Will Apple Make Online Video Take Off?

Apple’s introduction yesterday of a device that will wirelessly pull content from a computer to a television set, has an eerie relevance to my conversation last week with Jason Holloway, CEO of online video start-up Dovetail.tv.

One of the challenges of online video adoption by both content producers and users is the inferior experience perceived in watching video on your computer screen ("lean forward" mode, as opposed to the "lean back" mode in which we’ve traditionally watched long form content on our televisions). The capability exists today to feed content from a computer to a television monitor, but of course there are only a few early adopters that do this. An adoption curve, Holloway and I agreed, will be in place over the next few years before online video will be viewed on a television screen in a mainstream way (this is separate from IPTV offerings of telcos such as AT&T, which will involve an incoming broadband signal routed through a set-top box to your television).

But when this device convergence becomes more mainstream, online video adoption will accelerate considerably. Apple’s new iTV device could push this forward as the company has a long history of changing the way things are done at major inflection points in the respective paths of culture and technology. This could be one of those points if it indeed has a sizable effect on online video adoption.

This will include any video that you can currently view online, from short YouTube clips, to independent films from Dovetail, to Apple’s own content that it will provide via the iTunes Music store. ITV and the quality standards it raises for watching online video could also motivate more content deals to be formed with Apple and other online video providers — the lack of which is currently holding the online video space back to some degree. ITV will work on Macs and PCs and it no doubt has other intended applications for Apple such as viewing photos and other media on larger television screens.

Meanwhile, video downloads are already on a significant rise, according to research by Ipsos.

Testing the Waters
Also related to Holloway’s comments last week, AT&T this week launched an online video channel. This is the precursor to AT&T's IPTV rollout, and I think the company is experimenting with features and trying to gauge consumer preferences, given that IPTV will be such a big bet for it — although the form factor (online video viewed on your computer) is different from its eventual IPTV service (viewed on your television).

The interesting part to me is that AT&T is charging US$19.99 for the service. There is a great deal of experimentation going on in the marketplace over what users will pay for and how they will pay (subscription vs. a la carte pricing vs. watching an ad). An online video panel we held at the Drilling Down on Local conference in March largely agreed that we don’t know what the answer is yet. Holloway, meanwhile, believes that just as online video channels are in an experimental phase, consumers are experimenting with new types of content and media and that they won’t "pay to experiment."

He therefore will opt for an ad-supported model until a certain degree of consumer traction and volume of content is reached. If Holloway is right, and I believe he is, then AT&T might have some trouble finding people to sign up at this rate, which is as much as half the price of some cable television service packages. Like many other things, we can only wait and see.

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