked well until the day before yesterday when I got an error message saying that this mode of use was “not supported.” As a Netflix subscriber, I felt as if I had been thrown under a bus.  Writing to NetFlix support has gotten no reply so far and that adds insult to injury.
Of course, I will probably eventually be told that this change was at the behest of media rights holders who fear that I might use this to illegally copy one of their movies.  That’s the socially acceptable answer they think.  It could also be that media interests want to dilute the advantages of NetFlix et. al. by making movies harder and more expensive to watch (buy an Apple TV in addition to what I’ve already spent on HDMI cable and adaptor.
Apple is falling for this ruse too.  Watch a movie in iTunes and try to capture a frame with any screen capture utility, including Apple’s QuickTime Player.  This is a “fair use” under US copyright law, btw.  This can no longer be done as the screen will turn into a checkerboard when you attempt this.  No doubt, this is also at the behest of the media industry.  Again, the advantage of consuming media via Apple is diminished.
Apple has gone so far with this that you cannot do a screen shot of DVD Player displaying a home movie you created in iDVD which still works under MacOS X 10.8.4.

Gareth Harris

John,
Thinking about why I have not posted as much lately …
This sort of article is what I enjoy on TMO [and particle debris]
There are lots of sites, such as thaw and macworld, which cover individual items - a program, a doodad, various bells and whistles,etc.
But TMO provides a strategic overview and analysis which people that chase bells and whistles miss, with more talk about the whole widget and platform.
Keep this type of overview up … just one masterpiece or Mona Lisa every week will do.

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