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Study: iTunes Video, Apple TV Appeal Limited

20 Feb, 2008 By: Erik Gruenwedel

While Apple Inc.'s omnipotent iTunes Music Store accounted for 20% of all U.S. music sales in 2007, consumer appeal of video content and the Apple TV lags far behind, according to a research report.

Just 19% of iTunes users bought video content accounting for about $100 million ($30 each) in first-half 2007 video revenue, according to Forrester Research Inc.

Consumers of iTunes video may represent just 4% of the online population, but they are a dedicated lot. About 44% buy content to watch on a PC and 42% have watched an entire feature length movie on an iPod video device, according to the report.

Forrester said increased use of the digital video recorder (DVR), broadband Internet access, a dearth of hit movies and denied access to user-generated video combined to hamper iTunes video sales.

“Disney remains the only studio that puts its new releases on iTunes, new releases that consistently outsell [catalog fare] from Lionsgate, MGM and Paramount,” said the report. “The result is a stunning lack of movie content for purchase.”

The study contends lackluster appeal of iTunes video has been restricted to early adopters and, as a result, has directly limited greater consumer adoption of Apple TV.

The study said 55% of online adults had never heard of Apple TV; 26% were unfamiliar to its features and just 4% said they would seek further information.

Among iTunes video consumers, nearly 20% were aware of Apple TV, but just 15% said they would likely purchase the $299 set-top box in the next 12 months.

Forrester estimated sales of 400,000 Apple TV devices through mid-2007 and said Apple would be lucky if it sold another 400,000 units by the end of the year.

“If everyone who said they want one bought one, this would mean a few million units sold,” analyst James McQuivey wrote in the report. “But that's not the way new technology adoption works. Only the people most likely to understand and benefit from technology are reliable in their estimates of future purchase.”

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