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Tuesday, March 02, 2010, 03:35 pm PT (06:35 pm ET)

Apple's iTunes Replay cloud service reappears in movie studio talks

New reports of conversations between Apple and film studios have verified the existence of an "iTunes Replay" cloud service detailed by AppleInsider a year ago.

A new CNET report published today says Apple is working to get studios to agree to allow it to host an online "cloud" version of the content they buy, enabling them to access it from their mobile devices, such as the iPhone, iPod touch and the upcoming iPad.

Earlier reports last month indicated Apple was working to convince music labels to participate in the same type of service for music.

AppleInsider described the service a year ago, when it was being developed under the name "iTunes Replay."

The service was designed to allow iTunes shoppers to build out their digital video collection without worrying about the space needed to store the often hefty media files.

One of the main complaints users have with video purchases on iTunes is that they are forced to either throw away their files after watching them, or find a place to store the large files either on their hard drive or by burning them to DVDs.

Last year's report said it was unclear whether Apple planed to charge for the service, which was said to include both iTunes Movie and TV show purchases.

The problem for Apple in deploying the new service was not technical, but instead related to concerns from media publishers that Apple's iTunes customers would be unable to stream the content they purchase to other devices, forcing Nokia and Microsoft and Google to develop their own media stores. None of those companies have done well in building mobile software markets, let alone in reselling music and movies.

Forrester's regular prediction of death for iTunes

The CNET report on Apple's cloud service presented dire prospects for the company's plans to deliver streaming access to content for users, relying heavily on advocacy voiced by James McQuivey of Forrester Research.

Back in 2006, McQuivey's firm presented data from a review of credit card receipts that insisted that iTunes had "experienced a collapse in sales revenues this year," as Register reporter Andrew Orlowski reported at the time.

Shortly afterward, McQuivey issued a report for Forrester entitled "Paid Video Downloads Give Way To Ad Models." It confidently announced, "the paid video download market [dominated by iTunes] in its current evolutionary state will soon become extinct, despite the fast growth and the millions being spent today."

McQuivey predicted that "Television and cable networks will shift the bulk of paid downloading to ad-supported streams where they have control of ads and effective audience measurement. The movie studios, whose content only makes up a fraction of today’s paid downloads, will put their weight behind subscription models that imitate premium cable channel services."

That Forrester report also predicted the death of DVR, and touted "new technology such as the recently announced Adobe Media Player," which McQuivey said, "will allow consumers to download video for playback without losing the ads that were sold with the video."

A year later at the end of 2007, McQuivey repeated his thesis that "nobody in the TV or movie business really wants to help Apple do to video what it did to music — that is, become the dominant electronic reseller," in an article he directly wrote for CNET under the headline, "Why Apple can’t do to video what it did to music."

His comments were directly contradicted by comments from Viacom billionaire Sumner Redstone, who had just publicly gone on record saying that "iTunes had ‘resurrected the music industry’ by creating a legal, affordable, instantly gratifying purchasing system for fans. The challenge now is for the film industry to catch up, and for competing companies to work together to establish new standards and practices.”

McQuivey also announced in late 2007 that Apple’s strong TV sales were “stalling” because of the departure of NBC Universal, which he estimated to make up 30-40% of iTunes TV downloads. “Without NBC’s content, iTunes is only 60 percent of a store,” McQuivey said. NBC left iTunes in December 2007, but later returned to the iTunes Store in September 2008.

When McQuivey announced the death of iTunes in 2006, Apple was just reaching a milestone of 45 million video downloads. By the end of October 2008, it had reached 200 million video downloads. Apple has continuously expanded its video business with its television and movie studio partners, adding HD movies and rentals to iTunes 8.

The iTunes Store expanded to include mobile software for the iPhone in 2008, and Apple is currently working to develop business models for books and newspapers centered around the new iPad.