Will Apple TV Take 2 Take Online Movie Rentals Mainstream?
An extraordinary thing happened today (well at least given who it was), Steve Jobs admitted that Apple had screwed up with its Apple TV product. Never one to take the rap alone he threw in Microsoft and a few others as well as examples …
Context & Ripple Effects
The Apple TV's arc has been a public deflation: after early claims that the box could overtake both TiVo and Netflix, by September 2007 the question in gadget coverage was whether it was officially a flop. At Macworld, Jobs said so himself — an unusual admission for Apple — while folding Microsoft and others into the same category of living-room failures.
The fix announced alongside the confession is a pivot from selling a media hub to renting content through it: the take 2 software overhaul turns the existing box into an iTunes Movie Rentals client, and Apple's deals with all major Hollywood studios are what make the rental catalog possible at launch. The breadth of pickup — Wired, NYT's Bits, Techdirt all carrying the story the same day — shows how much weight rides on whether rentals rescue the hardware.
First-order effects
- Every Apple TV owner gets a free software update that converts a lightly used purchase-to-own box into a rental storefront, giving Apple an installed base it can monetize without new hardware sales.
- All six major film studios now have a direct-to-consumer digital rental channel through iTunes on day one, a first for a single platform at launch.
Second-order effects
- Netflix, TiVo and Blockbuster now compete against a rental service bundled into hardware already sitting in living rooms, pressuring them to accelerate their own download or streaming offerings.
- Cable operators' video-on-demand businesses face a priced, studio-backed alternative that bypasses the set-top box entirely, tightening the market for living-room video delivery.
Third-order effects
- If studio licensing to one consumer platform becomes the norm rather than the exception, the window between theatrical release and home availability starts to compress around digital rental terms rather than DVD schedules.
- The episode reinforces a pattern where Apple concedes a product miss publicly and repositions it around content deals — making studio relationships, not industrial design, the decisive asset in the living-room market.
The trend: Living-room devices are shifting from owned-media hubs to rental-and-streaming platforms, with the pace set by which studios will license their catalogs to which box.