Rumors abound that Apple will soon announce the ability to download TV shows for $1, about half the current price. A couple of questions come to mind. First, will TV make the iPad a killer product? And second, will dropping the price of individual shows (rather than include it as part of a subscription) create a groundswell of demand for video on demand (VOD) service?
My answers to the first question is maybe. I’m not a big TV watcher nor a big novel reader, so I probably won’t get an iPad and am not the best person to predict its mass appeal. (The gadget person in our household is Susan. If it weren’t for her, I wouldn’t own an iPhone, and perhaps not even a DVD player.) My answer to the second question is a definite no.
About ten years ago, Sue and I were beta testers for an early VOD service called Intertainer to be introduced by Qwest (now renamed CenturyLink). I think we were selected because we lived across the alley from a Qwest switching station. A technician installed a 4 Mbps DSL line (back in the day when 256 kbps was considered exotic), a DSL modem, and a Gateway computer running Intertainer on Windows 98 with a 40” monitor. The monitor did not have a TV tuner, so we had 2 large monitors sitting in our living room, one to watch all of our cable TV and another to watch, well, a very small eclectic offering of more TV.
Before I discuss the problems with pay per view for TV shows, I’ll give a review of my Intertainer experience. The first problem was you had to boot up the system to watch it. Next was Windows 98’s propensity to crash, requiring you to boot again. On the plus side, Gateway had a very nice remote pointing device. It was shaped like a TV remote with a small trackball on top that you could operate with your thumb and two mouse buttons on the bottom that you could press with your forefinger. This would have worked great if it wasn’t for the awful user interface of the Intertainer app. All of the options were on a series of circular-shaped menus. It was really hard to move a thumb-operated trackball in an accurate circle.
On the first day we decided to watch Lawrence of Arabia for a dollar. It’s a great movie to see on the wide-screen, and I hadn’t seen it since it was in a theater when I was a child. (Oops, I’m dating myself here.) That’s when we encountered the next problem, the quality of the video image. The Intertainer app was a full-screen window. Inside the window were all the controls and a smaller viewer window for the video. Then, since Lawrence of Arabia was a wide-screen movie, there were black bars on the top and bottom of the viewer window. All in all, the movie itself only occupied about one-fourth of the 640×480 screen.
After a half hour, the phone rang and I clicked Pause to answer the call. Except it wasn’t a pause button, it was a stop button, which reset the movie to the beginning. After the call, I discovered that there were no chapter markers in the movie, so the back and forward controls took you to the beginning and end of the movie. I tried to get the movie back to the point where we were by dragging the progress bar, but there was no elapsed time indicator, so I had no idea where I was each time I released the pointer. Also, Lawrence of Arabia is a long movie so even minor movements of the progress bar represented a jump of several minutes in the movie. After another hour of viewing it was time to go to bed, but since there is no pause button, we just gave up and turned off the computer.
The next day showed us the final problem with the Intertainer system. There was a dearth of worthwhile content. Besides Lawrence of Arabia, there were only about a dozen other movies available, none of them recent releases. There were maybe a hundred TV shows available, but none were currently running shows. In fact most were shows that had long been off the air and that we had never heard of before. One of the few shows that we had heard of was Welcome Back Kotter, which was a big hit back when I was in high school. (Yep, dating myself again.) Every show and movie was the same price, one dollar. On a cost per hour of entertainment scale and on a quality of entertainment scale, movies beat TV shows by a big margin. Who would pay $1 to see TV reruns, especially of shows you can see for free on Hulu? That’s why broadcast TV is filled with sit-coms paid by commercials, because nobody would be willing to watch this stuff on pay per view.
I eventually wrecked the Intertainer system trying to hack the proxy server settings in an attempt to break out of the walled garden to browse the web. When the beta test was over, nobody ever called to ask us what we thought of the service or whether we would be willing to pay for it. I did call Qwest and asked them how much 4 Mbps DSL service would cost. The answer was $500 per month. Geez, that and a dollar an episode will get you all the Welcome Back Kotter you’d want.
Amazingly enough, Intertainer is still in business, though it’s a shell of its former self. The company is privately held. Its main shareholders are Comcast, Intel, Microsoft, NBC, Qwest, and Sony. If you view the company’s timeline, you’ll notice that the last major milestone was a settlement to an antitrust suit against the movie studios that owned Movielink in 2006. Apparently, nothing of note has happened since then. You’d think that with their star list of investors, somebody could figure out how to get some traction. Oh well.
Incidentally, Movielink itself has disappeared. Since it was owned by the studios, it had draconian rules on how many computers could view the movie after rental (only one), how long the movies could be viewed (one day), and what software was needed to view them (only Windows Media Player 9 or later, since all the movies were protected using Microsoft’s DRM technology). Given the awful user experience it isn’t surprising the service never took off. Eventually, Blockbuster bought Movielink in 2007 in its quest to compete with Netflix. Blockbuster now streams movies through the web, but it still only works on Windows because it requires Internet Explorer.
Pay per view isn’t completely dead though. The other major competitor in the VOD space is Vudu. Until recently, Vudu was a hardware company trying to sell VOD boxes and remote controls via mail order. Now it is a software company that licenses its service to TV manufacturers. I don’t own a Vudu-enabled TV, so I can’t review it here. An informative review of Vudu by David Pogue appeared in last week’s New York Times. I assume Vudu is working on an app for the iPad, though I wonder if Apple will allow it.
But I just don’t get it. Who wants to pay à la carte for TV entertainment? I much prefer a subscription. Netflix has all the movies I want and I don’t have to pay extra for streaming. I’ll pay for movies and HBO TV shows (since I only have basic cable and don’t get HBO), but I would never pay extra to watch broadcast TV, even if it is hi-res, wide-screen, Dolby enhanced, commercial-free, and time shifted.
[Update1: Vudu already has an iPhone app; it was released over a year ago. However, it only allows you to select movies to play on your Vudu-enabled television. You cannot use it to view shows on the iPhone or iPad.]
[Update2: Walmart just confirmed that it plans to buy Vudu for an undisclosed sum, possibly $100 million.]
[Update3: The New York Times has an analysis of the network’s fear of letting Apple sell shows for $1.]
[Update4: Qwest has been acquired by and renamed CenturyLink.]