Apple may be turning its attention to video

APPLE A DAY

Plugged In

January 03, 2008|By DAVID ZEILER

The reports that Apple has signed a deal with the 20th Century Fox studio to carry its content on the iTunes Store could be a fundamental clue as to the company's next major product focus.

Recall that Apple's efforts in 2007 were dominated by the iPhone, right from Steve Jobs' Macworld keynote in January. I'm guessing of course, but it would make sense for Apple to set video as its theme for 2008, starting with Jobs' Macworld keynote on Jan. 15. Video currently is Apple's weakest link, since its other businesses - the Mac, the iPod and the iPhone - are all going gangbusters.

But Jobs, like Alexander the Great, is always looking over the horizon toward his next conquest.

Much has been said this year about the failure of Apple TV to make an impact. Jobs has described it coyly as a "hobby." Video sales at the iTunes Store have been decent but not great. Of the major film studios, only Walt Disney has made new releases available for purchase (it could be Jobs' membership on Disney's board helps a tad).

The television component of the iTunes Store took a giant step backward when Apple's running spat with NBC Universal resulted in the removal of shows from NBC, the Sci-Fi channel, the USA Network and other Universal properties.

The technical hurdles of selling video over the Internet haven't helped, either. The files are large - a typical movie on iTunes is about 1 gigabyte, or about 200 times the size of a typical pop song. Even for users with broadband Internet connections, gratification is not exactly instant.

It's the sort of glum confluence of circumstances that can cause even large and otherwise successful companies to throw in the towel. Wal-Mart, for example, canceled its movie download service less than a year after it launched.

But one thing Apple has proven in recent years is that it often can succeed where others have foundered, such as with the iPod or its chain of retail stores. Solving video over the Internet is exactly the sort of challenge Apple relishes. Apple now can put its experience as a video vendor to use as it crafts the most user-friendly option for consuming video over the Internet.

The move to rentals makes complete sense, and probably was inevitable. In the years Apple has dabbled in offering video downloads, it has learned that fewer people want to own video than do music. If people didn't want to rent videos there would be no Blockbuster or Netflix, not to mention the various "video-on-demand" services provided by cable companies.

Expect video to be the centerpiece of Jobs' Jan. 15 keynote. He almost certainly will announce the Fox deal then and possibly deals with other studios.

Apple isn't far from having a killer video strategy. It has most of the pieces in place already. It just needs to bridge the gaps and then integrate those pieces as only Apple knows how.

Then watch how fast Apple's "hobby" disrupts the entire movie rental industry.

Read Dave Zeiler's Apple blog at www.baltimoresun.com/business/appleaday

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