updated 10:50 am EDT, Tue October 2, 2007
HD, rentals on Apple TV?
One market research magazine is predicting that the Apple TV will ultimately be a long-term success, despite expected sales of just over 100,000 in 2007. A writer for Seeking Alpha notes that unlike most of Apple's products, except the iPhone, revenue for the Apple TV is being deferred over two years to accomodate software upgrades. What these upgrades might be is uncertain, but three major categories are suggested: rentals, HD media and peer-to-peer distribution.
The most anticipated of these may be rentals, which both Alpha and other publications argue is the major factor needed to improve its appeal. The iTunes Store currently only allows purchases of movies and TV shows, the former often costing at least $10. Apple is expected to add $2.99 movie rentals to iTunes that allow 30 days of unlimited viewing, undercutting physical renters such as Blockbuster, and competing directly with alternatives such as Amazon Unbox. The main obstacle is said to be movie studios, with whom Apple must sign a deal. Rentals will eventually become the second largest source of income from iTunes, Alpha argues.
iTunes has also been missing truly high-definition videos, failing to take advantage of the Apple TV's HDMI output. It is believed that Apple may already have HD movies waiting to launch, the obstacle being how to deliver videos as large as 6 to 10GB in size over the Internet. It is for this it is claimed that Apple has BitTorrent-like distribution built into Mac OS X Leopard, which could be used to evenly distribute bandwidth in exchange for iTunes credits. This might mean, of course, that this option would be limited to Leopard owners.
If real, the exact timeframe for any upgrades has not been proposed. The research gro Blackfriars is predicting, however, that Apple TV profits will escalate to $1.8 billion in 2009.