The Clicker: Apple's real plan for iPod video?

Every Thursday Stephen Speicher contributes
The Clicker, a weekly opinion column on entertainment and technology:

You've got to love Apple. Crazy like a fox they are. Oh sure – some of their decisions regarding the
new iPod might seem a little odd to the gadget-lovers among us. "No DivX???" is the phrase most often muttered when Engageteers start reading of the new iPod's video functions. This is often followed by "No fast forward and rewind?!?" These really should be death knells for a portable media player and, as a rule of thumb, gaping voids in product functionality aren't considered wise strategic maneuvers. However, this is Apple we're talking about. They just think different, uh, ly.

So, is Apple worried? Heck no, and why should they be? The iPod's success has been off-the-charts phenomenal. As such,
Apple has rightfully made the decision to, like physicians, "First do no harm." Make no bones about it – there's a reason this thing isn't called the Video iPod. Above all, the new iPod is, well, an iPod.

So why include video at all? Steve Jobs has long maintained that a video iPod wasn't a good idea. He's firmly dismissed the market for such a player. Why backpedal now? Could it be that this is Apple's attempt to steer the still nascent market right to their front door?

Below is Apple?s (imaginary and far-fetched) plan to use the new iPod to capture the portable video market.

Step 1: Whet their whistles

While it?s important to adhere to the mantra of ?It?s an iPod first,? you?ve still got to do some promotion of its video functions. Yes, music videos are a great first step. Production costs for these vanity pieces are staggeringly high and their return have traditionally been skewed towards the non-monetary (i.e. PR and buzz). If fans are willing to pay $1.99 to see their favorite artists, it?s a fabulous win-win and it?s pure gravy. However, a meal of pure gravy isn?t a healthy diet. Apple knows that to own the portable video market they?ve got to bring turkey to the table and there are no bigger turkeys than the brain trusts behind episodic television. As we?ll soon see in step 2,
this isn?t the monumental task that it might seem. Knowing full well that they won?t be able to launch with the entirety of television, Apple has chosen a different approach.

Step 2: Don?t deliver a complete selection and don?t price it correctly..

The key to Apple?s success in the music market was two-fold. In addition to the success of the iPod, Apple was the first to offer a nearly all encompassing catalog at better-than-CD prices. For the first time ever consumers could visit one place and, for the most part, know that a mere 99 cents would quench their auditory thirst for that song they?d been dying to hear.

It should come as no shock to Apple that the same would hold true for video. A smattering of videos and shorts won?t be successful. Unfortunately, convincing studios and networks that placing full catalogs of their shows at better-than-DVD prices would be a Herculean effort. Content owners are under the misguided impression that consumers are willing to pay an arm and leg for content that has heretofore been free. Expect $1.99 episodes to go over like a rock.

But that?s fine. This is just Apple educating the studios in proper pricing models. Apple doesn?t expect these videos to sell. In fact, in some ways, it would welcome the opportunity to say to the studios ?I told you so; it?s just like music. If you give us all your content and lower the prices, we?ll sell it for you.?

Step 3: Help drive Torrent traffic.

?WHAT??? you ask, ?doesn?t this fool know that torrents are usually DivX files? Doesn?t he know that the new iPod
doesn?t support DivX?? Yes, that?s true, but here?s where Apple earns its foxtails.

Anyone who has ever delved into the world of torrents has been greeted by a slew of file formats. Yes, the video is usually some flavor of DivX. However, the bit rate, the resolution, the audio format, etc. can all be different. The onus is then placed on you, the consumer, to download and configure the proper codecs. What if, on the other hand, a new set of torrents emerged. Instead of files intended for all types of destination devices, these files just assume they?ll be played on the wildly popular iPod. It would be easy enough to encode iPod friendly versions. It?s just H.264 and Apple (surprise surprise) offers a $29.99 upgrade to its Quicktime Pro package which offers encoding into H.264.

All of a sudden you?ll be able to look at:

Lost.S01.E02.ipod

and know that not only will the file play on your iPod, but that it?s been optimized to do so. Suddenly, the lack of DivX support isn?t so important. In fact, by excluding DivX Apple might have given the torrent community the direction it needs to truly make iPod torrents consumer friendly.

Within six months we?ll see iPod torrent search sites. People will be thanking Apple and wondering why DivX was such a big deal.

But why on earth would Apple want to drive torrent traffic? To pressure the content owners of course.

Step 4: Wait for the studios to come to their senses and start offering better, more varied pricing schemes.

?Perhaps,? Apple thinks, ?if the studios can see how we helped their music brethren, they?ll come crawling back with a complete catalog and better pricing.?

For instance, perhaps they?ll offer 50 cents an episode. That?s a price that most people could come to terms with.
Pre-order the DVD and get the shows for free. Pay $3 a month for NBC shows. The possibilities are endless.

Is this really Apple?s plan? No, probably not. Will it work? Stay tuned to see.