Will Apple Have To Rethink Apple TV

Despite digital video downloads being quite a popular story in the media, the reality of the marketplace shows that they are not as popular as many believe. Revenue from paid digital downloads was $98 million last year and some estimate that this year it will reach $279 million, so it is growing quite fast, but surveys indicate that these services cater to a niche. Has Apple missed the mark with the Apple TV and its iTunes Store video offerings?

Digital movie downloads may be rapidly growing, but they are not penetrating the mainstream. Many users don't like the prices or the quality of the offerings, or simply the idea of buying a movie and downloading it, only to see it once. Meanwhile the number of ad-supported content online is growing, and it is looking to become far more popular than the paid model. Directly from networks or from third party services, such as Joost, ad-supported video content is similar enough to the TV experience to be familiar, and more and more are tuning in every day.
Neither the iTunes Sore, nor the Apple TV is set up to take advantage of this.

Apple has long been fighting subscriptions in music and seems to be doing the same with videos. While sales have been good so far, they are nowhere near stellar. The Apple TV was also received with lukewarm feeling, mainly because the use that Apple intended for it, to stream video content bought from the iTunes Store is moot for the majority of consumers out there. Fortunately, Apple made a very versatile box, which can easily be updated anytime they want. That combined with the fact that the Apple TV is practically a smaller Mac mini, means that it can run just about any program available on the Mac. Should the paid digital video download model fail, Apple could quickly adapt. Given the possibilities, it's a shame that they don't already offer more flexibility.