Apple iTunes to Offer Video on Demand

New iPods Play 'Desperate Housewives' and Other ABC, Disney Shows

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YORK, Pa. (AdAge.com) -- Apple's not-so-carefully guarded announcement today yielded a new thinner iMac, a video iPod and an updated version of iTunes that allows the purchase of $1.99 music videos. But the big surprise -- CEO Steve Jobs' infamous "One more thing" -- is downloadable TV shows available on the new iTunes 6.0, beginning with Desperate Housewives.

Apple's newly enhanced iTunes video-on-demand system does for TV programming what podcasts have done for radios.
Advertising potential
And while no advertising application has been discussed yet, the media industry is buzzing about the potential of iPod as the next video-on-demand device.

Disney Channel and ABC shows including Lost, Night Stalker, That's So Raven and The Suite Lives of Zack & Cody can be downloaded the day after they air (for $1.99) and can be auto-synced for iPod viewing. Along with 2,000 music videos will be six short films from Pixar Animation Studios, of which Mr. Jobs is also CEO.

'Revolutionary'
"Disney and Apple are offering customers a new and exciting way to experience television," Mr. Jobs said, calling it "revolutionary."

"This initiative is a perfect example of us applying our strategic priorities, namely marrying great content with cutting edge technology to more effectively distribute our content," Robert A. Iger, CEO of Walt Disney Co., said in a statement. "For the first time ever, hit prime-time shows can be purchased online the day after they air on TV."

"This is video on demand without the problem of cable operators," said Tim Hanlon, senior VP, Publicis Media, noting that "Apple has trumped Comcast" in the area of on-demand programming.

"Judicious ad support is the next logical step," he said. "It's a warning signal to the cable industry that video on demand could be far more robust market place than it is currently if they took some of these lessons in mind."

New iPods
The newest iPod (with no new name) will come in black or white, and sports a wider 2.5-inch display. The model is 31% thinner than the current version and will ship in 30 gigabyte and 60 gigabyte versions, which retail for $299 and $399, respectively. Both ship next week. New ads for iPod featuring rapper Eminem were shown at the press conference.

The company also announced the flatter iMac G5 computer that will be priced at $1,299 and $1,799 feature levels.

The unveiling comes days after Apple reported record fiscal fourth-quarter sales of $3.68 billion, up from $2.35 billion -- a 57% increase over the same quarter last year. Fiscal year 2005 for Apple ended with $13.9 billion in sales, an increase of 68% over 2004.

IPods ship in record numbers
The company shipped 6.45 million iPods in the quarter, a record quarterly number for the company, although that fell short of analyst estimates of from 7.5 million to 8.5 million, causing the stock to dip on the news. Adding to the iPod quarterly tally was the sale of more than 1 million iPod nanos in just 17 days between its launch and the end of the reporting period.

Apple said it has shipped some 30 million iPods worldwide so far.

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