Apple TV faces uphill battle in Canada

Apple Inc. might not shine as brightly in the video-content world as it does in mobile, industry observers say. They say the company’s latest version of Apple TV is facing significant challenges in the Canadian market. About the size of a stack of five drink coasters, the Apple TV device connects to a television set and wirelessly streams videos and photos from a computer or from web content, including Netflix Inc.’s online video service. Launched in Canada in September, the product’s second version dropped in price from $250 to $120. The new version is also smaller, with a memory system designed for content streaming instead of storage. Some users say Apple TV is a simple and effective way to access online content on the television, but industry analysts remain skeptical of its success in Canada. Independent technology analyst Carmi Levy said in an interview that Apple isn’t marketing the product as well as it could and consumers poorly understand it. “As it stands right now, it faces an uphill battle, largely due to two key factors: its near invisibility in the usual retail channels and a relatively low level of understanding among its target market,” he said. “Everyone knows what an iPod is and what it does, but Apple TV is quite a different animal altogether. Canadian consumers need to be educated about it first, before they can be expected to buy it in large numbers.” Levy said that one of Apple TV’s main draws is that it offers a more streamlined design than one gets by simply connecting their computer to their television set. “ be anywhere near as elegant or as day-to-day usable. That’s what Apple sells, and that’s how it’ll get consumers to pony up for its vision of streaming television,” he said. But some Canadian users complain that it takes a long time for Apple TV to spool up a streaming movie. Michael Hennessy, Telus Corp.’s senior vice-president of government and regulatory affairs, recently wrote on Twitter the device took nearly an hour to prepare a movie. “So we picked a movie from new Apple TV menu to watch now,” he wrote on Oct. 23. “Screen says movie ready in 59 minutes. That sucks. to PVR and Rescue Me.” James McQuivey, vice-president and principal analyst of consumer products at Forrester Research Inc. in Cambridge, Mass., said in an interview that he hasn’t heard of any similar speed issues in the United States. McQuivey said it’s too soon to tell whether the new Apple TV will take off in the U.S., adding that the first version only sold about a million units in the country after its 2007 launch. “For a company like Apple, you could call it a failure,” McQuivey said. Apple CEO Steve Jobs said this month the company sold more than 250,000 new Apple TV units since their release in September. McQuivey said the company didn’t push Apple TV as hard as it could in the early years, with Jobs repeatedly calling the product “a hobby” compared to Apple’s most popular device, the iPhone. Now Apple faces significant competition from Google Inc.’s new web-TV product, Google TV, McQuivey said. Google announced the system in the spring, but reports suggest it won’t be available in Canada until 2011. McQuivey added that Google TV works differently than Apple TV. Instead of bringing web content to the television set, Google TV adds a search function between the user and the TV’s cable or satellite box to find web programming and standard television shows. It simplifies the task of searching for programs across hundreds of cable, satellite or Internet streams. “Google TV is much more ambitious than Apple TV,” McQuivey said, adding that Google TV aims to become the user’s main television interface. “Every company knows that if you can be in control of the user experience for four hours of television viewing a day, you’re basically going to be in a position to print money.” McQuivey added that Apple and Microsoft Corp. will likely mount web-TV systems to compete with Google TV. But industry observers say new online TV systems won’t entice consumers to cancel their cable, satellite or IPTV subscriptions. “Most of the four hours of television an adult watches is something they can’t get from an Apple TV,” McQuivey said. “They can’t get their sports in most cases. They can’t get their news in most cases. They can’t get the TV shows they regularly watch in most cases on any of these devices, at least not without paying an additional fee.” Levy said consumers also value traditional television services. “As much as Canadians like to complain about ever-increasing subscription rates and dropping value for their dollar, cable and satellite subscriptions are typically the last contracts to be switched,” he said. Hennessy said in an interview that Canadian users can’t use devices like Apple TV to stream on-demand television shows because U.S.-based broadcasters don’t have the rights to let Canadians access the web content. Canadian content providers also prefer the conventional TV distribution model, he said. “The traditional ‘walled garden’ distribution model remains the most efficient way for rights holders to distribute their content with assurance of compensation,” he said. But some industry watchers have said Google TV could pave the way for a content-rights contest, particularly in Canada, where broadcasting distributors often buy broadcasting and Internet rights together. Analysts and observers also say web-TV services could impact users’ Internet usage rates. Heavy streaming users risk going over their Internet service download caps. According to Levy, it’s a take-it-or-leave-it situation: either consumers risk the overage or they forego heavy use of online television. “Consumers will be forced to make the Hobson’s choice of cutting into their monthly caps to watch TV,” he said. Apple Canada didn’t respond to a request for comment. news@thewireport.ca

Apple TV faces uphill battle in Canada

Broadcast | October 29, 2010

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