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Apple Is Said to Consider Expanding AirPlay for Streaming Video

Apple Inc. (AAPL) is weighing an expansion of its AirPlay audio service to include streaming video from an iPhone or iPad to television sets, according to two people familiar with the project.

Under the plan, Apple would license its AirPlay software to consumer-electronics makers that could use it in devices for streaming movies, TV shows and other video content, said the people, who asked to remain anonymous because the plans haven’t been made public. Apple now only licenses AirPlay for streaming audio. Devices that could be used for video may be available this year, one of the people said.

An expanded AirPlay would let users stream programming wirelessly from an Apple mobile device to a TV that carries the technology. That may spur wider use of Apple’s services and devices in consumers’ living rooms. Chief Executive Officer Steve Jobs has had limited success selling Apple TV, a set-top box introduced in 2007, and as recently as September still called the product a “hobby.”

“Because of the market size they have with their portable devices, they have a naturally large share of the audio market,” said Jasper Vervoort, a director of marketing at Royal Philips Electronics NV. “I don’t know how successful they will be with video. We would definitely have an interest in supporting it."

Trudy Muller, a spokeswoman for Cupertino, California-based Apple, declined to comment.

‘Blessing’ for TV Makers

AirPlay was introduced in September as a way for users to wirelessly stream audio and video from an iPhone or iPad to the $99 Apple TV. A person using an iPad to watch a video from a website or movie downloaded from iTunes could quickly sync it to play on a TV through Apple TV. It also lets users view photos and other media from a mobile device on a big screen.

Apple and electronics makers may both benefit from expanding video capabilities beyond Apple TV. Streaming video from Apple mobile devices to TVs and other products may reinforce the use of iPads and iPhones to download more video sold through Apple’s iTunes Store, while also enticing consumers to buy new home-theater gear.

‘‘Apple connectivity in AirPlay is a blessing for an industry trying to move the needle forward on sales,” said Russ Johnston, an executive vice president at Pioneer Corp. (6773) He declined to discuss the potential for video.

Electronics Expansion

Apple doesn’t typically license its software to other manufacturers, though it has made an exception with AirPlay for audio. Apple licenses the technology to electronics companies including Pioneer Corp. and D&M Holdings Inc., which use the technology to stream music to speakers and receivers.

Companies pay Apple $4 for each device sold that carries AirPlay, according to two people who are familiar with the arrangements, though not authorized to speak about them. Those licensing agreements prevent video from being streamed, even though the technology is there to do it, one person said.

Heavy early interest in the audio capabilities gives Apple the opportunity to open AirPlay beyond music, adding movies and other video services. After getting thousands of “Made for AirPlay” music-oriented devices manufactured by the other electronics companies into the market, Apple’s ultimate aim may be to grab a chunk of the $100 billion global television market, said Ashok Kumar, an analyst at Rodman & Renshaw.

“They could be establishing a toehold in the digital living room,” said Kumar, who’s based in New York.

Google Rivalry

Adding new ways for people to use their iPhone or iPad helps Apple make its devices more compelling to customers, while also giving it an edge over what’s available from Motorola Mobility Holdings Inc., Samsung Electronics Co. and Research In Motion Ltd. (RIMM), Kumar said.

Google Inc. (GOOG), which competes with Apple in mobile software and advertising, also has been trying to gain traction in the living room. The Mountain View, California-based company is providing a version of its Android operating system for TVs consumer-electronics companies including Sony Corp. (6758)

The efforts reflect a sea change in how people watch TV shows and movies, with more consumers getting material streamed instantly from services such as Netflix Inc. (NFLX) or Hulu LLC. Jobs has said consumers soon will get most of their music, movies and other content in digital form. He’s already gone so far as to bar Blu-ray DVD players from Mac computers.

Analysts including Gene Munster at Piper Jaffray Cos. in Minneapolis have speculated Apple will expand its ecosystem of products to include Web-connected televisions, a market that relies on high volume and manufacturing efficiency to overcome falling retail prices and low margins.

Avoiding Risk

The company could lessen that risk by partnering with television makers, Kumar said, letting them take the financial bet and adopt AirPlay for streaming video between devices in and out of the home.

A challenge for streaming video from a mobile device is ensuring the bandwidth is strong enough to carry the signal without interruption, said Tim Bajarin, president of technology consulting firm Creative Strategies. Google also faced pushback from companies including CBS Corp. (CBS) and News Corp. (NWSA) that didn’t want the Internet televisions to allow shows to be watched for free from websites.

Apple’s chip vendor for AirPlay is BridgeCo., a closely held company based in El Segundo, California. BridgeCo. is working with several TV makers to build its products into Web- connected TVs, according to two people familiar with the talks. It’s unclear whether those devices will include the AirPlay technology.

For Apple, AirPlay is a way to expand into the living room without having to introduce new products.

“Apple knows most of the action in the home entertainment space these days is iTunes music and the iTunes movie store, so they’re saying, ‘We’re not going to be in this business, but we will make it possible for anybody to play well with our products,” said Thomas Cullen, co-founder of Sonos Inc., a rival multi-room streaming audio system.

-- Editors: Thomas Giles, Lisa Wolfson

To contact the reporters on this story: Cliff Edwards in San Francisco at cedwards28@bloomberg.net Adam Satariano in San Francisco at asatariano1@bloomberg.net;

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net.

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