Look Out, Traditional TV: Here Come the Set-Top Boxes

Apple, Others Will Change the Medium -- and Advertising

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This week, like thousands of other early adopters, I picked up an Apple TV for my living room. If you haven't tried one of these devices, invest $300 and get one. Apple TV is a small set-top box that connects to any flat-screen TV -- but it might be easier to think of it as a smart iPod attached to your TV. If set-top boxes take off, Apple and others will change the medium and, with it, advertising.
Steve Rubel is a marketing strategist and blogger. He is senior VP in Edelman's Me2Revolution practice.
Steve Rubel is a marketing strategist and blogger. He is senior VP in Edelman's Me2Revolution practice. Credit: JC Bourcart

The set-top box seamlessly connects to any wired or wireless network in your home. That's all you need to get up and running. Apple TV will take any media in iTunes on your computer (PC or Mac) and copy it to an internal, 40-gigabyte hard drive. You can then access through iTV your music, video, audiobooks and podcasts even if your computer is off.

Most of the content people will initially consume on these devices will be movies and TV shows purchased from the iTunes store. Unfortunately, these are not yet in high definition, so the viewing experience is less than ideal for those who have HD sets. However, the cost of HD video cameras is coming down dramatically. You can now get one for less than $1,000. Do not underestimate what this will do to the economics of TV.

TV for years has been a closed system. You needed big infrastructure and dollars to create content and broadcast it to the masses. And although distribution has shifted from broadcast airwaves to copper wires and now fiber-optic cables, the economics remained the same. The cable nets had to find a niche that was big enough to support a sizable audience and therefore advertising.

Now, with Apple TV and other IPTV set-top boxes that are open, the economics have changed. There are already thousands of micro-niche user-generated video podcasts in iTunes. Some, such as Diggnation and This Week in Tech, are extremely popular. These are all going HD. Merlin Mann, a productivity guru, told me last week his popular video podcast will be available in 720p next month.

Over the next several years, millions will add one or more set-top boxes like Apple TV. Once they do, look out. As they discover niche content that matches their interests, the existing TV networks will see their viewership erode even more. Further, brand marketers will recognize they don't need media. They too can go direct and reach an engaged audience.
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