Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

Summary: Apple is trying again with Apple TV in an attempt to be the center of the digital living room. The concept isn't new since Google, Microsoft, Netflix, Amazon and others are also targeting your living room. Here's our ranking of the digital barbarians at your door.

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Apple is trying again with Apple TV in an attempt to be the center of the digital living room. The concept isn't new since Google, Microsoft, Netflix, Amazon and others are also targeting your living room. Of that group, Netflix is the only real threat to the incumbents.

On Wednesday, Apple unveiled its Apple TV and comparisons to rivals like Boxee and Roku are everywhere. Apple TV fits in the palm of your hand and is designed to be the heart of an entertainment network connected to various Apple device. Steve Jobs pitched the device as a worry free experience because it doesn't store content. Apple TV only rents shows to you. It's 99 cents a pop for a TV show and $4.99 to rent a movie--or the same price you'd pay on your cable set-top box. The content rental device will run you $99.

And it doesn't stand a chance. Welcome to the conundrum that's the digital living room. Apple tried to portray Apple TV as something other than a set-top box, but it lacks apps. Therefore, it's a glorified Roku box. Meanwhile, Apple lacks the content. On the TV front, only Fox and ABC are signed up.

The clear winner in this Apple TV gig is Netflix. Jobs touted "the best implementation of Netflix," but that's not a big deal. The real deal is that Netflix CEO Reed Hastings and his company have navigated the digital entertainment landscape better than anyone. Netflix's ability to navigate the turbulent entertainment business is absolutely brilliant.

Consider the following:

  • Netflix has the content through savvy dealmaking;
  • Netflix has the distribution to cut deals with Hollywood;
  • Netflix has avoided the hardware quagmire by embedding itself everywhere;
  • And the company is already in your living room via multiple boxes.

Here's a list of Netflix distribution partners:

  • Apple TV;
  • Microsoft’s Xbox 360;
  • Sony’s Playstation 3;
  • Nintendo’s Wii;
  • Internet connected TVs (most of them);
  • Blu-ray players;
  • TiVo;
  • Roku digital players.
  • Apps on the mobile front.

You pick a screen or consumer electronics device and you're likely to find Netflix. And it's all you can eat for a subscription. The real genius with Netflix: The company isn't a huge threat to cable or any of the incumbents. If anything Netflix is more HBO killer than Comcast killer.

So with that argument out of the way, it's clear that Netflix is my No. 1 pick to dominate the digital living room. All the pieces are there and at some point a company like Apple or Amazon is going to have to pay a pretty price for Netflix.

Related: Apple, Google TV: Does Pay as You Go Make Dollars and Sense?

What follows is a ranking of digital living room barbarians---larger players mostly---that have a shot of competing with cable and incumbent consumer electronics companies. The rub: None of these underdogs are in position today to upend cable giants or even players like Samsung, Sony and others producing Internet connected TVs. Here's a look at best of the rest of the digital living room field:

No. 2: Microsoft

Microsoft is in your living room more than you'd think. If you have Verizon FiOS, Microsoft is the operating system on the set-top box. And if you have an Xbox, you know that Microsoft is in your entertainment center (right). In fact, the Xbox community and Netflix streaming is a nice perk. And at this point, Microsoft isn't a huge threat to the content companies so Hollywood will play ball. Another point: Via PCs, home network servers and other gear, Microsoft has as many living room touchpoints as anyone.

No. 3: Apple

So Apple TV was a flop and probably will be again. However, Apple has all the devices around the TV locked up. If -and that's a huge IF - Apple can get content players to go along, the company could be a digital living room titan. The problem is that content companies aren't going to trust Jobs as the gatekeeper. Add it up and Apple is going to have to really get its hands dirty and enter the TV market. Apple TV probably needs to be a real TV not a little box with an HDMI port.

No. 4: Amazon

Amazon can rent you movies and sell you content in your living room, but the e-commerce company is largely a wild-card. Amazon has its movie rental service - $1 cheaper than Apple TV in most cases - and counts Panasonic, Samsung and Sony as partners. Amazon and Netflix would fit together very well and the companies have complementary expertise in e-commerce and distribution.

No. 5: Google

Google has the same problem as Apple: Content companies are wary of the search giant, but will deal with the company just so Jobs doesn't control their fate. Google is talking TV search, Android set-top boxes and movie rentals on YouTube. Put it all together and Google should have enough opportunities to prove it's a friend to the content creators. If that plays out, Google may be in your living room at some point. At this juncture, however, Google TV remains largely on the whiteboard.

Related: Google, Apple, Netflix are among those trying to shape 21st Century TV

And the rest of the rest...

The aforementioned companies were picked as digital living room players largely because they play on multiple fronts such as hardware, software and commerce. Here are a few other companies that aren't content distributors, but have a lot of hooks into the digital living room.

Cisco

Cisco has your set-top box via Scientific Atlanta, your router with Linksys and video tools such as the Flip camera. Toss in some living room telepresence and Cisco is a player. Cisco, however, falls into a bit of a different category that the likes of Google and Apple.

Motorola

Motorola's story is similar to Cisco. Despite all the hubbub around boxes in your living room, the set-top box is still the focus. Motorola has the set-top box - split with Cisco - and has Android devices it can also deploy.

The incumbents

Anyone notice how Samsung is talking up apps? How about those cable companies talking about TV Everywhere on the Internet? How about those TV companies owning Hulu? Comcast is pairing distribution and content via the NBC Universal purchase. It's quite possible that the digital barbarians only made established players perform better. Despite a lot of thought, I still haven't found the economics that would encourage me to cut the cable cord. On the bright side, Apple, Microsoft, Google and the gang will keep trying.

Someday, they may get the digital living room right.

Topics: Hardware, Apple, Google, Mobility

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48 comments
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  • Netflix problem

    Netflix has one big problem: It's confined to the United States. No one outside of the United States can buy any of the shows in it. That limits its audience and distribution. With Apple's upcoming data center in North Carolina, will it be able to reach the world?
    mayadanteamihan
    • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

      @mayadanteamihan One data center to serve the World? LOL, Wow. You might not want to post on tech sites!
      That being said Apple will have the same problems as NetFlix, Amazon, Zune Market place, Hulu, You Tube, Cable, Satellite and all the other content distribution company's.
      It's all about the licensing terms and convincing the content creators that you can protect their content while providing them with a nice profit!
      AboveAverageJoe
      • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

        @AboveAverageJoe Apple's strat is to make AppleTV cheap, when they have enough market share, the contents will come to them. Apple can leverage the current massive iTunes users due to iPod/iPhone and especially iPads. When apple does get enough market share, they will dump Netflix and because it is competing directly with them using iTunes. Netflix is there so Apple won't look out of place and scheme to capture Netflix's users. Netflix's strat is to install itself in as many places (market share) so contents can come to them and lock users in, this is why they are letting each other into their land. It's a real strategic warfare.
        m3kw9
      • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

        Wow! this is such a great news! I specially love this part of the article " Apple TV fits in the palm of your hand and is designed to be the heart of an entertainment network connected to various Apple device. Steve Jobs pitched the device as a worry free experience because it doesn???t store content. " more exciting changes are about to be unveiled....

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        apollosan
    • Netflix problem & solution

      @mayadanteamihan

      One major limitation with the Netflix and Apple iTunes store is that the large majority of quality content is only available to those living in the USA.

      Netflix is available to those in the USA (But for those abroad, you can get a US IP address with a VPN service)

      Also, if you are abroad it can be challenging to setup a US ITunes account without a US credit card.

      Yet I did find a work around solution for accessing the the iTunes US from abroad by using iTunes Gift Cards at http://www.VPNTelevision.com

      I don't understand why Netflix, Apple and the media companies don't just let people have worldwide access to media...wouldn't it mean more profits for them?!?
      Uncle Abe
      • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

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      • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

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    • Poorest Comparison of These Devices EVER!

      @mayadanteamihan Netflix is a service available at least in UK and Europe as well. Not a device and it's available on your cell phone via Android Market (will be on Google TV as well), Xbox Live Marketplace (available to even future WP7 devices), Apple App Market, and via web for entertainment PC's and all DLNA enabled devices. BUT it is not everything it's cracked up to be. There are better services available Larry left out along with devices like Sony PS3's. Which are now neck n neck at 40million devices a piece with Xbox 360's!<br><br>@Larry<br>Streaming Services is a competitive market sector all it's own that indeed includes more than Netflixes! Add at least GreenCine (#3 rated), MovieLink, Real.Com, Amazon, Hulu, PlayOn, iTunes, YouTube (which already has streamed pay for content for ages now, just not from Google themselves) along with foolishly excluding all mention of Blockbuster. Which is still #2 online (it's their brick n mortar stores going bankrupt not their online, stupid) and no doubt Vudu delivers the highest quality service Movie download rentals on the planet!!!<br><br>How in the World does Apple TV rate even being mentioned as a device out for years and still no sales to speak of as a proprietary device separate from iTunes sales and rentals? Netflix will always need a medium to stream through. Whether that be PC's, Sony PS3, MS Xbox, Android Mobile devices, Apple iOS mobile devices, Google TV, Samsung TV's, Toshiba's TV's, etc!<br><br>Maybe you should stick to comparing Services to Services and Devices to Devices..... Larry. Because this is one of most asinine comparisons on the planet! ....it makes no sense whatsoever!!!<br><br>And how in the World can you even compare devices that aren't even out yet is way beyond me. Therefore your score is a big fat ZERO!<br><br>Prediction: Google Tv BluRay Player Combos, Google TV DVR Combos, Google TV Media Centers, Portable Google TV Entertainment Centers for Cars/Vans/Motorhomes and Google TV Sports Bar Centers! ...yeah not much of a prediction since these are already being worked on. In Fact Sony has a Combo Google TV and BluRay player already coming out. Because it's perfect for Internet Interactive content shipping in Movies and it'll also be coming to PS3 and there's over 40 Million of those Sold to date!!! haha..... ;) ....yeah works well with Interactive Games as Well! lol<br><br><a href="http://hothardware.com/News/Sony-Introduces-Google-Internet-TV-And-Bluray-Player-/" target="_blank" rel="nofollow">http://hothardware.com/News/Sony-Introduces-Google-Internet-TV-And-Bluray-Player-/</a>
      i2fun@...
    • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

      @mayadanteamihan With hindsight, we can now see that apple has stepped right into the forefront of providing movie and music for us. Their flawless system from itunes store, itunes to apple device works seemlessly which is something other music players can't seem to do yet.
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  • Lotsa money...

    ...in bored people.
    Feldwebel Wolfenstool
    • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

      @Feldwebel Wolfenstool Most insightful comment I've read all day +1
      hawks5999
  • No CC

    They are all barbarians. Not one of them provides closed captioning on their digital downloads. At least with Netflix you can go back to getting physical media...
    ridingthewind
  • decaf

    I love Netflix, but this article is going way overboard. "Watch it Now" amounts to an on-demand b-list pay cable station. It's fantastic for what it is, but in the scheme of things (i.e. compared to the influence of even, say, Showtime let alone Fox), they're still beggars - the content owners are kings. If you want to watch a first run movie when it's available for home viewing, every other option you listed (and any video rental service) is superior to the "Watch it Now" service.
    ej1980
    • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

      @ej1980 - i watch a lot of netflix and while it's true, if you absolutely have to have something available the second it comes out, you have to pay a premium -- but i have to say, there's so much content out there, i'm happily watching entire seasons of content that i never got the opportunity to watch --

      and i never really liked comcast's selection of $5 rentals to be honest -- the interface sucked and the price was too high -- the selection was bad also
      veeesta
  • Integrate Apple TV?

    "Apple TV probably needs to be a real TV not a little box with an HDMI port."

    Maybe it is my high comfort level with consumer electronics having designed HDTVs, but I still fail to understand why integration of a media streamer into a TV is the home runl.

    I will acknowledge the integration may be for "marketing purposes" to encourage customers to purchase a new TV.

    BUT...My experience over the past few years has shown that the providers and formats are changing too rapidly. Most of the 2009 HDTVs with integrated functionality cannot support Netflix streaming. What will happen next year when another company wants to introduce another service? There is no incentive for the TV manufacturers to update the TV firmware to support new services. (It could be argued there is a substantial disincentive due to the support cost.)

    The high reliability of TVs through the late 80s through today have led most people to expect modern HDTVs to be usable for 8 - 10 years rather than the 3 - 5 years for computers. I don't think consumers will be satisfied with a major TV function (streaming) integrated into a TV that will be technologically obsolete within 1 or 2 years.
    TerryNorton
    • RE: Ranking the digital living room barbarians: Netflix rules; Apple, Google others likely to struggle

      @TerryNorton

      Well put.

      gary
      gdstark13
  • Mistake

    You simply isolated the main feature of the unit, and forgot to discuss the value-add of the box. Especially for those who have bought into the iLife ecosystem.<br><br><a href="http://www.apple.com/appletv/#remote" target="_blank" rel="nofollow">http://www.apple.com/appletv/#remote</a><br><br>I'll be buying this and replacing my PS3 and the center of my tv viewing experience. The PS3 has served me very well, expecially since Netflix got their act together with it. However streaming from PC to PS3 is a poor expierence, music playback pales, etc. It works, barely, and knowing Apple the expierence with the Apple TV will be much less geek and much more work.<br><br>I've held out on previous models because they were too expensive and contained a spindle. At $99, and a USB port, this is a no-brainer, for me.
    People
    • Most Apple purchases can be described that way

      @People
      [i]this is a no-brainer, for me[/i]

      Most Apple purchases are made without engaging the brain but this is especially true of those fools who have purchased Apple TVs. Even Jobs admitted it sucks by calling it a hobby!
      NonZealot
      • no brain

        @NonZealot

        "Most Apple purchases are made without engaging the brain"

        I would include your purchase of your MBP among these.

        "Even Jobs admitted it sucks by calling it a hobby!"

        That you keep saying this just continues to evince the fact that you are a troll, with no useful level of logical reasoning or English comprehension. First, the language just does not mean what you are implying it means, and second, Jobs has been calling it a hobby since before it was even released. That is because, as he has mede quite clear on NUMEROUS occasions, he feels the market is just not quite there for TV, and so he wants to have a presence, but no firm commitment as of yet. What part of that are you not getting?

        BTW, even if jobs WAS admitting such a thing, that does not make it so, unless you are in an RDF. Jobs does not dictate what sucks and what does not (except maybe to you.) Logic fail. (Appeal to Authority. Look it up)
        DeusXMachina
      • In Jobsonian, hobby means

        we are selling hundred of thousands per year instead of tens of millions per year.

        In other words, most of Apple's competitors would kill for a "hobby" like the AppleTV was.
        frgough