Apple is holding a press event on Tuesday, and the invitations said "It's Showtime". There's been much speculation, with plenty of "informed" rumors, that they're going to launch an "iTunes Movie Store" from which people can download full-length movies for $14.99. By all accounts, this seems likely.
But why? Others have tried, and failed miserably, to offer legal movie download services. The main reasons for failure:
Because of these horrendous failures, the launch of a new video download service usually isn't a big deal. Amazon just launched their "Unboxed" video download service yesterday, and nobody cared. It doesn't solve any of the problems people have with the existing services.
Why will Apple's product be different?
But the little Apple router, the AirPort Express, has a neat little feature: "AirTunes" wireless music transmission. You can play music from iTunes over the wireless network and the AirPort Express will receive the signal and play it out to a stereo. This way, you can have your computer at the other end of the house while listening to its music on the living room stereo.
The record industry almost flipped out, but Apple calmed them down by encrypting the transmission. That way, users couldn't capture the nicely uncompressed version of their copy-protected iTunes Music Store purchases and save them as DRM-free files.
Apple has encryption in place that allows protected audio and video files to play on any Mac or Windows computer and any iPod. The protection is good enough to satisfy the publishers.
It solves almost every major problem that video download services have faced. If videos can play on almost any computer and the only portable devices people care about, the last hurdle is TV support. A "video AirTunes" (bad name guess: AirShow) could output component video and HDMI (but definitely not DVI) without inciting the wrath of the MPAA.
$15 per movie is steep, but I don't think Apple has much say in that. They're lucky that the MPAA isn't charging them $35 each. A better price point would be $12 or $9.
iTunes has always had the ability to share your music library across the network so you could play it on other computers. (Or so your entire college dorm could "share" music.)
Combine these with the idea of a video AirPort Express, Front Row, and a movie- and TV-download service (they already have TV shows for sale), and you can:
We've had the last two for a while, but they're not strong enough on their own to drive major market success: people need to be able to watch video on the world's most popular video playback device while sitting on the world's most popular type of lounge furniture.
Pulling this off well would change everything.