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When you talk about, even think about, digital content stores, Apple’s iTunes is the natural selection.   It’s the dominant, mainstream store in the market.  Amazon’s MP3 and video store pops up as second mention.  Amazon being synonymous with retail.   Microsoft is hoping to change that, or at least join the party.

The “Xbox Live” environment for gamers has been growing steadily.  Microsoft has put money into original content and licensing. Still, that’s a niche market.  In October, they went more mainstream and begin selling videos in their Zune Marketplace. The offerings at the time, however, were limited. Now, the Zune Marketplace is expanding a little more. 

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The Superhero business is booming.  Marvel Entertainments first self produced movie, Iron Man, dominated the weekend box office earning an estimated $201m in global receipts in its debut.  At the same time, on Wall Street, the company didn’t fare badly either.  Marvel posted better a better than expected quarter and raised 2008 guidance. These numbers are only a small part of a bigger story.

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Apple announced this morning (press release) they will be getting select videos on iTunes the same day the films are released on DVD.  That news is getting the headlines, and deservedly so, it’s a big story and coup for Steve Jobs and team, but there’s a bigger story locked within the soundbytes.  It’s a story about Hollywood and a modernizing movie industry.   It’s a coming of age film.  It’s a story about distribution technology and profit margins, about the old guard accepting and embracing the new.  If there were a trailer to watch, the voice over would talk about throwing stones through the leaded glass of old traditions.  It might close: “Broken Windows, coming soon to the Internet theater nearest you.”

The “windows” in reference are release windows, the prescribed time gaps between which films are aired over different media.  Click to Read More

In efforts to turn around the long struggling company, Blockbuster, under the leadership of Jim Keyes, has gotten experimental.   They’ve been testing rental kiosks, exploring cellular downloads, and evaluating concept stores.  They’ve added managerial transparency.  The company has even gone public with an ill received interest in acquiring Circuit City to create a new hybrid rental retail chain.   Now, in the latest move from Keyes’ Frankenstein lab, Blockbuster is reportedly eyeing TV distribution too.

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Unlike rivals NBC (part of GE), ABC (part of Disney), or Fox (part of News Corp), TV Network CBS lacks the insurance and financial cover that comes from being part of a larger, more diversified conglomerate.   As a standalone network, nearly two thirds of the company’s revenues come from advertising.

This morning CBS reported their earnings.  Despite the exposure to a fluctuating ad industry, and despite challenges levied by the writers’ strike, the numbers proved mostly positive.   Total quarterly revenues were up 14% to $3.65 billion during the first quarter.   Overall, earnings came in at $244.3m or 36cents per share, a positive gain over 28cents per share earned during the same period last year.  On an adjusted basis, the EPS were 40 cents.

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Last week, Apple made a tiny debit from their enormous cash reserves to buy small semi conductor design firm PA Semi.  At approximately $278m, the deal barely shifts the multi billion dollar cash account on the balance sheet; still it has left many analysts, watchers and writers asking questions.  The first and most obvious is “why?” Why did a company that favors buying companies in the early stages of development buy a company with an established customer list? And why given Apples’ focus and success with consumer-focused products choose to invest in the challenging and cyclical semiconductor industry?

Another more macro set of questions (in a companion post to this article) query whether the deal represents a possible shift in Apple’s acquisition policies.  Was this the start of a more acquisition friendly Apple; one interested in taking advantage of weaknesses in the current financial markets to fortify underlying tech assets?

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In early March , Steve Ballmer took a shot at rival Google by telling Stanford students the company was a “one trick pony”; that search advertising was the only venture they knew how to make money at.  It’s a charge that’s been leveled at Googlers more than once.   Whether it proves true or not in the long term, there’s nothing wrong with being a specialist.  A one trick pony can make for a great business; a multi-billion dollar one in Google’s case.  On the other hand, if you’re going to be a one trick pony, operating in a market with a questionable long term future can pose a serious problem once growth plateaus.

That’s the issue Blockbuster’s CEO Jim Keyes faced when he came on board to run the movie rental shop last year.  Not only had the company suffered from mismanagement and corporate bloat in prior years, but it was also facing serious competition (both direct and indirect assaults) over a changing market. 

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