Could Disney's investment in Hulu upset the iTunes applecart?

Summary:This week's announcement that Disney will invest in video streaming site Hulu sent shockwaves through the video industry and turned the spotlight on Hulu competitors YouTube and CBS. CBS and its fledgling TV.

This week's announcement that Disney will invest in video streaming site Hulu sent shockwaves through the video industry and turned the spotlight on Hulu competitors YouTube and CBS. CBS and its fledgling TV.com is the only remaining major TV network not part of the Hulu clique – NBC, Fox and now ABC.

The other major company that could feel some aftershocks from the Disney-Hulu deal is Apple. Business Week's Cliff Edwards points out that Apple neither creates video content nor does it distribute it for free online. Both of course, are core features of Hulu.

The threat is that Hulu is streaming free (albeit with ads) what Apple is trying to sell and rent. Gartner's Michael McGuire adds that we could be seeing a shift away from paying for video content to streaming it for free, saying "over time, perhaps the direct-payment model goes away."

Hulu's leading the movement to try to convince iTunes customers that they don't need to purchase downloads and that ad-supported video content is better because it's free. Business Week notes that Hulu may also charge subscription fees for premium services in the future.

Apple seems content to sit on the free video sidelines with video podcasts and their half-hearted Apple TV, but I wouldn't count Apple out just yet. It has too big of a lead in iPod and iTunes to simply let the networks run away with all the profit from online video.

What should Apple do?

I don't envision Apple trying to compete with free video streaming as it undermines the lucrative purchase/rental business model it built with iTunes. Should it roll out a video subscription service? Not likely.

What about a killer video streaming application for the iPhone? Apple currently has video viewing capabilities in the iPod app but it's reserved for video content that is purchased or rented from Apple. Software is available to convert video from other formats to play on the iPod/iPhone, but Apple frowns upon the practice.

While an iPhone video streaming app from Apple sounds like a good idea, BW reports that Hulu is secretly developing an iPhone app and may beat Apple to the punch? Will Apple approve it? Will Apple wake the sleeping AppleTV giant? Apple doesn't have much skin in the video streaming game currently and Hulu is trying to eat its lunch.

BW thinks Apple's "summer surprise" may come in the form of the rumored MediaPad from a partnership with Verizon, but will it be too little too late?

What would Steve do? Throw out some suggestions in the TalkBack.

Topics: Mobility, Apple, Banking, Browser, Software Development

About

Jason D. O'Grady developed an affinity for Apple computers after using the original Lisa, and this affinity turned into a bona-fide obsession when he got the original 128 KB Macintosh in 1984. He started writing one of the first Web sites about Apple (O'Grady's PowerPage) in 1995 and is considered to be one of the fathers of blogging.... Full Bio

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