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Simon
Following that logic there was no business case for iTMS in the first place and it has been successful regardless.
No, iTMS succeeded for a number of reasons…just about none of those had to do with iTMS being available for Mac and PC.
It had a successful hardware platform associated with it. hardware platform was successful because of a large amount of content already in user's hands (ripped CDs + napster mk 1). nobody else gave that much storage with a decent interface. iTMS emerged 2 years later, version 4 in fact and offered easy purchase through an interface that was free, the only thing that really worked with the hardware, and already in many people's hands. someone recently had a good story on this. will see if i can dig it up.
There is no comparable video device to the iPod, and watching a film on an iPod is not that immersive an experience. An iPhone/iPod touch is mildly better. iTV is low res and kludgey. Moreover iTunes does not already manage most of its user's video libraries. If it could rip your DVDs, well then, maybe yes.
If the telco/cable folks could figure it out and have big libraries, video on demand would be the way to go. Then again we tried in vain to find a decent movie on FiOS on demand the other day and could only come up with one we'd both seen. Hollywood's not there yet. This market is going to take longer to crack.