Apple plots a DVD player for the broadband era

At the recent All Things D conference, Steve Jobs, chief executive officer of Apple in an uncharacteristic display of modesty dubbed Apple TV, as a “hobby” that the company was trying to figure out. He, then proceeded to outline his grand vision of turning the Apple TV into the DVD player of the Internet age.

Well if you believe what you read in this morning’s Wall Street Journal and The Financial Times, then the company has taken first step towards that goal. The company is said to be in talks with major Hollywood studios to figure out a way to rent full length feature films to Apple TV viewers.

With Apple willing to give a bigger cut to the studios, which are frantically and desperately looking to shore up their shrinking DVD-related revenues, it won’t be long before the majors sign-up for the new offering.

At $2.99 a pop, the movies will be available for rental for about 30 days, and the service could launch sometime in Autumn 2007, according to the two financial dailies. Apple currently offers movie downloads from studios such as Lions Gate Entertainment, MGM and Disney.

This download-rental move will put Apple in direct conflict with dozens of competitors, including the cable and phone companies that are betting big on the video-on-demand as an engine of growth. The strategy is typical of Apple: it lets the market reach a point of confusion, and then starts offering a service that emphasizes ease of use and elegant out of the box experience.

It worked in the case of iPod, and if the initial hype around iPhone is any indication, then it might work when it comes to multimedia computers formerly known as cell phones. From a limited two-week experience with AppleTV, an encore isn’t that difficult to imagine.

Still, it won’t happen overnight – unlike the digital music player market, most of us are fairly happy with our DVD players, and snail mail still remains the fattest pipe around. The bandwidth constraints, at least in the US, home market for the US are not going to go away anytime soon. The so-called fast connections are fast, when compared to say what was on tap two years ago. The infrastructure challenges of such a service and the costs associated with it are another issue Apple will have to tackle.