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Apple's Broken Streaming-Video Promises

There is a premise that the inevitable Apple TV flat screen will launch the "cable-cutter" revolution in earnest.  And if rumors are close to right, this will happen in the next six months or so.

The promise is that Apple will bring the same elegant hardware and consumer friendly software to the unhappy cable customer. There is only one problem with this a la carte utopia, in my experience. And that's that it doesn't work. Let me share my story and see if it reflects your experience.

I have an Apple TV 2 and so, a few weeks back, I tried to buy Mad Men for $3.99. The Apple TV device tried to download, and failed. I went online, trouble shot the wifi, tested, and re-started everything, and finally called Apple. They suggested downloading from iTunes on my desktop, and streaming via AirPlay. They credited me the failed purchase and I went and downloaded again, which took almost 2 hours.

And it's not just a personal gripe—Apple boards are full of complaints about iTunes, connection speeds, failed downloads,  and hinky rentals.

Now, before you ask, maybe it's my wifi or connection speeds. I wondered that as well. So I tested Netflix, which is  stunningly fast and solid on my same home network.

So, why does my personal experience matter?

It matters because some pretty smart people have determined that AirPlay is going to be at the center of Apple's livingroom strategy, among them Peter Kafka from All Things D and Jeremy Alair from Brightcove. And I agree. 

But what possible excuse does Apple have for providing a sub-par streaming experience in the face of a direct competitor like Netflix? Is it a server bandwidth issue? Does Apple simply not have the capacity to deliver content at peak periods like the premier of Mad Men? That's crazy talk. Apple has a gleaming new server farm in North Carolina and has had a long runway to be ready for streaming media.

Can it be that Apple simply provides higher quality, therefore larger, files than Netflix? That may be so—but if that's the case, then they need to re-think what customers want. A 3-hour download that can't begin until the entire file hits your hard-drive isn't "on demand," it's order today, view tomorrow. And that isn't what the market wants.

Want proof? Apple had been the leader of the online movie streaming business, with a 61% share in 2010.  But in 2011, the research firm IHS iSuppli reports that its share dropped to just 32%. Meanwhile, Netflix jumped from .05% of the business in 2010 to a stunning 44% in 2011. If that isn't a wakeup call,  I don't know what is.

And this is a massively growing market—the research reports that  U.S. video-on-demand grew 10,000 percent, from $4.3 million in 2010 to $454 million the following year, according to IHS. Transactional VOD grew from $155 million to $273 million.

To be fair, Apple and Netflix provide very different services. Netflix's service is a subscription-based service offering customers access to thousands of movies and TV shows while Apple iTunes customers pay to rent movies and TV shows or sometimes series. But they both compete for dollars and consumer time.  And Netflix service has clear technical superiority.

I was thinking of making a video about this—but heck, way easier to just post one of the other folks having EXACTLY the same experience I'm having:

So here's the question. Apple has the devices (iPhone, iPad, Apple TV,  and soon a flatscreen). Apple has great content relationships, and Apple has a massive server farm. Why do they let bandwidth,  streaming,  and complex rules create a less than optimal user experience?

[Image: Flickr user James Good]