So yesterday, Apple made two announcements, the total impact of which I don't think will really be seen for a while yet.
- A "video iPod" capable of viewing MPEG4 video on a compact screen.
- iTunes 6, which includes support for downloading MPEG4 videos from the iTunes Music Store, including but not limited to music videos and -- much more importantly -- first-run television programming 24 hours after it airs.
For years, the defense of the "TV episode bittorrent downloaders" was "They broadcast it for free over the air, and if I miss it, I have to wait til they randomly re-run it, or until it comes out on DVD." This was usually followed by some plaintive cry about "If only they'd offer a download service, where I could download the shows I want."
If ABC sticks to this, and expands their lineup, this could be a huge shift in the way people deal with television programming.
Let's go to this hypothetical future, where television programs available as for-pay downloads are ubiquitous. Let's assume you spend about $100 a month on the "get every cable channel" package, because there's some network stuff you want to watch, some extended cable stuff, and you want to get your episodes of Rome. Who knows.
What if you didn't have to pay $1200 a year for cable? What if you could subscribe to the TV show itself as a video podcast? Every Wednesday, your computer happily downloads (legitimately) that week's episode of Lost. Every Sunday, it's grabbing Rome. Every Thursday, it's getting you your fix of The Donald.
The "full-season" price that iTMS is charging for Season 1 of Lost right now is $34.99. Let's double that. Let's say that they decide to be greedy in exchange for offering you this automated television download service. Let's call it $75.00. And maybe HBO, with its superior programming, charges $100.
At that rate, you can get your favorite programming for ($100 + $75 + $75) = $250 a year.
Now, take it one step further. What if the BBC is part of this venture? Now you can add "new episodes of Dr. Who to the list, or Spooks, or Eastenders, or whatever particular BritShow sparks your fancy.
The mating of legitimate television downloads, combined with automated tools for getting that data onto the living room television, make for a huge win for both consumers and content providers, and could mean a huge warning for cable television providers, if done properly.
What are the obstacles?
One obstacle is HDTV. The versions you can presently download from iTMS are SDTV-grade videos, if that. Right now, if you're an HDTV nut, you'd still much prefer to see "what's inside the hatch" on your big-screen in HiDef than you would to download the lo-def video. But the ability to download HiDef content is only a matter of time. Services like Verizon's FIOS service, bringing up to 30Mbps downloads to consumers, are only going to make it easier to distribute HD content going forward.
Another is the cable companies... right now, I'd be very surprised if they started rolling out FIOS-like bandwidth to their users. It's far too easy for consumers at that point to be like "uhhh, no, just give me bandwidth, I'll get my content from somewhere else." A program like this could completely marginalize cable providers, turning them into "just another broadband bandwidth provider".
Where's the win, though?
Consumers have wanted "a la carte" cable programming for a while. Instead of being forced to buy bundles of 120 channels to get the 6 they want, they've wanted the ability to buy just those channels and (more importantly) pay for just those channels.
This has the potential for changing this dynamic even further, allowing people to buy their shows a la carte, and to eliminate many middlemen in the process.
Let's assume I'm paying $100 a year for Rome and let's assume that Apple keeps 25% of that. So the rest goes to HBO, who now sees $75 a year from me. That's probably more than they're seeing now, right up front. But if I also decide (and, please shoot me if this happens) that I want to watch Curb Your Enthusiasm, they'll see an additional $75 a year from me.
There's a direct relationship between "programs people want" and "profits content-owners make". There's no worries about "sponsors", because when you multiply those numbers onto the larger scale, they don't need commercials any more. People are paying directly for the content they wish to see.
Take it one step further. Who needs an "HBO"? What does "HBO" become in that new future except a television studio that creates content?
What if this model had been around while JMS had been fighting for editorial control on Crusade or Jeremiah? Instead of fighting with a network to pitch an idea and get them to air it, to get them to choose when to air it so it does well, etc., etc., you could simply get investors who believe in the value of your content, produce it yourself, and push it out to iTMS and let people view it whenever they want. The small-studio television producer sees huge return here, because it makes them a lot more money than they probably would have gotten from a TV Network that was buying a show they didn't really believe in, and get a lot less hassle in the process.
All this potential from a 5 oz hunk of metal, plastic and silicon, and some software to drive it.
Seriously, I think there's a non-trivial chance that we will look back on this point in time right now and say "this is where television changed completely."
UPDATED: Apparently, Mark Cuban, former broadcast.com CEO, and owner of the Dallas Mavericks, seems to have reached much the same conclusions and has the numbers to back them up.