As neat as a vPod would be as a gadget, I really feel like video/movies are a totally different beast than audio:
1. People don't have the same 'rip-off' mentality towards movies as they do for CDs (for the most part). Many prefer the 'a la carte' option that iTMS offers, but do you want a single scene from a movie? It is nice to only purchase that one track you enjoy from an artist, rather than buy an entire CD to get that content. Most people buy the entire DVD and feel like they're getting their money's worth versus CD content (extras, etc).
2. What would a major benefit to an iTVS be? OK, you don't have to leave your home to get the content, and it's instant. But I can already rent an unlimited number of movies with Netflix, and aguably cheaper (flat rate)...plus, I'm being just as lazy as with an Apple based service (it's just a few days behind my requests, but I always have movies on-hand). Also, the downloaded video would not be of the same quality as a raw DVD (admittedly I'm not an expert of H.264).
3. Compression with music is (arguably) less noticeable to the senses than compressed video would be. This is my opinion, but for 'the masses', 128AAC suits...while I'm not so sure you'd like to purchase a video that is lossy. Why is HD looking like the next big thing? People want superb video quality, bar none...HD-CDs and SACDs have pretty much died as a commercial audio product.
4. As stated before, music is a passive experience, while you can't exactly view a vPod while driving or doing most physical activities.
5. It's just as easy to carry a case of 48 DVDs to a friend's house as it would be carrying a vPod. Not to mention the time needed to encode those DVDs. If you want your home videos, that's what iMovie/iDVD are for.
6. Could you burn your rented/purchased videos from the iTVS to a DVD and strip any DRM? Hmm....
7. TV shows/podcasts would be nice, but music videos suck and get boring very quickly.
I'm not saying the vPod wouldn't be a great gadget or nobody would buy it, but I think that too much emphasis has been placed on it being the 'holy grail' of Apple hardware.
I predict an upgraded PM with pre-N and dual processors, PB with HD screens and pre-N wifi, along with an Airport AV (pre-N, replaces the Airport Extreme Base Station). And maybe...just maybe an iTablet/iPDA device to integrate as a controller for the Airport AV (or the iPod gains this functionality).
OK...I've blabbed enough.
