iTunes video sales double as Apple preps new content partners

The iPod maker is also reportedly planning a major update to its video services, including the addition of several new content partners, for a high-profile launch that could come as early as January.

In a research note released to clients earlier this morning, American Technology Research analyst Shaw Wu said his proprietary checks with industry sources indicate that iTunes video sales from music videos, ABCTV shows and Pixar short films continue to come in ahead of expectations.

"Apple disclosed that it sold 1 million videos on October 31, 2005," said Wu. "We are picking up indications that sales have more than doubled since then and that this strength is attracting attention from other content providers including NBC, CBS, and Fox eager to participate in this new market opportunity."

The analyst said he would not be surprised to see Apple announce new content partners over the next few quarters, perhaps as early as Steve Jobs' keynote at Macworld Expo during the second week of January.

In recent weeks, independent sources have begun to spread rumors that Apple is gearing up to add a slew of new video content to its service early next year. Rumors that Apple is working on a broadband video service have also been re-ignited and appear to coincide with similar reports that surfaced following Apple's hiring of Julia Miller in March.

Miller came to Apple 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. After coming to Apple, sources say Miller's position included the exploration of a video subscription service, either for a portable video player or a settop device.

"While it is still early, we believe Apple is in a decent position to build as strong of a position in digital video infrastructure as it has in MP3 players," Wu said. "Like music, we do not believe Apple will compete for profit in content as a reseller/marketer, instead giving the majority of the profit back to the content providers."

Instead, the analyst believes signing up more content partners will help the company drive more growth from its easy-to-use and tightly integrated hardware and software systems.