Disney Deal Paves Way For Mobile Media

Walt Disney Co. agreed last week to make five of its current prime-time TV shows--including the hit series Desperate Housewives and Lost--available for download to Apple's new video-ready iPod.
San Jose, Calif. — Last night's episode of Desperate Housewives playing on your iPod for $1.99. Believe it or not, that's what's being hailed as the next big step in digital media.

The Walt Disney Co. agreed last week to make five of its current prime-time TV shows — including the hit series Desperate Housewives and Lost — available for download to a new video-ready iPod from Apple Computer Inc. The shows will be available on Apple's iTunes service 24 hours after they are first broadcast, but only at the native 320 x 240-pixel resolution of the new iPod.

Systems makers like Apple face a general lack of content and a fragmented market for an emerging class of mobile video systems — realities that were reflected in last week's deal. Indeed, even Apple chief executive Steve Jobs' own studio, Pixar Animation — the only other studio besides Disney to support the video iPod at this point — is contributing just six animated shorts. The iTunes site will also provide about 2,000 music videos for download at the 320 x 240 resolution.

Taking an upbeat stance, analysts said the Disney deal forms a template other TV studios will follow. "The most important things are that these are the top two TV shows, and they have set the bar at $1.99 per episode," said Van Baker, a consumer analyst for Gartner Dataquest here.

Don MacDonald, vice president of Intel Corp.'s consumer division, said Disney is creating a new business model, wedged between broadcast advertising and boxed DVD sales of a series season. "This is a huge step forward in demonstrating confidence in online distribution by the studios," he said.

Disney and Apple executives were naturally enthusiastic. "This is the first giant step to making content available to more people in more places," said Disney chief executive Robert Iger.

Apple's Jobs said, "Sometimes the first step is the hardest one, and we have just taken it." Jobs positioned the new iPod with its 2.5-inch TFT-LCD screen as "first and foremost a music player," with video as one of its extra features.

Fragmented market
A handful of similar video-enhanced MP3 players from Samsung and others are already in the market as part of a "transitional category" with limited prospects on the road to full portable media players, said Susan Kevorkian, a consumer audio analyst at International Data Corp. (IDC; Framingham, Mass.).

Barely 100,000 portable media players have shipped so far from companies like Archos, Creative Labs, Thomson and others, said Josh Martin, who tracks the sector for IDC. Lack of content is the top issue for hard-disk-based devices.

Studios like Viacom are just starting to offer their MTV, VH-1 and other prime-time video programs online for PC users, but they haven't made significant inroads in video for portable devices yet.

The iPods come with a 30- or 60-Gbyte hard drive. They use Apple's Quicktime to decode H.264-encoded video at 30 frames/second. The players are being offered for $299 and $399, respectively.

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