No one in the technology space has truly figured out the living room. So says Steve Jobs, as paraphrased by Silicon Alley Insider’s Dan Frommer today. Job’s remark came from the Apple earnings call yesterday evening, as part of an admission that Apple itself falls into that “no one” category, too.
The reason why this tough nut hasn’t been cracked is revealed during the rest of the statement, though. Here it is, in its entirety, courtesy of SAI:
I think the whole category is still a hobby right now. I don’t think anybody has succeeded at it and actually the experimentation has slowed down. A lot of the early companies that were trying things have faded away, so I’d have to say that given the economic conditions, given the venture capital outlooks and stuff, I continue to believe it will be a hobby in 2009.
What Jobs is failing to realize is that is significant demand for an engaging livingroom experience that includes digital content. The major telcos and cable are currently engaged in a battle for who controls the livingroom experienced, with the telcos attempting to deploy broadband fiber capable of delivering the cable experience, with cable companies trying to horn in on the digital broadband markets while maintaining their position as the dominant provider of livingroom video entertainment.
In their efforts to compete, though, no one’s apparently had the brainstorm that price is a factor for many consumers. While FiOS and Cable bills continue to trend higher when the full entertainment packages are considered.
Meanwhile, literally millions of hours of content for every special interest and niche is created on the Internet on a daily basis (of course of varying quality levels), and only a handful of the devices in most people’s living rooms are equipped to view this content. Given that the economy is supposedly in some sort of tailspin at the moment, you’d think that device manufacturers might see this market as something more than a “hobby” market and more of a real opportunity.
This is the primary reason why Apple hasn’t been able to come up with something that the majority of video consumers would want to put next to their set. Not only are the pricepoints far too high on the devices they do create for these purposes, but they seem to have completely ignored all the variety of ways people use their television for home entertainment.
Apple isn’t alone in this, though they are the most prominent example of how it’s been completely ignored. Not to beat a dead horse, but one of the most common usages for the TV set is as a baby-sitter of sorts, something I’ve always called the “veg-factor.”
To illustrate the veg-factor, think about the type of media consumption you do in the morning, while you’re getting the kids ready for school, or fixing breakfast in the morning while you’re getting ready for work. Morning show format news-ish programs are designed for this low-engagement, veg-factor consumption. They’re, in large part, designed to be background noise that delivers some entertainment and utility to your morning.
Likewise, in the evening, you come home from work, you switch on the TV and catch the local news or a Seinfeld re-run, and leave the TV on through Wheel of Fortune or whatever reality program du jour is on this season. Most people won’t even touch the remote until prime-time starts. That’s the veg-factor in action.
Think about it. Would you sit on this website right here and watch a game show where people try to guess, for instance, what a Web 2.0 company does just by interpreting it’s vowel-less company name for a full thirty minutes? No, you’d probably turn it off in less than three minutes. But millions of Americans tune in every day so they can have what basically amounts to a made-for-TV version of scrabble play while they eat their dinner.
As of the time of this writing, very few online video website and almost no PVR or media center PC systems really function with this in mind. The selection of PVR devices that play well with Internet content is pretty low to start with, but when you take that narrow selection and add the criteria that it must have playlists, you’re left with almost nothing to choose from.
Until they start performing in this manner, Internet content won’t ever make the leap to the livingroom in a way that replaces cable or cable-like video delivery. Until companies like Apple stop regarding Internet content creation as a hobby market, they’ll never be able to think in the terms required to pose a serious threat.
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