Okay, so my predictions surrounding Apple TV weren't right.  I'm really disappointed in what Apple TV turned out to be - there is so much more potential for TV.  There are two things about TV that make the screen very special: it is typically the biggest screen people interact with and people usually interact with it together.  Dare I say the buzz word social?  With cell phones, laptops and desktops, the interaction is usually solo, or at best awkwardly social with people crowding around.  On top of that, the screen is usually attached to the best audio experience you interact with day to day as well.

While other screens have had a lot of attention when it comes to software, the TV has largely been relegated to bad cable box implementations.  This is one of the reasons I joined Xbox almost a decade ago: I knew Xbox was going to change video game consoles forever if only for the reason that Microsoft is a software company (whereas Nintendo is a toy company and Sony is an electronics company).

Video games have been a great vehicle for investment in television technology.  Everything from core display technologies like 3D to security technologies like those used in Xbox 360.  There are even some areas of technology where video games are the only recourse for large scale technology investments.  For instance, video games accelerate the arrival of interaction technology like Kinect or graphics technologies like programmable shaders.  The other driver of investment around television has been video distribution.  This means everything from VHS and DVD to HD capture & broadcast technology.

Over the past several years, these two verticals have begun to overlap.  This is because video game platforms are the only software-capable television devices with distribution at scale.  These investments are only the beginning as to what is possible with software on TV.  While there are other investments in bringing software to TV from manufacturers like LG, Sony, TiVo and Roku, they do not have the scale that others do.  Even TiVo continues to linger with only 3 million subscribers (compared to 25 million for Xbox LIVE), and smart TVs will take a long time to catch up to an Xbox.

Thus, I think Apple TV has thrown away a great opportunity.  If Apple TV had the following features in addition to pursuing my previously discussed distribution strategy, it would be a hands-down winner.

What would the Apple TV cost with these features?  I would argue not much more.  The DVR portions would be subsidized or perhaps cost $100 extra.  The expansion port might be a bit.  Apple TV is already made with the same core components as other iOS devices.  While Apple may have had to do some think-work around standard controls and UI paradigms, it has done that very well with its other devices and I have confidence it would be able to do the same with a television screen.

I'd buy this box.  Heck, it might even get me to subscribe to cable rather than futzing with all the various web sites I go to for TV shows these days.

You might argue that the functionality above is close to a Mac Mini, and those cost $700.  You'd be right, but the innards are different: it's costlier for Apple to integrate outside technology such as Intel processors.  Remember that an iPhone also cost $700, at launch.  Disk drives add a lot of cost fast, but if Apple can sell Apple TV at a profit at a price point of $100, I would argue my estimates hold water.

~s

Rumor has it that Apple will be launching a new Apple TV on September 7th.  There's been a lot of attention paid to the possible features of Apple TV, but no one has talked about what could be the most unique aspect of the device: its distribution strategy.

In a world of viral video, status updates, tweets, chats and other short forms of interaction, it's obvious that the attention span of the average Internet user is very small.  This presents challenges for traditional, long-form media formats.  In fact, it's much more dire than a challenge.  Each year, the National Endowment for the Arts produces a report on reading in the United States.  In 2004, 57% of adults were reading books.  In 2007, a newer report showed further declines although it expanded the definition of "reading" (from literary works to even occasional reading such as the news and other information).  There could be many reasons why people are not reading, though the 2007 study seems to point the finger at digital distractions.

Let's look at other long form media, such as TV shows.  As this recent Nielson Three Screen Report points out, Americans are now watching TV while simultaneously browsing the Internet.  Attention is obviously split in these cases, and I would bet retention is abysmally low.  If Americans see half- or one-hour TV shows as too much of an investment to avoid the act of checking email, facebook, or twitter, 2 hour movies hardly have a chance.  With the trend of declining theater attendance continuing, Americans will soon have the luxury of watching new-release movies with their laptops open.

About a decade ago, TV audiences were introduced to reality TV with the introduction of Survivor.  Since then, the form has been refined to an art of tugging on emotional strings and extracting drama out of every day situations (or not so every day situations).  However, this is also the most perfect form of media with which to use the Internet.  Why?  Think back to taking the SAT or other standardized test.  Remember the section where you had to read a passage and then answer questions showing you understood it?  This is called critical reading - the act of analyzing the input for facts and hypotheses.  However, the best examples of any form of media require not only critical reading, but critical thinking - the act of evaluating ideas for validity and of forming a belief framework.  When fans of LOST or Inception begin to hypothesize the meaning of the ending, they are thinking critically.  Reality TV requires none of this and the amount of critical reading required is minimal.  When these two aspects are absent, attention goes elsewhere.

What can "true" long form media do to regain attention?  Various media properties have dabbled with supplementing their long forms with short forms to keep people interested or entice people to give the long form version a shot.  Webisodes for The Office and Heroes are an example.  Content creators adapting to the declining attention spans of consumers, to me, means a steep and steady decline in the creation of long form media properties.  If you need more convincing that long form media will get less funding, read this report about how the collapse of the cost to rent a movie will result in an upstream collapse in economic activity around Hollywood.

But, I think this is actually a great thing.  As Hollywood's available capital for investment contracts, there will be a greater emphasis on creating stuff that matters.  Long form media that spurs critical thinking is better for everyone: Hollywood would no longer get lambasted for producing drivel, they'd be able to control finances, consumers would get meaningful entertainment, and auteurs would continue to have the opportunity to create entertainment that is deep and engaging.  While there will be less money to go around, technology continues to make it cheaper for budding artists to flourish as well.

So, I think the way long form media regains the attention of its audience is simply quality.  I think properties such as Harry Potter, LOST and 24 show that long form media that is made with high quality at all levels engage audiences in a way no short form media can.  That gives me hope that media will move away from digital distractions and become a new way for critical thinking to take place.

~s

There are generally three actors in content-based industries: creators, distributors, and consumers.  Lately, I've been looking at these industries as a matrix.  It's a very simple one: put forms of media (books, music, movies, TV shows, video games, graphic novels, newspapers, etc.) across the top and put the three principal actors down the side.  I like this matrix because it is a tool for analyzing the problems each of these actors has and how they can be solved through the use of technology.

When placing a company or a product into a cell, I think of it solving a particular problem that actor has.  For instance, in the graphic below, RED solved the problem of a digital HD-capable camera system while stalwart film camera makers were fumbling.  The iPod solves a consumer problem of place-shifting your music.  Xbox LIVE solves consumer problems such as matchmaking opponents or communicating with your friends, while Xbox LIVE Arcade solves a distribution problem for smaller games.  iTunes solves some consumer problems around organization, but it is much more widely known as a storefront, hence its place as a distributor.  Netflix solves problems for consumers by suggesting things for people to watch, but it also solves digital distribution problems for studios.

For instance, look at the intersection of music and consumers.  It is perhaps an over-analyzed cell in the matrix by this day and age - Napster launched over 10 years ago, iPod happened in 2001, and iTunes followed 2 years later.  Since then, there have been dozens of startups playing inside that corner of the matrix.  However, there have definitely been fewer new-media tools made for the creators of books.

Let's look at a more modern example: consumers & graphic novels (or "comic books" for those of you who look down upon your inner child).  Similar to the large population of music-loving people, the people who love graphic novels have had problems with discovery and place-shifting.  Along with electronic reading technology, publishers like Marvel along with startups like Graphic.ly are starting to do for comics what Apple did for music many years ago.  If you look closely, the medium is even following the same pattern: technology is solving distribution problems first, and then moving to higher level issues such as discoverability.  Finally, like with iTunes LP, creative tools in the medium will let creators move past the direct translation of the medium from analog to digital.

The pattern continues: you can look across the "consumers" row of the matrix and see many of the same issues in each of the categories.  That means there's another trick this matrix can help you do: copy business models.  Take a look at Chegg: USA Today even notes that the company applies the Netflix business model to the medium of textbooks.  Looking at the cells in the matrix that are spare may give you the ability to see a workable business model that can be copied from an adjacent cell.

I'll probably have posts later that take deeper looks at some of these intersections, but I wanted to make one more observation.  Some of my friends have often commented that they believe media is a dead business and that most of the problems people have with media have been solved.  Certainly, the bottom row of the matrix is flooded with startups and stalwarts alike vying for attention in each vertical.  However, I don't think technology has even touched media yet, and my proof is that there isn't enough going on in the top row of the matrix.

If you've read the book Blue Ocean Strategy, you know that it can be valuable to zag when others zig.  In this case, everyone is going after the consumer, but the blue ocean is in the top row.  In fact, it almost feels like entrepreneurs are ignoring creators when it takes creators turning into technologists (ala Peter Jackson's founding of WETA and James Cameron's work on Avatar) to solve their own needs.  As this blog post points out, the real revolution in media is going to come from changing the way creators make content.  From filling in the matrix with what I know, it seems there's ample opportunity to change how things are done in the top row.

~s