iTunes Movie Rentals and Apple TV Take 2

On 1/16/08 at 5:01 AM, tbutlermac.com (Travis Butler) wrote:

>Admittedly, I haven't seen any figures on Apple's margins on video
>rentals (or video purchases, for that matter). However, the reports
>I've seen on their margins on music purchases have been very
>consistent - around 5 cents per track. Last year, around when they
>sold their 3 billionth song, I did some back-of-the-envelope
>calculations that showed that in *the one previous quarter*, they made
>four or five times the profit selling iPods that they made selling 3
>billion songs over *the entire history of the iTunes store*. Which
>makes it pretty obvious to me that they're using low-profit music
>sales to drive high-profit iPod sales.

As a follow-up, Apple explicitly stated this is what they're
doing with the movie rentals in their quarterly earnings call:

http://www.macworld.com/article/131756/2008/01/rentalstrategy.html

I've been a TIVO user for 2 years now. They intentionally cripple the machine. It has a teeny hard drive, it has a slow ethernet port, the files are all encrypted (WHY?) so they are a pain to handle for burning DVDs. It is constantly screwing up recording times and my machine crashes every other day. I can burn DVDs on Macs or PCs, but while the best approach is to strip the encryption on the PC, it is just flat out better burning on the Mac. I upgraded to a TIVO2 last summer partly so I could get the DIVO downloads particularly on the History channel. Now I find that: 1) they are hard to download and 2) my drive is so teeny I can't hold many and 3) all the good episodes are downloadable from Apple. I am really looking at the apple machine. $230 is a pittance compared with what I am paying for basic crappy cable, and other alternatives. (Oh and TIVO keeps double billing me, too). Two years ago I thought TIVO was great. I couldn't believe that they could do the whole thing through a phone line. But over 2 years it has gotten worse, not better. Their ethernet is 10-bt ! Not 100bt or gigabit! You have to void your warrantee to put in a 400 Gig drive. The software on the mac is highly intermittant. ---OH and burning a TIVO file takes forever. A single 2hr soccer game takes maybe 4-5 hours to render for a DVD on a G5--EVEN if it is only a 2 gig file. The file is already an MPEG2. Why rerender? Oh yeah--and it is constantly losing my operator's code on the files--so I have to trash them. It says I'm not the owner. Not on every file--just some. I don't want to use elgato--it's all Mac based. I want something I can run through the TV. I don't want to use a $2000 computer for my TV (although the 24" iMacs are pretty mind boggling).

--On February 4, 2008 6:52:39 AM -0800 Clyde Kahrl
<ckahrlclydekahrlesq.com> wrote:

> I've been a TIVO user for 2 years now.
I've been a Tivo user for 8 years.

> They intentionally cripple the machine.
Most of the intentional crippling is there to keep them from being sued
into oblivion like ReplayTV. The features I consider intentionally crippled
are the on disk encryption of all shows and the download blocking of cable
HD channels (series 3 and HD). The first is easily circumvented. The 2nd
probably is as well with an OS hack, but I've not looked into it.

> It has a teeny hard drive,
The record time is pretty clear on the box. Looking around it looks like a
500GB add-on ready to install in a Tivo runs about $230. It looks like for
raw drives 500 GB (on special) is around $150. Most people don't want to
pay that much more for a DVR, especially when they can get them for $10 a
month from their cable provider (with similarly sized hard drives.)


> it has a slow ethernet port, the files are all encrypted (WHY?) so they
> are a pain to handle for burning DVDs. It is constantly screwing up
> recording times and my machine crashes every other day. I can burn DVDs
> on Macs or PCs, but while the best approach is to strip the encryption on
> the PC, it is just flat out better burning on the Mac.

Hmmm, downloads from my series 3 run about 1.5 - 2.5 Megabyes/sec
downloading with Firefox. That's faster than 10 Megabits/sec. I'm pretty
sure the latest models have 100 mbit/sec ports. Gigabit would be nice but
as most homes don't have gigabit switches quite yet (gigabit on the desktop
has only become common in the last year or so.) this would an additional
cost to each Tivo with no real benefit to most home users.

The only time I've had the Tivo miss recordings are because:
a) broadcast time changed without guide being updated (happens frequently
during football season when shows are typically pushed back a half-hour but
the guide doesn't change.)

b) Channel went out because of cable company

c) Power loss.

None of those can be blamed on TiVo, except maybe a. I've had a handful of
shows missed because the guide didn't change even though the change was
announced way in advance. An e-mail to tivo usually got these corrected in
a day or so.

For decryption on the Mac I use Tivo Decode:
<http://tivodecode.sourceforge.net/>

I have an automator script that asks for the file to decode then runs the
program for each file I've selected. I have to watch disk space but that's
about it.

I then convert to MP4 format using VisualHub ($23).
<http://www.techspansion.com/visualhub/>

and finally edit commercials out with QuickTime Pro ($40) then add to
iTunes. I currently have around 60GB of TV Shows moved from my Tivo to
iTunes and available to my AppleTV.

Roxio offers a Tivo to DVD/iPod Mac solution for around $70, but I'm not a
fan of Roxio and my solution gives me unencumbered files for future use.
<http://partner.roxio.com/enu/oem/tivotoast/default.html>


> I upgraded to a TIVO2 last summer partly so I could
> get the DIVO downloads particularly on the History channel. Now I find
> that: 1) they are hard to download and 2) my drive is so teeny I can't
> hold many and 3) all the good episodes are downloadable from Apple.

The Tivo HD and Series 3 have ESata drives for expanding hard drive space
without voiding the warranty. Unfortunately it doesn't apply to the Tivo
Series 2. What I would do is get Firefox and add the Download Them All
extension. As soon as a show airs, copy it off the tivo. Then it doesn't
matter how little the space is on the tivo, just how much is on your mac.

<http://www.mozilla.org/>
<https://addons.mozilla.org/en-US/firefox/addon/201>

The catch to using Download Them All with a Tivo is to make sure it doesn't
do multi-part downloading and doesn't try to download more than one at a
time. Other than that it works great. I'll frequently queue up 10 shows to
download, go to work and they're all available when I get home.

I looked at going strictly Apple TV and dropping my cable use, but the cost
per season on iTunes is just two high for all the shows I'd like to watch.
Maybe if the rental model is extended to TV Shows and I can rent a movie
for $.99 an episode it might make more sense.

On Feb 4, at 9:52 AM, Clyde Kahrl lamented:

> I've been a TIVO user for 2 years now. They intentionally cripple
> the machine. It has a teeny hard drive, it has a slow ethernet port,
> the files are all encrypted (WHY?) so they are a pain to handle for
> burning DVDs. It is constantly screwing up recording times and my
> machine crashes every other day.

A couple of years ago, I set up a MythTV [0] system at home on an
inexpensive Linux machine. Back then it was not a task for the faint
of heart. These days, with one-disk installations such as Mythdora [1]
and Mythbuntu [2], it's pretty easy. If you've got a reasonably
powerful older PC sitting around, a used tuner card is pretty cheap
and the software is free, so there's not much to lose in trying it.

My original setup was on a single machine with a 250 GB drive, in the
family room, connected to the television. Since then, by popular
demand, it has expanded to a back end server in the basement,
containing four tuners and two 500 GB drives, connected by Ethernet to
three front ends scattered around the house (kitchen, family room,
master bedroom). There is also a front end running occasionally on the
Mac in my basement office or on my MacBook, connected wirelessly.
Different programs can be viewed on each front end at the same time.

The machine in the kitchen has a DVD-RW in it on which programs can be
archived. The drive is mostly for watching DVDs, but my daughter also
uses it for burning programs. It's pretty easy to use.

All the machines on the system can and have run for months at a time
with no maintenance.

TiVo is prettier, but Myth works pretty well.


[0] <http://www.mythtv.org/>
[1] <http://www.mythdorawiki.com/wiki/index.php/Main_Page>
[2] < http://www.mythbuntu.org/>

On 4-Feb-2008, at 07:52, Clyde Kahrl wrote:
> I've been a TIVO user for 2 years now. They intentionally cripple
> the machine. It has a teeny hard drive,

Mine has about 215 hours of storage.

> it has a slow ethernet port,

10bT is not really _slow_ but ok.

> the files are all encrypted (WHY?)

threat of lawsuits from the content cartel.

> It is constantly screwing up recording times

What? I've had a Tivo since 1997? 1999? and I don't think it has
_EVER_ screwed up a recording time. Not once.

> and my machine crashes every other day.

My original DirecTivo (5 years old) has started crashing on occasions,
once every few weeks or so. Other than that, I've never even seen a
TiVo crash (expect for a couple of times during some brownouts we
had). Mine restarts only after power outages.

> The software on the mac is highly intermittant. ---OH and burning a
> TIVO file takes forever

Never used a series 2 unit. Likely never will.

> A single 2hr soccer game takes maybe 4-5 hours to render for a DVD
> on a G5--EVEN if it is only a 2 gig file. The file is already an
> MPEG2.

If it's actually an MPEG2 you should be able to drop it right on toast
and burn a DVD in 4-10 minutes.

--
I want to get hurt!

Clyde Kahrl on 2/4/08 wrote something to the effect of:

>I've been a TIVO user for 2 years now. They intentionally
>cripple the machine. It has a teeny hard drive, it has a
>slow ethernet port, the files are all encrypted (WHY?) so
>they are a pain to handle for burning DVDs.

Tivo is terrified of annoying the networks, hence the copy protection of
the files. This is one of things I dislike about Tivo -- their business
model is to make money selling statistics to the networks so they've got to
please them. If it's a choice betwen doing what's right for the little
$15/month customer or the big networks, they'll choose the networks every
time (unlike Apple).


>It is constantly screwing up recording times and my
>machine crashes every other day.

This sounds odd. Perhaps you have a defective unit? I have 4 Tivos and they
crash maybe once a year, if that. I have had some crashes while
transferring files to a back bedroom Tivo that's on a slow and flakey WiFi
connection, so I generally avoid that. But in regular Tivo use they are
rock solid. If they miss a recording it's because of a problem with my sat
TV box or the TV network pre-empted the program, not the Tivo.


>Their ethernet is 10-bt ! Not 100bt or gigabit!

Are you sure about that? I'm pretty sure it's 100, but it may depend on
your adapter (most use a USB-to-Ethernet adapter). I download stuff
regularly and it's pretty fast. Amazon Unbox movies download in 2-3 hours,
usually. (My main Tivos are connected via Ethernet, not WiFi.)


>You have to void your warrantee to put in a 400 Gig drive.

Yeah, but if it's an older Tivo, who cares? I just replaced the original
15GB drive in my ancient Philips Series 1 Tivo with an old Mac 80GB drive
and it's as good as new. (My mom uses it. It has a lifetime service, so no
monthly costs for her.) The original drive finally died a few weeks ago --
I was amazed that it lasted nearly 10 years with constant use! Most of my
other Tivos are upgraded -- it's not a big deal.


>The software on the mac is highly intermittant. ---OH and
>burning a TIVO file takes forever. A single 2hr soccer
>game takes maybe 4-5 hours to render for a DVD on a G5

What you need is one of the Humax DVD Tivos. I have one and it is AWESOME.
It has a built-in DVD burner and allows you to move Tivo shows to DVDs. The
best part is that it doesn't burn them in real-time -- it merely copies
them over so it's really fast. Depending on the quality setting of the
recording, I could burn that two-hour soccer game to DVD in 20 minutes.
It's also great that while a disc is burning, you can be recording one show
while watching another show!

(BTW, I have the entire World Cup 2006 on DVD burned via this Tivo. I made
two complete sets. :-)

The main limitations are:

   * You cannot change the quality of the original recording
     when you burn to DVD. "Best" quality = 1 hour on one DVD,
     "Basic" quality = 6 hours on one DVD, etc. so you need
     to keep your DVD usage in mind _before_ you record the
     show. For instance, for those World Cup game, I recorded
     most in "High" quality so they'd fit on one disc. (Tivo
     will split longer shows across multiple discs.)

   * You cannot burn certain content: downloaded shows, shows
     moved from other Tivos (really stupid), Amazon Unbox
     shows, etc. There's a copy protection flag Tivo checks
     to see if you're allowed to burn a show or not and
     these are indicated by icons in the burn list.

   * You cannot record only a portion of a show, but must
     burn the entire thing (so no removing the commercials).

   * You cannot add content later to a DVD -- once you start
     burning it, it burns the whole disc and finishes it. No
     partial discs.

   * You cannot use the DVD burner to record shows directly --
     you must use Tivo to record it, then copy the shows
     to the DVD. This is not a problem in my experience.

The good points are:

   * No limit on the number of DVDs you burn.

   * Nice interface for choosing the list of items you want
     to put on the DVD. You control the order and can name
     the disc.

   * The burned DVDs have a Tivo interface for playback.

   * The DVDs play in other players and computers. In fact, I
     usually move stuff to my Mac via DVD and Handbrake versus
     using Tivo's slow, ugly, and awkward system. It rerips it
     so it degrades the quality, but this is only for iPod/iPhone
     use, so it's fine for that.

   * There's a Firewire input on the front so you can bring in
     digital video from your Camcorder. This records as a
     regular Tivo show (in real-time) and then you can burn
     that to DVD if you want. You can do the same with shows
     from a VCR or other video source (even another Tivo). But
     since this is real-time, it's slow.

The Humax that I have only has an 80GB drive (the original), but because I
can just move shows to DVD so easily, I haven't felt the need to upgrade
the drive. I've got a library of 200+ discs I've burned. It's really great.

-- Marc

______________________________________________________________________
      Marc Zeedar * Publisher * REALbasic Developer Magazine
                    <http://www.rbdeveloper.com/>

LewisGmail wrote:
> On 4-Feb-2008, at 07:52, Clyde Kahrl wrote:
>> It is constantly screwing up recording times
>
> What? I've had a Tivo since 1997? 1999? and I don't think it has_EVER_
> screwed up a recording time. Not once.

I wonder here. One thing TiVo can't deal with, and no other box that I know of either, is unplanned schedule changes. Most of these affect me during football season. Sunday night in the fall on CBS is a mess as games NEVER end on time. If you're expecting to get 60 minutes or Shark without intervention or asking it to just record an extra hour it will not work. Nothing TiVo can really do about that.

David Ross

--On February 5, 2008 6:00:37 AM -0800 Marc Zeedar
<publisherrbdeveloper.com> wrote:

> Tivo is terrified of annoying the networks, hence the copy protection of
> the files. This is one of things I dislike about Tivo -- their business
> model is to make money selling statistics to the networks so they've got
> to please them.

Actually they make very little money doing this. Most of their money is
from the customer fees and the ads at the bottom of the main tivo screen,
plus the occasional thumbs up for more info on commericals during shows.
Maybe a kickback from Amazon Unbox and Rhapsody.

I think DVR statistics is about to become important (as shows like Jericho
get cancelled because of low ratings and saved by fans because the ratings
were low because of DVR that aren't counted by Nielsen.) But Tivo's
statistics are strictly for Tivo devices. THere are lots of other DVRs out
there and networks want one or two companies to provide stastics across the
board, not have to pay one company per device for their statistics.

> If it's a choice betwen doing what's right for the little
> $15/month customer or the big networks, they'll choose the networks every
> time (unlike Apple).

For the Series 3 and HD models they delayed features because they've had to
work through them with the Cable Card certification, but this was not
because of money from the networks but because it's the law. Tivo didn't
want to go the way of Replay TV who got them sued to a minimal existance
(are they even still around?).

Oh and what has Apple done to go against the movie industry? You're talking
about a company whose CEO is the largest stockholder in the Disney
Corporation. They didn't exactly beat a no DRM drum for movies did they?
They pretty much went with the standard 30-day view/24-hour once started
policies for rentals that the movie companies demand instead of pushing for
a more time or a lower price. THeir Apple TV uses HDCP copy protection on
the HDMI port.

Kevin van Haaren on 2/6/08 wrote something to the effect of:

>--On February 5, 2008 6:00:37 AM -0800 Marc Zeedar
><publisherrbdeveloper.com> wrote:
>
>> Tivo is terrified of annoying the networks, hence the
>> copy protection of the files. This is one of things I
>> dislike about Tivo -- their business model is to make
>> money selling statistics to the networks so they've got
>> to please them.
>
>Actually they make very little money doing this. Most of
>their money is from the customer fees and the ads at the
>bottom of the main tivo screen, plus the occasional thumbs
>up for more info on commericals during shows. Maybe a
>kickback from Amazon Unbox and Rhapsody.

Do you have evidence of this? Tivo just announced a deal with CBS last week, but the financial
terms were not disclosed, so we have no way of knowing just how much income this generates for
Tivo. I do know they have "regigged" their business plan several times over the years because
selling stats/ads to the networks did not bring as much money as they originally expected (hence
their having to raise the monthly fees a while back).

All I'm saying is that they are trying to make money on both sides -- from consumers and from the
networks -- and it makes you wonder where their ultimate loyalty lies. I'm a big Tivo fan, but I
don't trust them entirely.


>Oh and what has Apple done to go against the movie
>industry? You're talking about a company whose CEO is the
>largest stockholder in the Disney Corporation. They didn't
>exactly beat a no DRM drum for movies did they?

How do we know what Apple pushed for and didn't get? The negotiations aren't public. All we know is
that they took an awfully long time to get the studios on board and Apple no doubt had to cave in
on some demands to get the studios to play along. (I'm sure Steve Jobs had wanted rentals for
Macworld 2007 but couldn't complete the negotiations on time.)

After the success of iTunes with music, Apple is no longer a tiny, anonymous player in the industry
-- no way the movie studios were going to let Apple walk all over them and specify terms like they
did with the music industry.

I'm not saying Apple's perfect -- but at least they are trying. You look at how just about every
other company who's tried a digital media service and they have just caved in to whatever terms the
studios wanted -- which is why you end up with messes like Amazon Unbox where movies have different
terms and prices (it drives me nuts how some movies you can rent but can't buy and others you can
buy but not rent).


>They pretty much went with the standard 30-day
>view/24-hour once started policies for rentals that the
>movie companies demand instead of pushing for a more time
>or a lower price.

I read that the sticking point was that Apple wanted something different but the studios wouldn't
budge -- they insisted the terms be exactly the same as the cable industry (the studios make a lot
of money off PPV and "on demand" rentals).

But even with this Apple pulled a fast one by allowing you to keep the movie paused indefinitely,
even past the expiration date. That doesn't at all work with Amazon Unbox movies on Tivo -- you can
be in the middle of watching it and it will disappear when the expiration time hits!

-- Marc

David Ross on 2/6/08 wrote something to the effect of:

>One thing TiVo can't deal with, and no other box that I
>know of either, is unplanned schedule changes.... Nothing
>TiVo can really do about that.

Why not? My Tivo's on the Internet. Seems like it be possible for Tivo the company to monitor shows and
when a show goes long, send a signal to all Tivos to adjust their recording accordingly. Even if there
was a little lag time and it missed a few minutes of a show, that's still better than missing the whole
thing or only getting the first half.

Even better, why couldn't the networks embed a signal in their shows that tells Tivo a show is going
overtime? Just broadcast a "done" signal when the show's really over and Tivo would know to adjust the
recording. (This would require cooperation with the networks, however. The first idea would not.)

-- Marc

--On February 7, 2008 5:34:56 AM -0800 Marc Zeedar
<publisherrbdeveloper.com> wrote:

> Kevin van Haaren on 2/6/08 wrote something to the effect of:
>
>> Actually they make very little money doing this. Most of
>> their money is from the customer fees and the ads at the
>> bottom of the main tivo screen, plus the occasional thumbs
>> up for more info on commericals during shows. Maybe a
>> kickback from Amazon Unbox and Rhapsody.
>
> Do you have evidence of this? Tivo just announced a deal with CBS last
> week, but the financial terms were not disclosed, so we have no way of
> knowing just how much income this generates for Tivo. I do know they have
> "regigged" their business plan several times over the years because
> selling stats/ads to the networks did not bring as much money as they
> originally expected (hence their having to raise the monthly fees a while
> back).

As a public company they have to file a 10-Q with the SEC. You can review
that online at:
<http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001193125-07-262270&Type=HTML>

According to that:
> Service revenues for the three and nine months ended October 31, 2007
> increased 8% and 10% or $3.9 million and $15.1 million over the service
> revenues for the three and nine months ended October 31, 2006,
> respectively. This increase was primarily due to the year over year
> growth in our TiVo-Owned subscription base of 5% to 1.7 million as of
> October 31, 2007 compared to 1.6 million for the same prior-year period
> and a 5% increase in TiVo-Owned ARPU. TiVo-Owned ARPU increased primarily
> due to increases in the TiVo-Owned subscriptions that pay recurring fees.
> Additionally, these new subscriptions were acquired under our new
> multi-tiered pricing structure and bundled sales program which yielded
> higher monthly subscription contract prices for new TiVo-Owned
> subscriptions.

Now they lump in their "audience research measurement revenues" in their
ARPU number (Average Revenue Per Subscription, and no I don't know why it
isn't ARPS). But you'll notice it isn't even mentioned above, just the
extra money from "increases in the TiVo-Owned subscriptions that pay
recurring fees..." and changing the pricing structure on subscription fees.
Also included in the service revenues is advertising fees for the things I
mentioned.

Audience research measurement revenues gets a barely mention (well 3
mentions) usually in summary sentances. Other than that it's a lot about
subscription fees.


> All I'm saying is that they are trying to make money on both sides --
> from consumers and from the networks -- and it makes you wonder where
> their ultimate loyalty lies. I'm a big Tivo fan, but I don't trust them
> entirely.

I don't trust any company. I'll use the product until it no longer works
the way I want and then stop. I'm most likely on my last TiVo. I've got a
lifetime subscription, and it does HD. THe next big thing is downloadable
shows and I think Apple TV is ahead on that (although TiVo can change that
as well.)

>> Oh and what has Apple done to go against the movie
>> industry? You're talking about a company whose CEO is the
>> largest stockholder in the Disney Corporation. They didn't
>> exactly beat a no DRM drum for movies did they?
>
> How do we know what Apple pushed for and didn't get? The negotiations
> aren't public.
> ...
> I'm not saying Apple's perfect -- but at least they are trying.

Negotiations aren't public but Apple is trying? Now it's my turn to ask --
where is your evidence?

> is why you end up with messes like Amazon Unbox where movies have
> different terms and prices (it drives me nuts how some movies you can
> rent but can't buy and others you can buy but not rent).

They only have one set of terms now, they've been place for quite some time
(at least 4 months when I started using it from my TiVo) and they're
exactly the same as Apple's terms.

<http://www.amazon.com/gp/help/customer/display.html?nodeId=3748&#renting>

And iTunes has exactly the same problem re-movies you can buy but not rent
and visa-versa. iTunes also has different prices. That's the biggest issue
I have with iTunes movies -- it's pretty much exactly the same as Unbox.
"Kind of HD" is about the only difference and I doubt that'll last long.

> But even with this Apple pulled a fast one by allowing you to keep the
> movie paused indefinitely, even past the expiration date. That doesn't at
> all work with Amazon Unbox movies on Tivo -- you can be in the middle of
> watching it and it will disappear when the expiration time hits!

As long as you don't want to do something else like listen to a podcast or
some music for the entire time it's paused. And don't lose power! A sort of
workaround is not a solution to a broken "feature", and it's broken in both
systems.

At 5:34 AM -0800 2/7/08, Marc Zeedar wrote:
>David Ross on 2/6/08 wrote something to the effect of:
>>One thing TiVo can't deal with, and no other box that I
>>know of either, is unplanned schedule changes.... Nothing
>>TiVo can really do about that.
>Why not? My Tivo's on the Internet. Seems like it be possible for
>Tivo the company to monitor shows and
>when a show goes long, send a signal to all Tivos to adjust their
>recording accordingly. Even if there
>was a little lag time and it missed a few minutes of a show, that's
>still better than missing the whole
>thing or only getting the first half.

This requires someone to be watching the channels. Plus by that time
you'll probably get into inconsistencies.. This handful of west coast
affiliates aired the comedies after the game, whereas the east coast
affiliates went right to the local news, and are playing the comedies
at 3 am or so..

I think this is one of those ideas that looks really good until you
have to implement it.

~Nick
http://www.inmff.net