What does a well executed TV App Store mean for pay TV?

The App Store works for Apple. This is partly because the devices that Apple makes are very cool. It is also because Apple has built App Stores that are productionised, making it easy for almost anyone to publish applications and to make money from them. The Apple App Store has established a consumer experience that is sufficiently different to traditional web sites that the “I expect everything for free on the web” attitude of consumers has been reset and consumers are happy to pay for at least some applications. It is this combination of the productionised publishing model and the “apps for sale” business model that has encouraged innovation. Which self-respecting consumer brand does not have an iPhone app today? 150,000 apps and counting says this model has worked. Apple now advertises the iPhone using the range of available applications and not the coolness or the features of the phone.

So far, Apple hasn’t really tried to apply the App Store to the TV, despite its Apple TV device. This may be because the TV requires mainstream video content and broadcast integration more than it needs slick navigation. It may be that Apple is focused on phones and pads and can’t do everything at once. Or it could be that the App Store model isn’t right for the TV?

If you look at what CE manufacturers are doing now, then there is some weight to this last point. We’ve already consigned Yahoo TV Widgets to the legacy bucket as the manufacturers seek to deploy their own environments in order to gain commercial control and therefore make money out of their gatekeeper role. Some manufacturers are even calling their walled gardens App Stores. However, in most cases these walled gardens are repeating the mistakes of the pay TV operators in the late nineties and early noughties. Each content provider has to agree a separate commercial deal with the manufacturer, who is typically looking for a share of gross revenue. Whatever the merits of that business model, it creates a bottleneck where the manufacturers struggle to respond to demand and the supply of apps is limited even below the numbers who will sign up to that business model. Rather than give up on App Stores on the TV, we need to think about what defines a “well executed” App Store, and not just settle for what’s there now.

A well executed App Store would make it easy for content providers to publish and monetise applications (which, for the TV, should be predominantly content-based). You shouldn’t have to work out who to contact, wait for a response, have a meeting or two before the commercial proposal and counter-proposal and then sometime later actually sign up. You should be able to go to a web site, sign up to some standard, reasonable terms and start building your app using industry standard tools and commoditised skills. Unlike Apple, it shouldn’t force a particular content aggregation route and it shouldn’t discriminate against brands that may compete in some way with the operator of the App Store. This discrimination and insistence on iTunes for content distribution are the major flaws in Apple’s model, but of course are understandable given their market position. It is unlikely that other players will succeed in dictating terms in this way and indeed even Apple allows Amazon to sell e-books to the iPad and iPhone, so it is not even completely proprietary on Apple’s devices. Importantly, a well executed App Store would enable content to be delivered securely.

So, if we had a more open approach to the App Store on TV which was also productionised, what would that mean for pay TV? If content providers were able to quickly and easily sign up and develop apps for our App Store, then that might stimulate innovation. If they were able to apply whichever business model they liked and were free to build their own consumer relationships, then the barriers to entry are greatly reduced, the content providers will build applications and the consumers will get a high quality experience that is full of choice. This rich experience should drive consumer adoption which in turn drives more innovation in application development. Once the App Store becomes the preferred platform, then a tipping point is reached and even content that was previously exclusive to a pay TV platform may be made available for fear of missing out on a market segment. At this point, consumers may start to churn away from their pay TV subscription. Once the content that originally drove the consumer to take out that subscription is available from another route, then it is only inertia that prevents that churn. So a well executed App Store could have a pretty serious consequence for traditional pay TV.

It is likely, of course, that pay TV operators will deploy their own App Store. They may even have learnt something from the failed walled gardens of the last decade. They will also exploit other routes to market for their aggregated content bundle, through others’ App Stores. But who is enlightened enough to both productionise and open up their App Store? Will Canvas do that?