(Credit: Greg Sandoval/CNET) The company's representatives have recently spoken with some of the major film studios about enabling iTunes users to store their content on the company's servers, two people familiar with the discussions told CNET. That's in addition to streaming television shows and music.
Apple has told the studios that under the plan, iTunes users will access video from various Internet-connected devices. Apple would, of course, prefer that users access video from the iPad, the company's upcoming tablet computer, the sources said. Apple spokesman Tom Neumayr said Apple doesn't comment on rumors or speculation.
The news comes a month after Apple spoke to the major record companies about a similar plan involving music. Apple's vision is to build proverbial digital shelves where iTunes users store their media, one of the sources said. "Basically, they want to eliminate the hard drive," the source said.
By cramming digital songs, videos, and all manner of software applications on computers and handheld devices, there's some indication that consumers are maxing out hard drives, particularly on smaller mobile devices. That has led to speculation among Apple watchers that some consumers might slow their purchasing of new content, if they have nowhere to easily put it.
It's a bit of leap to reach that conclusion, certainly when a stagnant economy might be hampering sales, but there are some worrisome signs. The NPD Group reported last week that the number of people who legally downloaded songs dropped by nearly a million, from 35.2 million in 2008 to 34.6 million last year. Screen Digest, a research firm that focuses on the entertainment industry, on Monday said growth in movie downloads slowed dramatically in 2009, following sharp increases in the two prior years. Screen Digest had projected that total U.S. online movie sales for 2009 would come in at about $360 million, but the total reached only $291 million, the company said.
"(Apple) just doesn't have the leverage it once did. Apple can't dictate terms or position itself as a digital savior."--James McQuivey, Forrester analyst
Hollywood isn't interested in any walled gardens, said James McQuivey, a media analyst at Forrester Research.
"The studios are very concerned that they're going to get roped into somebody's proprietary platform," McQuivey said. "They want a world where consumers have a relationship with the content, and not with the device or the service. They are in a position to force Apple to go along and make sure that content bought [via] iTunes will play on a Nokia phone. That is very un-Apple-like."
The upper hand in Hollywood
"Apple would prefer not to do this," McQuivey continued. "But it just doesn't have the leverage it once did. Apple can't dictate terms or position itself as a digital savior."
The reason that Apple doesn't wield the same power over the film and TV industries that it did with music is that more players are willing to give the studios what they want.
The Digital Entertainment Content Ecosystem, or DECE, is a consortum of heaving-hitting media stakeholders lining up to create standards for file formats, digital rights management, and authentication technologies. The group includes Adobe Systems, Best Buy, Cisco Systems, Comcast, Intel, Hewlett-Packard, Lions Gate Entertainment, Twentieth Century Fox Film, Microsoft, Netflix, Panasonic, the four largest recording companies (Universal Music Group, Sony BMG Music Entertainment, EMI Group, and Warner Music Group), Samsung, Sony, and Warner Bros. Entertainment.
DECE's goal is to make sure that a movie or TV show bought from Comcast's video service will play on Samsung devices or on Netflix's service.
Not all the studios have joined. Walt Disney has create a DECE-like service called KeyChest, which is supposed to be DECE-compatible.
Applying more pressure on Apple is Google, one of its main rivals. Google, obviously, has YouTube. It's also eyeing some start-ups with cloud technology to beef up its streaming services.
Two weeks ago, sources told CNET that Google had informal acquisition talks with Catch Media, a Los Angeles company that wants to become a clearinghouse of sorts, in which consumers move media around the Web, and Catch handles the permissions and licensing.
So what's Apple's answer to the Google threat? Apple is building a new data center in North Carolina that, according to reports, will be the backbone of its streaming offerings. In December, Apple bought Lala, a struggling music service with an expertise in cloud computing. Google was also trying to acquire the company, but Apple outbid Google.
The one thing that could help Apple pull away from Google, giving it more clout with the studios and TV networks, is if iPad catches on with consumers.
The Web-enabled computer tablet, which is due to hit store shelves later this month, features a 9.7-inch display screen and can play back video in up to 720p resolution, the sources said. If consumers start buying video to watch on the iPad, Hollywood could soften its stance on standards. But McQuivey says Apple can't create any proprietary formats, at this point.
"Apple can't suddenly make the iPad a closed environment," he said. "Apple is not any position to refuse to limit its customers' choices. By pioneering (the apps), Apple is stuck doing what's right for consumers."
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