Apple might be prepping iTunes Replay service for on-demand video

A new rumor is circulating that could bring a new feature to the next edition of iTunes and iOS: an Apple-owned on-demand video service to rival services run by Amazon and Netflix.

The service is called iTunes Replay, and it supposedly allows users to stream videos directly from Apple servers, according to a story from Apple Insider. The feature allows users to purchase videos from iTunes and then stream them from the Internet on various devices, including Apple TV, computers and iOS devices. It’s like Netflix, and similar to what iTunes Match and iTunes in the Cloud will provide users for music.

Apple Insider says that while pricing for the service isn’t yet clear, Apple will allow users to re-download some videos that they purchase (though not all of them will allow re-downloading an unlimited number of times) in addition to the streaming service. Supposedly, it will include both TV shows and movies, as Apple has been secretly making deals with lots of studios and content-providers to make the service viable.

The benefit of iTunes Replay is that because Apple is providing the devices for playback, there won’t be any additional issues of digital rights management from the studios providing the streaming content. DRM is a constant hurdle for Amazon and Netflix, which have to make deals with studios to offer them on various devices and for certain amounts of time. Apple’s devices already provide DRM protection required by the studios, which means that hurdle won’t be an issue.

Providing both streaming and downloading capabilities will allow Apple to make videos available even if users don’t have high-quality Internet connections on their device. It makes sense that Apple is going with video in its big cloud push with the upcoming iOS 5, and the re-downloading capability is similar to what Apple is already offering with iTunes music and apps. Not all videos will be capable of re-downloading, but according to the information circulating right now, users will be able to download again videos they purchased as far back as January 2009. Those old purchases will also be eligible for streaming.

The rumors are supported by a recent Apple TV update that allows users to stream old TV shows they’ve purchased to the service, which previously was only capable of streaming rented or purchased videos that were saved on an iTunes-running computer on the same Wi-Fi network.

Bringing iTunes Replay to iOS seems like a no-brainer at this point, but that’s the part that’s really up in the air. If it does, Apple will give iPad and iPhone users their own iTunes-based Netflix service, essentially. If they can make it work better than competitors, Netflix, Amazon and other video streaming services could get a run for their money.

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