iTV and iTunes 7

It was interesting to see Apple give a few details about an upcoming device they are working on called iTV, for they never ever reveal a product that’s in the pipeline. Combined with iTunes 7 and the ability to download movies, I like what Apple is doing. I have longed for a WiFi device that will take what’s on my computer and send it to the TV. But I do have a couple of questions and foresee a few problems and solutions.

First is iTunes 7 and the backup process. If you buy a movie, you can burn it to a DVD, but that DVD can’t be read by current DVD players. I suspect this is because these movies are encoded using h.264 and not MPEG2. The time it would take to convert h.264 to MPEG2 just wouldn’t be worth it, especially on a little MacBook. But given that the HD DVD standards include the h.264 spec, it won’t be long until the new DVD players come out and I suspect then Apple will make it possible to burn these movies to DVD’s that can be read by the new DVD players.

In the meantime, Apple is working on their Airport Express for video, aka iTV. Speculation is that it wasn’t released yesterday because of the new 802.11n wifi coming out. “n” offers far more bandwidth than the current “g” wifi standard, thus allowing you to stream video reliably and at a high quality. Supposedly in early 2007, “n” will become standard and Apple can finally release the iTV product and bridge the gap between computer and TV.

But we still have one problem. I don’t buy movies or tv shows. I like to rent them because I generally only watch them once. Until Apple offers a rental plan, I’m not interested. And here is why I think Apple will fail if they don’t offer rentals.

Rumor has it that Netflix is currently working on a set-top box that will be an alternative option to their current service. Instead of DVD’s through the mail, DVD’s will be sent through the internet to this set-top box while you and your family are quietly asleep. Conceivably, if rates and plans stay the same, you could watch three movies a day for around $20 a month. I suspect Netflix will put some sort of limit on how many movies you can watch a month, but even three a week blows away Apple’s pay to own model.

If I was Apple, this would be the route I would head with this iTV. Make it a box where you can download content to it through a subscription model. And with the impulse buying disease that America has, offer the option to buy the movie and essentially keep the movie on the hard-drive.

Problem is though that the movie studios are unlikely to agree to such a model. All the current online rental services only allow 24-Hour rentals. I suspect that’s because of agreements with the studios. But that’s where Steve Jobs thrives. Since he is the biggest shareholder of Disney, he can flew his muscle and get Disney’s current offerings to agree to such a model, thus creating a trickle down effect to the rest of the industry.

And finally, the biggest problem of all. HD. With everything moving towards HD, there simply isn’t enough bandwidth to download such large files as HD movies over the internet. It would take too long. We are still a few years from HD really catching on, so downloading movies off the internet may succeed. But once folks are able to bring HD DVD players into their homes at a reasonable price, it’s going to change the game.