The story cites two people “with knowledge” of the auction, which is being run by two investment banks that Hulu hired to help negotiate a sale. That Apple could be considering Hulu isn’t exactly unique: Yahoo, Microsoft, AT&T and Google have also been linked to the Disney/News Corp./NBC Universal joint venture.

The plus for Apple taking over Hulu would be the addition of a lot more content to beef up its iTunes and Apple TV offerings and present an alternative to Netflix. Apple has long been said to be working on its own subscription video service, but that has yet to come to fruition.

A big acquisition like Hulu would also be one way to quiet those on Wall Street who are begging Apple to get more value out of the cash it’s keeping around.

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Under section 11 of the App Store Review Guidelines, we’ve confirmed that there’s a new section (hat tip to MacRumors) that allows apps to access and provide content subscribed to or purchased outside of the App Store, with one caveat:

11.14 Apps can read or play approved content (specifically magazines, newspapers, books, audio, music, and video) that is subscribed to or purchased outside of the app, as long as there is no button or external link in the app to purchase the approved content. Apple will not receive any portion of the revenues for approved content that is subscribed to or purchased outside of the app.

Apple still says apps that link to outside stores, subscriptions or purchasing methods will be rejected, but it’s no longer requiring that publishers offer subscriptions or purchases in-app if they also do so in another venue (like the Amazon Kindle store, for example).

Apple has been steadily winning magazine and newspaper publishers over to its in-app subscription method. But it’s unclear if any of the decisions made by publishers were influenced by the fact that before today, Apple seemed ready to turf them out of the App Store entirely come June 30. Still, magazines seem to be doing well using in-app subscriptions, so Apple may have accomplished what it needed to on that front by demonstrating the value of its subscription system.

Some users had feared that Apple’s ultimatum on this issue would result in the loss of key apps from the App Store, including Amazon’s Kindle e-reader, and could possibly affect relationships with other great content providers like Netflix and Hulu. Thanks to these revised guidelines, it looks like those apps will remain available to iOS users relatively unchanged, though Amazon will have to do something about the link to their web store that they provide in the current Kindle app.

Whatever the reason, I’m glad Apple backed down on this one. It’s probably better off making the App Store such an attractive vector for in-app sales that content providers opt to use it, rather than trying to force the issue and hurting users in the process.

Related research and analysis from GigaOM Pro:
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The Current Marketplace

Consider how you currently watch TV, which could be through broadcast or cable television. If you watch cable, you pay a fee to a provider (like AT&T), which allows you to see certain channels based on your subscription (though that model doesn’t seem to be panning out so well anymore). The providers pay a portion of your subscription fees directly to the networks (an average of about 26 cents per channel). Networks make additional money with the ads they run on their channels as well. If a network doesn’t show ads, you can expect they charge the cable provider substantially more than 26 cents per channel, and the opposite is true if they show an average amount of ads. This is all relative and pretty much a standard business model.

How Apple Could Shake Things Up

With the introduction of the App Store, we’re starting to see how some industries are shaking up the status quo. For instance, consider the magazine industry. Wired now provides its app directly to consumers, and can sell a digital version of its magazine at a comparable price (per issue) to the newsstand price. Yet, without having to incur the printing costs behind it, and even while giving Apple 30 percent of the revenue, Wired pockets a lucrative profit.

Can the same model work for the television industry? Network providers already provide their content through iTunes, and, through negotiation, have arranged to sell content at $2-$3 per episode. Rumors of 99-cent TV shows have been rampant but unfulfilled, simply because of the tough negotiations required to make it happen. Could the solution be to simply bring an App Store directly to the TV? If so, similar to the Hulu or Netflix app, a network provider like HGTV  could provide its own app for free and charge within for in-app content, like episodes of a show. If it wanted to provide streaming content of the past few episodes for free, it could do so. As long as it approves of the 70/30 profit split with Apple, it would maintain a lot more control over its content and pricing. The networks would be happy, and Apple would be happy. Networks could still run ads as they wished and earn even more profit.

Who would stand to lose from this? At the outset, nobody, but if such a solution were to become mainstream, then cable providers could begin to see a dip in subscriptions. Why would most consumers pay a monthly fee of $30 to over $100 if they only want to watch a certain show or a certain network? Instead of paying for needless extra content that consumers never watch (based on their own viewing habits), they can pay for content that matters to them. The providers are aware of this, which is why many of them also provide internet service (think about Verizon, Comcast (c cmcsa) and AT&T).

I think an App Store on the TV could really revolutionize how we watch and engage with content.

What are your thoughts? A new Apple TV could revolutionize the television experience. Do you think it will take off? I’d love to hear what you think, so please share your comments!

Related GigaOM Pro Research: 3 Things Apple iTV Must Do to Succeed

The iTunes Store is a Dead End for Video

Apple sits in an enviable position in the smartphone market, has pushed the tablet category into the mainstream consciousness, and its Mac lineup is selling like hotcakes. It’s the king of music retailing as well, but movies and TV have been somewhat anemic. The iTunes store does not have the dominant position with video content that it does with music. The slow buildup of the video category has led Steve Jobs to refer to the Apple TV as a hobby: something for Apple to continue to dabble in while the market matures.

[inline-ad align="right"]So why has it been so slow? Because Apple was able to reach the top music retailer spot so quickly, media companies have been reluctant to concede control of electronic distribution to Apple. They feared the same fate as the record labels: their electronic plans dominated by a powerful distribution partner. NBC Universal even pulled its content from the iTunes store for a time during a public spat with Apple. NBC eventually returned, but the industry has still been slow to move on ideas like subscription services or lower pricing through iTunes. The pricing model for video content in the iTunes store has been static for years, and it’s not working.

The entire model for iTunes Store is based on owning the content you purchase. Unfortunately, the video content on the iTunes store is lower quality than what you can buy for the same price elsewhere. Why would anyone want to own mediocre quality content? The future is streaming for convenience and ownership for full HD.

How the iPhone Changes Everything

The explosive growth of the iOS platform (iPhone, iPod touch, and now iPad) has the potential to change Apple’s relationship to media partners. While there has been little change in the iTunes Store, there have been some innovative efforts in providing television shows and movies over the Internet.

iPhone apps provide a way to bring together these two worlds. Media companies can develop apps to bring their properties to consumers, while still retaining control over pricing and establishing a direct relationship with the consumer. The Hulu and Netflix apps are free in the App Store, but require a paid subscription to the respective service to access content. Of no small significance is the fact that Apple does not get one penny from these subscription services. And Hulu and Netflix know exactly who their customers are and how to reach them. App Store developers will be quick to tell you that one frustration is that they have no idea who is buying their apps, and no way to respond to people who complain in App Store reviews. Apple simply does not provide that information to developers.

You can see why media companies would be far more eager to pursue this path where they control pricing and have direct contact with their customers.

An End Run on the iTunes Store

In this scenario, Apple will miss out on a percentage of video content sales. It would be convenient to leap to the conclusion that this would upset Apple and it might take steps to prevent this from happening, but content sales isn’t what Apple is after.

I think the more likely scenario is that Apple continues to view the iTunes Store as the means to an end: selling more iOS devices. While the iTunes store contributed $1.2B to Apple’s revenue this past quarter, I suspect only a small portion of that number comes from video content. In comparison, Apple pulled in $2.17B on the iPad in the same quarter. I would bet that the margins are a lot better on the iPad than the iTunes Store as well, contributing far more to earnings than content sales. Apple will willingly give up growth in content sales in order to make sure that the App Store remains the preferred software distribution channel and iOS devices are the preferred hardware platform for media companies.

Great for Media Companies, Great for Consumers

The big media companies obviously win in this scenario. I think it also opens the stage for small media companies and startups to grow, because the App Store is a pretty level playing field.

Consumers also benefit. More choice, more pricing models, more innovation, more content. The opportunity provided by apps, multitasking in iOS 4, and remote control devices like the iPhone, iPod touch, and the new Magic Trackpad will create a great platform for developers and media companies to deliver existing content and innovative new features. Think Chopper 2 on the TV, controlled by an iPhone, and Scrabble on the big screen with iPod touch tile racks, and new apps that are designed to be controlled by a remote or Magic Trackpad. Maybe someone will finally figure out how to create compelling interactive content for movies that does not get in the way of actually watching the movie. Wouldn’t that be amazing!

Apple TV is Dead, Long Live Apple TV

The current Apple TV, a device where you buy and manage all your video content through the iTunes Store, is dead. But the next Apple TV, where media companies can produce apps to deliver their content to consumers, will be huge because it opens the marketplace back up to innovation again. I can’t predict if Hulu and Netflix will continue to ride the wave and hold their leading position, but I can guarantee that in an open market, someone will figure out a model that works for consumers. And Apple will be there waiting with the best devices for consumers to access that content.

Related GigaOM Pro Research: TV Apps Market to Hit $1.9 Billion by 2015

This has made me take a serious look at Hulu Plus and Netflix.

The CliffsNotes version of this article: if you’re a movie person, get Netflix, If you’re a TV person, get Hulu Plus. The reason: Hulu’s movie selection is completely abysmal, whereas Hulu Plus is good for current-run TV shows.

Now, lets look at the apps. Our sister site NewTeeVee has a write-up covering the availability of shows here, so I’m not going to subject you to a large table in this post.

Hulu Plus ($9.99 per month)

There’s been a lot of bloviating about the short ads you’re forced to watch, even on the paid version of Hulu. They are noticeable, with an announcer’s voice that frequently grated on me. While I can kinda see the point, for me, it’s not a big deal; my cable-only channels subject me to longer, more frequent commercial interruptions. The ads on Hulu Plus aren’t a deal-breaker for me, but they are a point against the service.

What’s more of a bother to me is how limited the mobile offerings are. Not all Hulu shows are available for viewing on the iPad or iPhone. Stargate SG-1 is available in its entirety on the web; not at all on mobile (according to Netflix, this will be available for streaming August 15, so we’ll see if it’ll be on Hulu Plus then). However, Hulu Plus’s offering are deeper — where the free version might only have three shows of a season, the Hulu Plus version is more likely to have the full season. I did find Hulu was more likely to have older TV shows, as full seasons of Hill Street Blues and the A-Team are available (and let me say, the A-Team does not hold up well after all these years). Hulu’s movie selection is very weak — no mainstream movies to be found.

The app performs well. You can manage your queue, although, oddly, you can’t add a full season in one press. Because Hulu’s service is entirely streaming, I found the app a little easier to navigate than the Netflix app. However, in a curious technical decision, the Hulu Plus app doesn’t support the VGA output cable. Since I don’t have a 3G iPad, Hulu was the only one I was able to test over a cellular connection, and the results were fair, but from a small sample set: On the train to work, where AT&T coverage is spotty, the video was pixellated; at home with a better signal, it worked fine. One annoying feature in the Hulu Plus app is every time I launched it, it reminded me I was watching a video and did I want to continue watching it?

Netflix ($8.99 per month)

Comparing Hulu to Netflix is a lot like comparing iBookstore to Amazon’s Kindle store; like Amazon, Netflix has the benefit of a large library. As with Hulu, there are shows only available on Netflix — I could not find Nip/Tuck, Weeds, and Thirtysomething on Hulu; the complete offerings are only on Netflix. It also bears repeating for people who skipped my intro bit that Netflix is the place for you to go if you’re into movies.

I found the Netflix app to be a little sluggish. The video playing was usually fine, but I encountered a lot of slowness browsing the libraries. It’s also hard to pull down the Genres list — postings at the bottom were cut off. In addition, it’s impossible to just search by the titles available for streaming. Unlike the Hulu app, Netflix actually uses the VGA cable.

Final Thoughts

I was hoping that, at least for TV shows, one service would be a home run. Sadly, that’s not the case. While I found more TV shows on Netflix than Hulu that I enjoyed, I could convince myself to pay for Hulu for a few months to re-watch Hill Street Blues as well as start House and Law and Order. I’d be well ahead of the DVD costs. Hulu also earns points for current shows.

Given the economics, it’s not a requirement for an either-or service, For less than $20 a month, you can have access to a great library of movies and TV shows. The ads on Hulu Plus are a bummer. You get no commercials and larger selection (including movies, on Netflix) but Hulu Plus also lets you stay current on your shows. If you’re just staying current,  and not digging through a backlist, there’s little reason to sign up for Hulu Plus.

Looking Ahead: My Wishlist

Both these apps are fantastic, but operate under the necessity of an Internet connection, which means you’re screwed if you’re on a plane or in a bad cell area without Wi-Fi. What I’d love is for these apps to have the ability to also download movies into their device library for off-line viewing. I’m not sure how the licensing or logistics would work, but I hope that’s in their plans.

Which app do you prefer, and why?

Related GigaOM Pro Research: Three Reasons Hulu Plus is No Threat to Netflix

The service is currently in private beta, but you can sign up for the opportunity to try it out. Invites appear to be going out already, though who knows how many folks will get a chance early on in the private program. The subscription will run $9.99 per month, and give season pass type access to full seasons of television shows, as well as past seasons for some programming. All of the content will purportedly be presented in glorious HD.

Though the service itself is in private beta, the iPhone/iPad app is available right now for download. There is a gallery of free sample content and a tour of the content offerings as a whole, but otherwise you must have a beta invite to log in and do more.

It looks fairly similar to the ABC television layout — and interestingly, highlights some of the ABC programming that’s freely available via its iPad app. The app works and feels much like the browser-based and desktop interfaces, which was a good move to keep things simple for anyone already familiar with the service. The search functions in real-time and gives an immediate listing of available content for consumption in an easy to navigate layout. You can even hide the top horizontal pane to focus on the shows that you’re looking for without distractions. From a player perspective, you can pause and play, but like the existing service, there are intermittent commercials to sit through which you cannot skip.

I’d be lying if I said this premise didn’t piqué a little bit of interest for me. However, a couple of things seem odd. The first, is that they aren’t clear whether the private beta is allowing you to try it for free, or try it with the $10-a-month subscription. I would hope the former if, but it doesn’t seem to be stated where I could find any clarification. The other odd part, is enabling this subscription service and content for web-enabled television sets. Content-wise, we’re talking about free, over the air network television programming, not cable which may be limited to some people who would pay $10 a month for this access. We can already watch this stuff on our TVs without paying for it. Oh, and we’re still getting commercials while paying for this otherwise free content? Hm…

Yes, there are older shows available, and yes, it’s cool to see this stuff on the go via iPad or iPhone, but with many people having DVRs and Sling devices — not to mention Netflix and the ABC apps for iPad — how enticing will Hulu Plus actually be? If you’ve gotten an invite and have some insights to share on the topic — or even have an opinion (we know you do) about the attractiveness of this new offering — we’re all ears. Guess Flash on the iPhone wasn’t such a big barrier after all.

Last week DynDNS released its beta support for Wide Area Bonjour and DNS Service Discovery. This means that if you own your own domain name, and you have a Custom DNS service with DynDNS, you can configure your Apple AirPort device (AirPort Extreme, AirPort Express and Time Capsule) to present itself as part of that domain, automatically updating your domain name and broadcasting configured services.

What is Wide Area Bonjour?

Wide Area Bonjour enables the same zero-config automatic service discovery functionality over the public Internet that we all enjoy on our local network (seeing our shared files, printers, scanners and so forth). If you have a MobileMe account and utilize the Back To My Mac functionality, you’re already using Wide Area Bonjour without even knowing it.

Why would we use this?

Most of us who use DynDNS use it to be able to let the IP Address that our ISP give us resolve with a friendly domain name (such as myname.homedns.org). This basic free DynDNS service works really well as long as you have a third-party router that supports DynDNS (which most of them do). Unfortunately Apple, being Apple, does not support DynDNS in its routers, leaving you to run the OS X DynDNS updater application on your computer. The downside to this is that if your computer is asleep and your home Internet connection drops and reconnects (giving you a new IP address) DynDNS does not get updated until the computer wakes up. When wanting to use Snow Leopard’s Wake On Demand feature this is a problem, so this has meant “tough luck,” requiring you to run the DynDNS Mac client on multiple machines and hope the IP updating occurs often enough. It generally works fine, with the occasional expected downtime when your home IP changes at midday if computers are sleeping.

Does it work?

This DynDNS Community post explains the current problem the DynDNS team are having. The gist is that while the Wide Area Bonjour service discovery works just fine, the domain name IP allocation will only work if your IP does not resolve a reverse name lookup. This is an issue since almost all Internet Providers that give you a dynamic IP address have a full domain name allocated already. For instance, if you do a reserve name lookup on your dynamic IP you may get a name of 123-148-53-102.dyn.ispname.com. This is a problem because of the way Apple’s Global Dynamic Hostname configuration currently works. It will only attempt to configure a name for the IP address if a name doesn’t already exist. DynDNS has queried Apple about the way this works and it appears to be non-intentional behaviour caused by a bug. Apple has indicated on the bonjour mailing list that a fix will come some time in the future, but at this stage there is no ETA. Apple will have to issue firmware updates for the Airport devices to make this work as expected.

What is working fine at the moment is Wide Area Bonjour service discovery. So if you have a static IP that does not resolve with a reverse name lookup and would like to emulate the kind of automatic service discovery functionality that you experience with Back To My Mac, you can achieve this goal with DynDNS now. DynDNS have two guides to assist with the appropriate configurations if you want to give it a try:

• Apple Wide Area Bonjour and DNS Service Discovery with Custom DNS
• Dynamic DNS Support for Apple AirPort Extreme, AirPort Express, and Time Capsule

Watching the iPad’s first television spot on the Oscars Sunday night, I got giddy all over again in anticipation of getting my hands on this hot new product. Though it’s still a few weeks away, I’m even more excited for the applications that will be coming to the platform. Here’s my top 10 list of apps that I want to see developed for the iPad.

Coda

As a graphic designer and web developer, Coda is a staple in my workflow. It features a built-in FTP system, which could be problematic to port to a mobile device, considering there isn’t a traditional file structure to store data. However, perhaps the iPad’s new file storage system will provide an adequate solution. Regardless, as someone who codes, it would be awesome to sit next to a client and modify code and push changes to a site all from my iPad while they load and test the revisions on their own desktop.

Photoshop

Before you laugh, remember that Adobe has already released Photoshop Mobile for the iPhone, and all things considered, it’s not such a bad application. A larger iPad version could allow support for opening and manipulating native Photoshop files as well as working between multiple files. CS4 introduced a new tabbed approach to viewing multiple documents at once. A similar setup could easily be implemented on the iPad.

Katamari Damacy

What’s a fun touchscreen device without a fun game? Katamari already exists as an iPhone app so it’ll scale up decently on the iPad. But given the advanced graphics of the iPad and the larger screen, a native iPad version is a must. If you’ve never played Katamari, check out this clip below.

iMovie

Call me crazy (it doesn’t hurt to be wishful) but the feasibility of an iMovie-like app is certainly within the realm of possibility. I would have never expected Apple to introduce video editing on the iPhone. Nevertheless, along with a video camera, the iPhone 3GS allows for simple video edits. Why couldn’t we have a larger implementation of this on the iPad, provided it gains a video camera at some point? With the larger screen, there’s plenty of room to view a larger timeline, add transitions or effects and with one tap, upload your masterpiece to YouTube.

iChat

I’m actually quite surprised this app still hasn’t made it to the iPhone yet, but as a platform that’s designed to be “the best way to experience the web, email, photos and video,” the iPad seems like the perfect device for iChat, especially if a future model gains a video camera.

Screen Sharing or Remote Desktop

There have been a number of third-party developers that have created similar apps for the iPhone, but I’m honestly shocked to see that Apple hasn’t implemented its own solution yet. With a larger screen and almost full-size keyboard, remotely accessing and interacting with other Macs on my network would be a breeze on the iPad.

Preview

While the iBooks application will open books that are in EPUB format, I’d love to see a more robust implementation of Preview available on the iPad (and iPhone). Specifically, an app that is capable of annotating PDF files and provides support for links within PDFs. Since I’m also an academic, some of the journals I read (as PDFs) contain bookmarks to other articles or chapters and currently, none of the built-in applications on the iPhone support interacting with them.

Hulu

I don’t care how it has to happen or if it involves Flash or not. Who doesn’t want Hulu on the iPad? Even if it required a small subscription, I would love to be able to access my Hulu queue on the go. Better yet, since the iPad is a closed system, the app could download and cache content so it wouldn’t necessarily have to be streamed in real time. This could be a great solution to save AT&T’s crowded bandwidth for 3G models and allow WiFi-only models to still play even if a network isn’t around. I’d pay for that; would you?

Bento/Filemaker

Now that we have iWork, how about a real implementation of Bento (or FileMaker if that’s not too much to ask)? The current iPhone version is pretty pathetic and really hard to use to manipulate larger databases. While FileMaker may be a stretch, I’d put serious money on seeing an iPad version of Bento before the year is out.

An Improved iTunes App

It looks as though the new iTunes app represents a step ahead of the current iPhone version, but there are still some missing features that would make this app a rock star on the iPad. Adding support for Internet radio, browsing my other libraries by Home Sharing or support for iTunes Extras and LPs would be amazing. Honestly, why hasn’t Apple announced support of iTunes Extras and LPs? The specs call for a viewing area of 1280×720 (the 720p high definition standard). They also call for building your iTunes Extras with what’s called a bleed graphic, or a graphic that can “fill in the extra space” if you’re viewing it at a size greater than 1280×720. Now given that as a way to compensate for a difference in aspect ratios, if you were to scale down an iTunes Extra for the 1024×768 display, wouldn’t it just make sense? Come on, if the Apple TV can do it (and we all know how excited Apple gets about that product), shouldn’t the iPad as well?

What are your thoughts on apps you’d like to see? Share your thoughts in the comments below. The great thing about Apple’s developer community is that they keep up with what’s discussed in the blogosphere. You never know; a developer might see your suggestions. So, share what you’d like to see on the iPad!

Answering, in its own way, to the likes of Boxee and others who want some alternative way to view Hulu on their computers, Hulu has announced the availability of Hulu Desktop. Sporting a super-clean UI and support for using the Apple Remote, this free download is a must-have for anybody who frequents Hulu often.

The app is built on the Flash platform, so the system requirements are pretty moderate, requiring at least an Intel Core Duo 2.GHz Mac with 2.0GB of RAM. Currently available as a beta, this application provides you quick and easy access to your Hulu queue, as well as the ability to browse Hulu’s entire lineup of TV shows and movies.

The UI of the application is fairly snappy and easy to navigate, putting tons of content, your queue, suggestions and search at your fingertips. The experience is very refined for an application that’s still in beta.

Hulu Desktop is a free download from Hulu Labs.

Hulu Desktop Now Playing Menu

Hulu Recently Added Content

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The alpha will get Hulu working again, in case you haven’t already downloaded the test fixes. The reason for Boxee’s renewed ability to play Hulu video is the new XULRunner browser it uses to play video, which sidesteps Hulu’s recent limitation of playback to non-browser based devices and applications. It also enables Boxee to play pretty much any video you can find on the web by adding URLs with video RSS feeds as sources. In the new alpha release, all of these features — and the new support for Pandora, PBS and RadioTime — are present, minus the bugs and connection issues that were present in the test builds.

The big news for developers is that Boxee also released its official API late yesterday to the public, so that anyone can develop their own plug-ins for the software. Development is supposedly open to all, with Boxee claiming they won’t decide what is and what isn’t published. Users will be able to install new applications via the App Box. The API is Python-based, and comes with full documentation. You can learn more about the API at Boxee’s developer web site.

Now that Boxee is open for community development, it truly has become more or less exactly what Apple TV should’ve been. Apple should be taking notes, or at least thinking about not trying to bar access to its hardware every time it releases a firmware update.

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