<massive grain of salt>
IF this were to come to pass. IF the price for the box was in the range they say. IF the service could be something akin to iTunes. IF the price for each film were notably better than purchasing the DVD. and on and on.
</massive grain of salt>

This would be absolutely fantastic. I'd subscribe in a minute. Especially if they started to include more obscure titles. Sure anyone can find a copy of The Incredibles right now, but how about older films that are harder to find. And shorts which are almost never available. iTunes started with the top songs but now after a couple of years it has quite a selection of more obscure artists and recordings, foreign recordings, audio books, and such.

"we believe iTunes can be expanded not only to manage digital photo libraries, but also video or movie downloads"

Wow really? It CAN be expanded? And here I thought it would be technologically impossible! It also CAN be expanded to include iTunes porn picture download. So I predict it will be! I have no evidence to back up this prediction, but I thought of it so hey read my stupid report! Such a service could potentially possibly be available within the next 6 years!

For those who pay attention to this stuff, you will notice that the movie industry has (surprise surprise) taken a very conservative wait-and-see approach where they allow the music industry to deal with these digital issues first and then slowly follow suit attempting to avoid the mistakes that occur along the way. That said, the record companies are still having problems trying to deal with digital music download services and getting all the money they want. And lets not forget they were getting pounded by illegal music downloads, so a possible remedy to that helped Apple get those deals signed. Illegal movie downloads are a relatively tiny problem and when you combine this with ongoing record movie revenue and the INSANE profitability and income the movie industry is getting with DVD's, I don't think you'll see any deals with Apple anytime soon. And with no content... well... thats not a very fun situation. I'm not against a digital movie service, I just don't think its realistic anytime in the forseeable future. But hey thats just my opinion.

Even with the penetration of broadband connections, I don't see how a service like this can be successful. Until there's enough people with fiber running to the house, I don't think many people would put up with the extended wait that would be involved in downloading a movie.

1 - why do all these analysts say movie downloads will be part of iTunes? note: 'Tunes'

2 - Unless people can use existing media it's pointless. But the FACT adverts at the start of most DVDs tell me that copying MY DVD onto MY computer is theft so it seems unlikely (unless The Steve can convince the MPAA to let him make a DVD > H.264 app)

Quote

Anonymous wrote:
Even with the penetration of broadband connections, I don't see how a service like this can be successful. Until there's enough people with fiber running to the house, I don't think many people would put up with the extended wait that would be involved in downloading a movie.

You've hit on the most important point, but there is a solution. But the fix raises even more questions.

It would be possible to download movies that were much more heavily compressed but looked perfectly fine on a mobile-device. The big question is then: "How much is that worth?"

Right now, iTunes songs are less quality then CDs, but they're CLOSE enough that many people don't mind. If you're talking about BUYING a movie online that's 30% or 20% the quality of a DVD (or whatever's next) then what are you willing to pay for that? $1? $2? $10? You'd probably have to buy the DVD too if you wanted the high quality version, so what's a low-rez version worth?

Perhaps they could come up with a way to rip DVDs in legally with a lock applied to the file as you import them. Something like that would probably be cracked quickly, though, so I doubt they'd try it.

Anyway, short version is exactly what you said. Once everyone has fiber, no problem.

I think the downloadable movie market will only be viable WHEN the bandwidth is available to make it practical. And it WILL happen, eventually.

However, there is a market yet untapped, where the sound and video quality of a highly-compressed download is far less critical: television shows! So you missed the latest episode of "Lost?" Download it from Apple's iTV Store for 99 cents. Watch it on your iPod Photo/Video player. Save it on your computer to watch whenever you wish, or port the iPod to your TV. Quality might be semi-crappy, but hey, it's only a TV show!

Of COURSE there would be some kind of DRM (get over it), and you might even have to watch a commercial or two (Apple's compromise with the TV execs to keep prices low, and create a new revenue stream for the ad execs). And I KNOW that you can already set your Tivo or VCR to accomplish the same thing, but this would be more portable and convenient for a lot of people.

Much of the argument (by Steve Jobs and others) is that folks won't want to watch movies on a 3" screen. That's not going to change anytime soon. So let's just forget the movie market for a while. If I just want to catch up on my favorite TV show on the train, or quickly create a collection of Sponge Bob episodes to keep the kids in the car entertained (without worrying about getting scratches-- or peanut butter-- on a DVD), this would be perfect!

Unlike the convoluted process of shoehorning non-game content onto the PSP, a TV-oriented iPod-iTVS package would be fast, easy, and a good bridge to expand on Apple's success, UNTIL such time as full movie downloads are practical (or direct-to-retina technology is perfected!).

Oh yeah, and the bottom line is, I'd buy one!

-Ken P

There is certainly evidence that the iTunes store is being prepared for video downloads at least from a technilogical point of view, so the analysts arn't simply making unfounded predictions like they would be if they were predicting a phenomena like a proposed iTunes porn download service. Whether these video capabilities are for a film download service or for something completely different, or are simply preparing such capability for when it becomes viable sometime in the future we don't know, but to write off such speculation as purely foundless is silly. ITunes may well have 'tunes' in the title but Quicktime doesn't and after all iTunes is Quicktime based.

Downloading viewable movies doesn't have to mean "buying" movies. This could be a rental program where movies are downloaded and expire in 3 days. Quality issues (due to compression which allows movie downloads across today's bandwidth contraints) wouldn't be that important if we're talking about portable devices. Most likely, there'll be levels of quality with suggested uses and accompanying price levels. You want to play it on your vPod? That's a relatively low-cost, low-quality file. You want to play it on your vDeck? That's a higher-quality file which will cost more.

This is an analysis of when Apple WILL DO what we think Apple COULD DO based on what Apple is LIKELY TO DO according to what Apple has ALREADY DONE on behalf of our imagination.

This article sounds solid but has nothng more than peoples "ideas".

-Lance

A lot of people (including me) have been thinking about downloading movies ever since the iTunes Music Store was originally announced. If my feeble brain can think about it you know Apple has been looking at it as long as I have.

I believe that Apple has invested a lot of time and money over the last 3 years moving towards a point where it is possible. Maybe not this year, but soon. When they do announce it I think a lot of people are going to very impressed with the approach they have taken. I'm just waiting to be able to download a movie to replay on my 15" PB while on a long business trip.

As for the broadband comment made earlier, it was dead on. Without having a larger pool of potential consumers on broadband the video service would underperform. However, in the past 6 months a new type of broadband service (broadband over power lines) has been approved. This has the theoretical potential to provide broadband access to anyone connected to the power grid. So the first major hurdle to the video service is being overcome.

As the the quality of the video. The poster that mentioned h.264 was correct. Apple has publicly touted this codec as providing extremely high quality video at a fraction of the size. The only logical conclusion for a video service would be to re-encode the movies to this new codec. Why require 7.75GB for each movie on your server and for the end user to download when a movie could be 1-2GB in size for the same quality? An added bonus would be that the codec is scalable, so you could use this codec from everything from your digital media server to your cell phone if you so desired. There is a downside to h.264. It is incredibly processor intensive. To either encode or decode the movie in your home you run the risk of bringing a G4 system to its knees (it is doable... but barely on the G4) and even on a G5 it isn't pretty. In addition, to use a G5 on some sort of media device would require some significant heat dissipation issues unless it was running at a low clock speed. This is possible to overcome, but a better solution would be the Cell processor. The h.264 codec can be written to take full advantage of the Cell processor, an inexpensive and very high performance processor on the verge of being released.

There are some technical hurdles that must be overcome prior to the release of a video service from Apple (if one is even in the works). But, IMHO, the two major technical obstacles to a video service are now, for the first time, being removed.

Anyone with a 3Mbps connection or better would have no trouble viewing full screen movie downloads in real time. That means all cable connections and lot of DSL connections. DSL is getting faster and competing with cable and even fiber. Cable speeds have moved up from 3Mbps to 4Mbps, fiber is available at 5Mbps or better, and DSL speeds can even be 5Mbps or better.

My next door neighbor has Verizon Fios at 5Mbps for $34.95 while I have Cavalier DSL at $25. I'm getting 5Mbps downloads as well. (Brad, look into it. Go to cavtel.com and check it out.)

With my connection, I can view the largest movie trailers in real time, save them, and view full screen on my 15" PB. Looks fabulous! Of course, these movie clips are Sorenson Video 3, not H.264. None of us have the horsepower to decompress H.264 in real time. For that, you need a chip from Broadcom.

If Apple's going to have a movie download service, it'll be a hardware/software solution similar to the iPod/iTunes solution. Mobile video would be another thing entirely but for home viewing, one would need a small box hooked up to the TV and broadband. Sony already wants to do this and so will everyone else with a movie library. I just hope Apple can get into the game ASAP. It isn't a matter of if but when.

Ron

M$ aint't gonna sit on the sidelines. Rest assured they are bribing and coercing every little Hollywood Dillbag they can find... and that won't be hard.
However, Steve certainly must be busy making deals for Pixar without the Disney Albatross, so who knows what kind of deals Jobs may be inking. News will come NAB @ earliest, Macworld July at latest.
Of course, that's just my opnion and I could be wrong.

Don't understand why nowadays, analysts like to say their estimates are conservative.

Btw, do Al Gore's Current sheds any light to future Apple's product offerings?

What surprise me is that Al Gore started what is essentially a videocasting, rather than podcasting, service. Is it because Edwards is into podcasting already or he is quietly working with Adam Curry?

"M$ aint't gonna sit on the sidelines."

Yes, they will. It's what they do. Wait until someone makes something amazing, then make a really half-assed copy or buy it up and ruin it.

Anyway. If Apple opened a video store, they'd be on absolute fire. They've become THE name in purely digital music, but imagine if they were also THE name in purely digital video. Based on those two fronts alone, they could grow to Microsoft proportions, and they'd be doing it fairly and honestly, too.

OK, this is fun news, but...

Wow, yes, those amazing UBS analysts are at it again. Always on the vanguard of Apple news, we can count on them for insightful analysis just as we always have...WAIT A SECOND!!! I've never heard of these jokers before.

I'm not against a good, fun speculative news item, but particularly given the source, this one sure is a lot closer to speculation than news.

when apple came out with the ipod photo,I wondered why they didn't do video.if they do i will be first in line.
I think if apple does come out with a media server it will be done right.NOT like the others with there short commings.the future looks brite.

As a movie lover with very limited means and not a lot of free time I'd like to see something along the lines of a low-res, good for 72 hours, watch twice (sometimes I fall asleep). If I then wish to have a hi-res, unlimited viewing version I can buy it within another 72hrs at the "standard price" minus what I paid for the low-res.

In another life, we called it a "Preview Booth"
It works.