Apple TV Gets A YouTube Boost

apple.jpgApple Inc. has had its share of miscues of late. The deafening hype surrounding the as-yet unreleased iPhone hasn’t quieted misgivings about the company’s first foray into mobile communications: inflated price, closed architecture, single source carrier (AT&T) and questions about whether it will even ship this month as promised.

The recent announcement of iTunes Plus, which promised music playable on any and all devices, is now mired in controversy. The industry blog ARS Technica reported that supposedly unprotected songs sold on the iTunes Music Store had customer information embedded in them, a move that in theory made it much easier for anti-piracy organizations like the RIAA to track them on file-trading sites.

That, coupled with the fact that customers who upgraded their software to purchase premium ($1.29 each) music were no longer able to buy cheaper versions of the same songs, turned what should have been a defining Apple moment into a nasty public relations headache.

Then there’s the little box that CEO Steve Jobs hoped would finally get Apple into consumer living rooms. Apple TV looked good on paper – a network device that can grab a video from any computer in the house, and stream it to a television in state-of-the-art widescreen format.

There was just one problem – it didn’t work with web sites, only iTunes, where episodes of most popular shows sell for $1.99 each. With no chance to watch Grey’s Anatomy on ABC.com or check out NBC’s Heroes with the occasional commercial break, Apple TV didn’t look like such a great deal. Jobs’ much-vaunted “Reality Distortion Field” was dissolving in a wave of bad press and bothered bloggers.

Perhaps Apple TV’s biggest omission was failing to tap into the zeitgeist of the web’s most popular video site, YouTube. Stranger still, it seemed a perfect match. Google CEO Eric Schmidt sits on Apple’s board of directors, and Google owns YouTube.

Last week, Apple TV’s prospects began to improve when the company unveiled a planned software upgrade, due later this month, which would provide the ability to play YouTube clips on the set top box. Along with that announcement, Apple’s web site began selling a 160 GB Apple TV – a model with four times the storage capacity of the original – presumably to hold all the newly available (and free) content

The Apple/YouTube deal is important for a couple of reasons. First, YouTube is fast becoming the preferred hub for the legal distribution of music videos. Last week, the company struck a deal with EMI, home to David Bowie, Coldplay and Norah Jones. This means that all four of the major labels are on board. Though MTV/VH1 owner Viacom’s intellectual property suit is still unresolved, Schmidt termed the action “a negotiating tactic” at the recent All Things Digital conference, hinting that an agreement wasn’t far off.

Secondly, a deal with Apple means the QuickTime H.264 codec, which maintains picture resolution regardless of screen size, will become YouTube’s streaming video standard. That’s the reason Apple executive David Moody only promised “thousands of videos designed for Apple TV” at launch, not the entire YouTube library. That conversion effort will take a lot more time, though all new videos will be offered in the new format. QuickTime videos are, of course, fully compatible with both the iPhone and iPod. However, no announcements were made about making YouTube content available on those devices.

The move affirms that Apple, for all its recent stumbles, still intends to be a revolutionary force in the entertainment world. As the iPod smashed the music paradigm, YouTube has re-shaped the television landscape. What started as a hybrid of low-rent “MTV Jackass” and alienated teen vanity vehicle has fast become the first on-demand video network of the Internet.

Google is, of course, the most popular web site in history. These elements, combined with Apple’s well-known hardware and design capabilities, could produce a recipe that does for television what the iPod did for music.

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