Unbundled video downloads: an exploding market

In the first 20 days after the unveiling of its Video iPod, Apple sold more than a million video downloads at $1.99 a pop, according to a press release this week.

“Selling one million videos in less than 20 days strongly suggests there is a market for legal video downloads,” said Steve Jobs, Apple’s CEO. “Our next challenge is to broaden our content offerings, so that customers can enjoy watching more videos on their computers and new iPods.”

Things are moving rapidly in this space, which I believe is the leading edge in the burgeoning unbundled media field.

CBS is in talks with Apple to provide programming downloads via iTunes, which prompted these thoughts from the folks at Engadget:

We were hearing some rumors of NBC talks as well, and we’ll try not to get ahead of ourselves here, but we have to believe that once all three networks get up and running on iTunes, the fight will be for who can offer the most and freshest content, a veritable paradise for the consumer…
Forbes writes that the adult video business is paying attention to what’s happening:
HellHouse Video has begun selling iPod-compatible titles, including This Little Piggy and Sindi’s Wet and Messy Adventure. Suicide Girls, which specializes in an updated (piercing and tattoos) take on pinup girls, has put free clips of its offering on its Web site. And both Playboy and Penthouse are reportedly considering moving into the market.
Over at the Sports Business Journal, they’re reporting that Apple is in talks with various leagues to provide sports content for the Video iPod.
…executives for each of the major sports leagues either confirmed existing discussions to make video content available on iTunes, Apple’s online digital download store, or said they expected such talks to begin soon.
Meanwhile, Burger King has announced that they will begin offering sponsored comedic downloads, but the real story here is that the videos are created by amateurs (a.k.a. “user-created”). The first downloads featured people driving through McDonald’s wearing the Burger King “King” mask.
To get the videos, Heavy.com sent out masks of the King and the Subservient Chicken to a group of their especially active users who submit content on a fairly regular basis. “They [Burger King] came to us and said: ‘We’ve got these masks, can we do something with your users?’ ” Heavy.com co-CEO Simon Assaad said: “We just sent about 20 masks out, and people just started turning up at our front door with videos.”
Apple finds itself in the catbird’s seat in all of this, at least for the time being. Not only does the company have a playback system (iPod), but it also has the ideal distribution model (iTunes), and that’s what makes their position so compelling.

Developments here are coming fast and furious, and I expect that to continue. While it’s terribly exciting for consumers (although I think the price point is too high), network affiliates have to be aware of the sword above their heads. My response to them is, “What are you waiting for? Get onboard with YOUR unbundled offerings.”

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