Apple Gears Up For The Video Discovery Wars

Think Apple's Matcha.tv acquisition was about its programming guide service? You're probably wrong. There's a new war brewing in online video: helping users find the stuff they want.

Conventional wisdom in the Hollywood-driven online video streaming market used to be that the platform with the most content wins. After all, we’re much more likely to sign up for a service that offers 10 of our favorite TV shows instead of just five of them. But as broader content deals start to even out the content discrepancies between services like Netflix, Hulu, and Amazon Instant Video, the “we have more stuff!” selling point is becoming increasingly unimportant.

So what’s the next war? Everyone’s talking about the new battle for exclusivity, original content production, where the platforms fund and produce their own shows without the help of big studios. But this war is different. Instead of competing to produce the most content, the platforms are competing to produce the most relevant content for their specific user base. Netflix’s directorial and casting decisions for House of Cards were famously based on data analysis of viewing habits, and Amazon’s pilot program lets users vote to fund their favorite new show.

This new battle for relevance shows an increasing understanding of how we watch video. Unlike music, most people don’t watch their favorite film or the last season of Lost over and over and over again for months on end. Eventually, we want to see new stuff--but given the massive amounts of content available on every service, we probably don’t know exactly what. The distinguishing factor in choosing an online video service could therefore come down to one important feature: discovery.

Discovery refers to a user’s ability to easily find new and interesting things to watch that are relevant to them. It’s that last part that’s most important. In a glut of content, we’ll quickly get sick of a video service that only shows us only seemingly random things to watch, no matter how much they show us. The suggestions and recommendations from the video service need to employ algorithms that are advanced enough to know something about us and make appropriate suggestions, just like a friend would.

Unfortunately, even on the current big three streaming video platforms (Netflix, Hulu, and Amazon Instant), discovery isn’t there yet. I mean, have you actually looked at the suggestions in your Netflix queue? Discovery is where Internet search was in 1998: Looking through those suggestions is like clicking Google’s first “I’m Feeling Lucky” button and hoping for the best.

Don’t take my word for it. Netflix knows their recommendation system needs work, which is why the company is testing out Netflix Max, a content discovery engine disguised as a mini-game that I’ve written about before. The underdog in the fight, Amazon’s Instant Video platform, also understands how important discovery is, and they aren’t sitting still. Just this past week, the company won an Emmy award for its work on personalized recommendation engines for video discovery.

If you aren’t convinced yet that discovery is the next battle for online video supremacy, how about the news yesterday that Apple bought a little company called Matcha.tv (a company most people had never heard of). We don’t usually think about Apple as being in the same market as Netflix, but remember that Tim Cook and others at Apple have said time and time again that the company is very interested in the TV sector, but they aren’t going to enter it until they feel they have something worthwhile to contribute.

Their new acquisition might help them produce something worthwhile. Matcha.tv’s technology allowed users to view a comprehensive list of all the content available to them in one universal queue--be it their Netflix account, on their subscribed-to cable TV channels, in the iTunes store, on their Hulu and Amazon Instant Video accounts, and more. As Tom Cheredar writes for VentureBeat:

So why Matcha.tv? The company doesn’t have any valuable patents or a large user base. What it does have is a very nice service that maps out all the available content both online and on your TV. And while Apple hasn’t been very specific about its plans to revolutionize the TV industry (besides acknowledging that such plans exist), buying this service could suggest Matcha.tv’s technology is in line with those future TV plans.

In additions to its content mapping service, Matcha.tv also had an extremely accurate discovery feature that gave users relevant suggestions on what they might like to watch next based on their past viewing history, and also on their--and their friends’--likes and mentions on social networking profiles. Given that a discovery engine is a much more difficult piece of software to build than a programming guide, it’s not a stretch to assume that Matcha.tv’s discovery algorithms played a part in Apple’s decision to acquire the company, especially considering all the work Netflix and Amazon are putting into discovery features.

All the evidence suggests that Apple is going to make a splash that includes much more than just another Internet TV. Apple knows that viewers aren’t satisfied with current streaming options, and that a slick TV that connects to Netflix and Hulu won’t be enough. Neither will having the largest content library or the best original content. The next online video battle will be won by the player who can tie it all together into a package that no one else can offer. A package that includes pushing relevant suggestions to the user so they can find what they want to watch, even if they don’t know what that is.

[Image: Flickr user ibkod]