vnunet.com analysis: Apple poised to ignite mobile video

Apple has kicked off a video download industry, but it's up to the content creators to fill in the second act

Apple's introduction of a video playing iPod and a video download service is a smart move, according to industry experts polled by vnunet.com.

"This will offer Apple a way to test the waters for non-music video content, " said Susan Kevorkian, senior research analyst for consumer markets at IDC.

"The information that Apple gathers will help form its decision in the future about offering a more video-centric device with a larger display.

"We think a larger display size will be important to gain consumer acceptance of a video-focused device because it offers a more comfortable viewing experience."

While many consider the small screen size of the video iPod a factor that could limit the device's success, Kevorkian pointed out that consumers have very little experience with mobile video.

This lack of experience comes with a lack of expectations, which effectively offers Apple the opportunity to set a de facto standard for portable video.

The company also won praise for offering over 2,000 music videos for sale through its iTunes music store.

At $1.99 per video, consumers will be inclined to buy the video instead of just the song, in order to have the option to watch the video, Kevorkian predicted. This should make them more accustomed with the iPod's video features.

Julie Ask, research director for telecoms and automotive at Jupiter Research, said: "It's still a great audio device and 'by the way, it does video too'. Even if people don't play video, Apple still wins. It still has 80 per cent market share in media devices."

The emergence of a video download service was inevitable, according to Ask. Mobile phones are offering video through 3G data networks and the DVB-H broadcast technology, and Sony's Playstation Portable offers movies through the use of the proprietary Universal Media Disk.

However, Jupiter Research is quick to counter claims that consumers do not want to watch video on mobile devices. A study by the analyst firm showed that one in every two consumers is interested in mobile video.

The analyst applauded Disney's decision to make five of its television shows available as downloads through Apple's iTunes store. "There really isn't a lot of a down side for [Disney]," Ask told vnunet.com. 

"It's a chance to go in and see what consumers demand. It's a great start for a content company to offer new services rather than being afraid of them."

Apple's offering, however, is far from complete, warned Michael McGuire, research director at Gartner. The introduction of a video iPod has only solved the technology side of the problem of how to create a market for digital media.

The amount of video content being offered needs to greatly increase, McGuire pointed out, before portable video becomes a viable business.

And Apple needs to evolve its sales model to drive sales and make it easier for consumers to get the content they want.

"Where is the menu that says: 'Would you like to buy next season's show in advance?' and simply have it delivered to you via RSS [as soon as it becomes available]?" asked McGuire.

Another missing feature that the analyst deemed "critical" is a way to search the video content. Consumers will increasingly consume media content when they want it, rather than when a show is being broadcast.

As they get accustomed to such a model they will want to look for old shows, and the owners will want to offer those in a digital format.

"Search providers need to invest in a better video search tool, so that can I get an old episode of the Lucile Ball Show," said McGuire. "Right now if I type that into a search bar I get hundreds of thousands of results, none of which get me to that show."

The question remains how far other television and movie makers are from making their shows available as a digital video download.

"This announcement is going to spark a tremendous amount of work," said McGuire. "That is what is happening right now at various media companies around the world. They are asking: 'What do we have the rights for? What can we experiment with?'"