ElDiabloConCaca said:
Any movie that is 700MB to 1GB in size would have a resolution and picture on par with a bad VHS recording.
I disagree. I download and watch digital anime fansubs all the time. They fit four episodes to a CD (well, it varies, but most groups shoot for 175MB per episode), and the video quality is virtually indistinguishable from DVD (actually, it looks better in many cases).
Keep in mind that MPEG4 (Divx, Xvid, etc.) is much more efficient at lower bitrates than MPEG2 (DVD). And the upcoming H.264 (MPEG4 Part 10) which will be built into Tiger will be significantly better still.
I would definitely buy and download videos online if the price were right. $10 honestly seems a little high to me, but if you can accept current new-release DVD prices (I sure can't), I guess it's a bargain. I don't like to spend more than $15 on a DVD, so I wouldn't want to spend $10 on a download (especially since you need to factor in the price and effort of burning your download to CD/DVD, because you just can't fit many movies on a hard drive). I think the prices would need to be variable for videos, really. Make the prices proportional to what you'd get in a store. e.g., $10 for new releases, $5-8 for older releases, and less than $5 for some bargain-bin titles.
Obviously, this would only be suitable for those with broadband. Colleges would probably hate it, and maybe even block it, because it would strain their connections a LOT. And Apple would need to have CRAZY bandwidth to dish out all those movies at acceptable speeds. Apple's servers are very fast right now, but their load is a lot lighter than a video store's would be.
I think now isn't the time for such a venture. They need to wait for:
1. Broadband to become more mainstream. This won't take too long.
2. The next generation of DVD players, based on MPEG4/H.264. That way they can deliver MPEG4-based video that will be playable on DVD players. Most people don't want to watch movies on their computer, so this is important, and people will want (need) to burn their movies to CD/DVD, so an iPod shouldn't be required (which, come to think of it, may might the whole thing not worthwhile for Apple).
3. Processor technology to advance. Decoding video takes a lot of processing power. Current MPEG4 is probably the lightest of the real contenders, and even it takes a lot of OOMPH. My old 450MHz G3 could barely play 640x480 content at full speed. iPods don't have that kind of power, so forget about hooking them up to a TV for playback. I'm not sure they could get such a powerful processor in an iPod without nuking battery life and exploding. At least not yet.