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Tuesday, July 19, 2005, 10:00 am PT (01:00 pm ET)

Apple looking to license Disney content for video iPod

Apple Computer may be seeking Disney's help in providing content for a new version of the iPod that would play video in addition to audio tracks.

These latest rumblings come courtesy of a Business 2.0 blog posting, in which editor Paul Sloan claims to have obtained a copy of an internal Disney e-mail referencing talks between the two companies.

"Steve Jobs has spoken with Disney President and soon-to-be CEO Bob Iger about ways to license various Disney content for a video iPod, according to an internal Disney email I have obtained," Sloan wrote. "That could include anything from clips from ESPN and ABC News to short cartoons."

On Monday the Wall Street Journal issued a similar report, saying Apple recently held discussions with four major recording companies over licensing music video content to sell through the Apple iTunes Music Store.

The reports have combined to re-energized speculation over a video iPod, which began about a year ago when Apple job postings, seeking an iPod engineer with video and WiFi experience, popped up on the Internet.

Several key Apple figures, including chief executive Steve Jobs and director of worldwide iPod marketing Stan Ng, have since downplayed talk of a video iPod, citing a broad range of issues associated with such a device.

"There is no legal way today of taking a DVD and making it viewable on a portable device. There are issues with video, and no infrastructure for acquiring that content," Ng said during a January press briefing in Sydney, Australia.

"For a player with a 3 1/2-inch screen, you have to wonder if it would be worthwhile. You can't watch video while you're jogging or mountain biking," he said.

However, the majority of Disney's core audience spends more time watching cartoons than they do jogging and biking. And as Apple's early success with Podcasting has shown, if there is a simple means for media distribution, consumers will use it to listen to (or watch) just about anything.

Analysts who follow Apple aren't shying away from the idea either. "Despite comments from Steve Jobs to the contrary, we wouldn’t be surprised if Apple eventually launched some form of a multimedia iPod," Ben Reitzes, an analyst for UBS Investment Research, said in a note to clients on Monday. "We believe that real success for a video/movie capable iPod may need to come in conjunction with a new download service from Apple that can easily put content into the device. "

Already Apple has taken a few steps in the direction of a video service. In March the company hired Julia Miller away from Microsoft, where she was responsible for the worldwide marketing and sales programs for Xbox Live, the world's first subscription-based broadband-only online gaming service. It's now believed that Miller's position at Apple includes the exploration of a video subscription service, either for a portable video player or a settop device.

With the release of iTunes 4.8 in May, Apple also delivered full support for video playback to the jukebox software — allowing users to organize and play movies in addition to audio files. A successive release of the iTunes software in late-June added Podcast support, which includes full, yet unadvertised, support for Videocasts.

In which direction Apple will go with video and iPod remains unknown, but sources told the Wall Street Journal that Apple could release a video iPod as early as September.

"We believe that an “iTunes for movies and/or video” could become reality by the end of the next calendar year," Reitzes said.