Congress may have postponed the scheduled Feb. 17 transition to digital broadcast television on Wednesday — ensuring that millions of rabbit-ear TVs won't go dark for at least another four months — but that doesn't mean that the way Americans get their video entertainment isn't in the midst of wrenching change.

Take, for example, the story on the front page of Thursday's New York Times: Digital Pirates Winning Battle With Major Hollywood Studios, in which Brian Stelter and Brad Stone report that bootleg copies of Warner Bros' "The Dark Knight" were downloaded 7 million times in the space of 6 months — despite an elaborate antipiracy campaign, months in the planning, that included monitoring every physical copy of the film.

Or Microsoft's (MSFT) report Wednesday that more than 1 million XBox Live gold members (who pay a $50 annual fee) have activated  a Netflix (NFLX) app and used it to watch, in the space of three months, more than 1.5 billion minutes of movies and TV shows downloaded over the Internet.

Here you have both sides of the sermon Steve Jobs has been preaching to the studios for years: the "Napster moment" the Times article describes, in which pirates do to the movie and TV studios what they did to the music industry; and the alternative, in which video content is legally streamed or downloaded  — for a fee — from the Internet.

So where does that leave Apple TV, the set-top box that Jobs unveiled two years ago as Apple's (AAPL) path to Hollywood's salvation? Originally a device for connecting a computer wirelessly to a TV, it was updated last year to allow shows and songs to be purchased or rented directly from the iTunes Store.

Although sales of the device tripled last quarter, thanks largely to movie rentals, it is still a minor player in the transition from the old distribution paradigms to the new.

"We're going to continue to invest in it, because we fundamentally believe there is something there for us in the future," acting CEO Tim Cook told analysts during Apple's last earnings call, but he still refers to it — as Jobs did — as a "hobby." (link)

The pundits have offered a variety of suggestions for how Apple might solve its — and Hollywood's — dilemma by revamping Apple TV, including Peter S. Magnusson (who urged Apple to add a tuner, a DVR and a Blue-Ray disc drive), Bernstein Research's Toni Sacconaghi (who advised the company to turn it into a full-fledged Tru2Way cable box), and Businessweek's Arik Hesseldahl (who examined a variety of options earlier this week, including buying DVR-pioneer TiVo (TIVO)).

[UPDATE: Piper Jaffray's Gene Munster issued a report to clients shortly before noon Thursday with his own predictions. See below the fold. ]

But the most thoughtful analysis so far may be the one posted Thursday morning at Roughly Drafted Magazine by Daniel Eran Dilger, who looks at what Apple should — and perhaps more important, shouldn't — do with Apple TV.

"Analysts have voiced a lot of terrible ideas that would actually dismantle or saddlebag Apple TV," he writes, "converting it from a fun hobby into a burdensome money pit failure."

Here, in thumbnail form, are his take on what he calls some of the worst ideas:

• Add a DVR, perhaps by buying up TiVo. "The only thing worse than jumping into a dead market long after the lights have been turned out is buying out the leading failure in the market in order to do so."
• Add an optical disk, perhaps Blu-Ray. "Talk about snatching defeat from the jaws of victory: Apple has been pushing digital downloads as an alternative to the DVD for years now, with pretty decent success."
• Add an HDTV screen. "This one takes the cake for ridiculous."

"Apart from those top three ideas for wrapping an albatross and a millstone around the neck of Apple TV," he continues, "there are a variety of smart things Apple could add to their box to make it far more valuable."

• Add iTunes radio features. "Plug Apple TV into your speakers and have streaming radio with graphics."
• More alternative content. "…the other big free content source is podcasting."
• Add an iTunes Store, and an SDK for interactive content. "Make it easy to download little $5 games and app, and Apple TV will explode with the same software interest as the iPhone."
• Additional support for user created content. "How about a custom client for also accessing me.com email, contacts, and calendar on the big screen, navigated by the iPhone’s keyboard?"
• Consider the controversial. "There are a variety of competitive services that Apple might benefit from partnering with, including ad-supported Hulu and subscriber-supported Netflix." (link)

Dilger fleshes out each of these options in considerable detail and in his usual lively style. The full piece is highly recommended.

See also:

• Tuning into Apple TV 3.0
• Apple vs. Netflix: How do they stack up?
• Apple TV Take 2: What's the hangup?

Below the fold: Gene Munster's predictions.

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The World Wide Developers Conference (WWDC) that opens Monday morning in San Francisco would be a relatively obscure technical gathering of programmers and IT administrators – with sessions on "Advances in OpenGL" and "What's New in Objective-C" – were it not for one thing.

Steve Jobs.

The keynote address that Apple's CEO is scheduled to give starting at 10 am Pacific Time (1 pm ET) is perhaps the second most closely watched event in high tech – after the opening speech Jobs gives every January at Macworld.

In the audience at Moscone West's main hall will be – in addition to thousands of developers (WWDC sold out for the first time this year) – hundreds of reporters, photographers, TV crews, venture capitalists, CEOs and maybe even a few celebrities from Hollywood and the music world.

What's Jobs going to talk about? To paraphrase Donald Rumsfeld, there are known knowns and known unknowns. That is to say, there are things we think we know he's going to say, and things we know we don't know. Here's a rundown:

3G iPhone. Except for a few short sellers on Wall Street, everybody who follows Apple assumes that Jobs will introduce a new iPhone that can send and receive data at so-called third-generation speeds. (In fact, so widespread is this belief that if Jobs doesn't show up with the thing on Monday, Apple's (AAPL) shares will get hammered before he leaves the stage.) Almost everything else about iPhone 2.0 are matters of little hard information and intense speculation. Is it thicker or thinner than version 1.0? Will it have a built-in GPS chip so it always knows where it's at? Will its price be subsidized by AT&T and the overseas carriers? Will it go on sale next week or sometime later? If these questions weren't still in play, there would be almost nothing to talk about next week.

The SDK. We know Jobs is going to spend some time discussing the so-called software development kit for the iPhone. We know because that's one of the two main themes of the conference (symbolized by the bizarre image of two Golden Gate Bridges that decorated the e-mail invitation). The other theme is the Macintosh operating system; presumably the two are merging somewhere in Marin County, judging by the doctored photograph. The SDK will finally give third party developers access to the platform Apple has managed to build, as Jupiter Research's Michael Gartenberg notes, without them. There's a flood of new software for the iPhone and iPod touch ready for release soon as Apple gives the word – including programs that will allow IT departments, should they be so inclined, to integrate the iPhone into their enterprises the way Research in Motion's (RIMM) BlackBerry is today.

.Mac. Even Jobs agrees that Apple's $99-a-year suite of Internet services (Mail, Backup, iSync, iDisk, etc.) needs an overhaul, if only to match the online applications that Google (GOOG), Yahoo (YHOO) and Microsoft (MSFT) now offer for free. By tracking crumbs of information scattered in recent Apple software releases, some observers believe Jobs is set to replace .Mac with something called Mobile Me, or just plain .Me. Probably the single most effective thing Apple could do improve .Mac would be to emulate Google and give it away.

Another iPhone. Speculation that Jobs would introduce a so-called iPhone nano – a smaller iPhone at a more affordable price – has faded; the smart money has pushed this back to next January. However, as American Technology Research analyst Shaw Wu points out, there are good reasons to suspect that Apple will keep the first generation iPhone around, if only to have something to sell in those parts of Latin America – and parts of North America, for that matter – where where 3G coverage is spotty or nonexistent.

New MacBooks. Two weeks ago, Piper Jaffray's Gene Munster put the odds of Apple introducing redesigned Mac portables next week at 60%. The other odds he gave – 80% by the end of summer – now seem more like it.

New Touchscreen device. Wu in report to clients this week said he's learned that work on larger, 4-inch and 7-inch multitouch devices has "gone beyond the prototype stage" at Apple. He goes out on a limb and gives 50-50 odds that one will be introduced at WWDC next week.

Those are the key themes, but there's plenty more to speculate about. If you want to dig deeper – in a suitably interactive way – come to WWDC with a copy of the 2008 edition of John Siracusa's Keynote Bingo card, pasted below the fold. The rules are laid out in detail at Ars Technica here, but they're pretty straightforward: put a token over a square if Jobs mentions the topic or says the word or introduces the speaker during the keynote. Cover five squares in an a row, and you get to stand up and shout Bingo!

Nobody's won the game yet. This could be the year.

[Moscone West photo courtesy of MacNN.]

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They're there: Carrie Bradshaw. Tony Soprano. Jimmy McNulty. Jemaine Clement. Seth Bullock. Julius Caesar.

Early Tuesday morning, somebody at Apple's iTunes Store flicked a switch and six of HBO's most popular series became available for download for prices ranging from $1.99 to $2.99 per episode. They are:

• Sex and the City: $1.99 per episode
• The Wire: $1.99
• Deadwood: $2.99
• Flight of the Conchords: $1.99
• Rome: $2.99
• The Sopranos: $2.99

As widely reported on Monday, the deal is a breakthrough for both Apple (AAPL) and Time Warner's (TWX) HBO.

For HBO, which is making individual episodes available for the first time, it's a chance to expand viewership beyond its 30 million cable TV subscribers to Apple's broader audience of 50 million registered iTunes users.

For Apple, it's a strong signal that Steve Jobs has backed away from his stubborn insistence on flat-rate pricing — $1.99 for TV episodes, $.99 for songs — and is ready start a new round of deal making in Hollywood.

On May 1, Apple announced an agreement with Warner Brothers, 20th Century Fox (NWS), Walt Disney (DIS), Paramount (VIA), Sony (SNE) and others to make movies available for iTunes download the same day they are released on DVD at two price points: $14.99 for new releases and $9.99 for older films. (see Apple's new Hollywood deal)

Could a rapprochement with NBC — which pulled its series off iTunes last December in a dispute over flat rate pricing (see here) — be far behind? The fact that NBC (GE) started streaming free episodes of two of its most popular shows, The Office and 30 Rock, to iPhones last week seems like a promising sign.

[UPDATE: Apple posted a press release this morning. HBO is "excited." Apple is "thrilled."]

The news that Time Warner CEO Jeff Bewkes let slip in a conference call on Wednesday — that from now on Warner Bros. movies would come out as video on demand the same day as the DVD — turns out to be bigger than he let on.

Apple on Thursday announced that not only would Warner Bros. titles be available for purchase on the iTunes store the same day and date as DVD release, but so too would movies from 20th Century Fox, Walt Disney Studios (DIS), Paramount Pictures (VIA), Universal Studios Home Entertainment, Sony Pictures Entertainment (SNE), Lionsgate, Image Entertainment and First Look Studios. (press release)

Even before the full extent of the deal was revealed, analysts were talking about the consequences for the DVD business. "Time Warner To Help Kill Off DVD Rentals" was the headline of Michael Learmonth's piece in Silicon Alley Insider Thursday morning.

What does all this mean? It means Time Warner is finally ready to start weaning itself from DVD sales, which have been Hollywood's biggest revenue source for years.

It also means that if Blockbuster — or Netflix, for that matter — doesn't figure out electronic delivery, it is toast. And it means that Sony and Toshiba just incinerated a pile of money in a useless DVD format war. (link)

What convinced the Hollywood studios to cut this deal with Apple's (AAPL) Steve Jobs? According to Time Warner's (TWX) Bewkes, the company had been experimenting with "day and date" video on demand (VOD) release for several months and found that DVD rentals only fell by 3 to 5 percent and sales of DVDs actually increased. Since VOD is so much cheaper than printing and distributing discs, it looked like a no-brainer.

“Taking a customer and moving that person over from rental-physical over moving them to VOD day-and-date is like a 60 to 70 percent margin instead of a 20 to 30,” Mr. Bewkes said, according to the New York Times. “So it’s about a three-to-one trade.” (link)

Among the titles immediately available for download on iTunes: “Juno,” “Cloverfield,” “I Am Legend,” “There Will Be Blood,” “American Gangster,” “The Diving Bell and the Butterfly,” “Alvin and the Chipmunks” and “Walk Hard: The Dewey Cox Story.”

Sometimes you have to listen very closely when Steve Jobs promises something.

When Apple's (AAPL) CEO introduced movie rentals at Macworld two weeks ago, he demonstrated how films downloaded through iTunes could be sent with one click to an iPod, iPhone or iPod touch.

Then, according to my notes, he said something about "current generation iPods."

Those three words have got a lot of people on Apple's discussion boards hopping mad today. It turns out that fifth-generation video iPods purchased as recently as five months ago won't play those iTunes movie rentals — and not because of any hardware deficiency. Current generation iPods, per the footnote in Apple's press release here, include only the "iPod classic, iPod nano with video and iPod touch."

"This is bogus!!!!!" writes user ninzan on one of at least a half-dozen threads devoted to the topic. "I was all up on apple rental now that I find out that I have been locked out i feel like a moronic apple groupie. My 5g Ipod video is apparently too old and my new itouch did not come with video output. i'm screwed"

The only recourse, it seems, is to ask for your rental fee back. According to reader reports, Apple has started to issue refunds.

What's going on?

Bryan Gardiner at Wired called around and by yesterday had come up with several theories.

Forrester's James McQuivey thinks it may be a strategy of planned obsolescence — a ploy by Apple to get users to buy new iPods.

Yankee Group's Carl Howe thinks it might have something to do with the clock-resetting trick some users have discovered for extending the life of a 30-day, 24-hour rental.

The most plausible explanation, to my ear, comes from The Unofficial Apple Weblog's Christina Warren. She points out here that fifth-generation iPods had a simple analog video output feature (replaced with authentication chip-equipped composite and component AV on the classic, touch and nano with video) that would have allowed rented content to be easily copied. Closing this so-called video hole may have been a requirement imposed on Apple by the movie studios.

Of course, nobody bought a video iPod before September in order to play movies rented on iTunes — an option that didn't exist at the time. Still, for millions of video iPod owners (disclaimer: I'm one of them), it's annoying to be so close and yet so far. Clearer disclosure would have been nice. And a refund of a few bucks to users who rented before they discovered the fine print seems like the least Apple could do.

SAN FRANCISCO — Steve Jobs gave it his best, delivering a new must-have gadget called the MacBook Air, deals with a full house of compliant Hollywood studios, and more bells and whistles on his existing products and services in a 90-minute speech than most technology companies do in a year.

But Wall Street was not impressed; shares of Apple (AAPL) got hammered, falling more than 10 points during the course of the keynote despite the impressive sales figures Jobs rattled off: 4 million iPhones, 5 million copies of the Leopard operating system, 4 billion songs, 125 million TV shows, 7 million movies.

And although the crowd of 2,500 that packed San Francisco's Moscone West ooohed and ahhhed at all the right moments, there was a audible murmur of letdown when Jobs ended the presentation not with his patented "one more thing," but with a couple musical numbers from songwriter Randy Newman.

Still, the performance was vintage Jobs. He showed genuine delight when he untied the little red string on a yellow interoffice envelope to reveal what he described as the world's thinnest notebook computer: .16 inches on one end and .76 on the other — thinner on its thickest end, as he happily pointed out, than the comparable Sony (SNE) ultraportable is on its thinnest. Even at $1,799, the Air will be "the must have product of 2008," predicts Jupiter Research analyst Michael Gartenburg. "All the cool kids are going to want one."

And he was clearly in his element demonstrating the features of the newly configured Apple TV, which can now wirelessly download DVD- and HD-quality video without going through a computer. Starting in two weeks, anybody who wants to spend $2.99 to $4.99 on the iTunes Store will be one-step closer to the video lover's idea of Nirvana: the ability to watch anywhere, at any time, any movie ever made. (Or at least the 1,000 movies currently in Apple's library, a number Jobs promises will quickly grow as Apple re-engineers the movies from participating studios.) Netflix (NFLX) should be nervous.

"This is potentially extremely disruptive," says Gartenburg. "This could do to Hollywood what the iPod and iTunes did for the music industry."

Tim Bajarin of Creative Strategies agrees. "The biggest news today is that Apple was able to get support from all the major studios," he says. "It shows that Jobs is still the master broker."

Media analyst James McQuivey of Forrester Research begs to differ. Apple needed Hollywood to put content on its video-ready hardware more than Hollywood needed Apple, he says. Renting content is one thing. Selling it for $1.99 (and forgoing all that ad revenue broadcast TV generates) is quite another; that's why Universal is making its movies available on iTunes even as NBC Universal pulls its TV shows.

Part of the air of disappointment that fell over Macworld Expo when the keynote was over was due to the fact that although Jobs delivered on some of the rumors, there were no major surprises, and most of the announcements anticipated in the Apple blogs proved to be wishful thinking. There was no new 16 GB iPhone, no demonstrations of 3rd party iPhone apps, no Blu-ray announcement, no new display screens, no Beatles on iTunes.

And even in the products Jobs did deliver, there were almost as many questions as there were answers.

How much, for example, does the 64 GB solid-state version of the MacBook Air cost? Jobs didn't say and none of the Apple reps on the floor seemed to know. (The answer can be found on the Apple Store: $3,098 with the high-end 1.8 GHz chip, a whopping $1,299 premium over the standard 80 GB hard drive model.) How do you replace the battery on the MacBook? (It turns out that, as with the iPhone and iPod, you can't — it's sealed into the gadget.) Where's the Ethernet plug? (There isn't one; you have to buy a USB to Ethernet adaptor.)

But for all that, it was an impressive show, delivering enough innovation to keep the competition at bay for another 12 months. "It goes to show," says Gartenburg, "that even when Apple doesn't deliver a tsunami, it can still make waves."

For more detail, see Jon Fortt's live blog at fortune.com/bigtech.

[Photo: Jon Fortt]

The Macworld Conference & Expo, Silicon Valley's largest technology trade show, opens Monday. But the moment everyone is waiting for comes Tuesday morning, when Steve Jobs makes his annual keynote address at San Francisco's Moscone Center.

Jobs has set a high bar for himself. At Macworld 2006, he introduced the first Intel (INTC)-based Macs — sparking a burst of sales that nearly doubled Apple's (AAPL) market share from roughly 4% to something approaching 8% (link). At Macworld 2007 he unveiled not just the all-but-forgotten Apple TV, but also the iPhone — a device that in nearly everybody's book turned out to be the machine of the year.

What can Jobs do to top that?

There's no shortage of speculation. The Apple rumor machinery has grown so elaborate that for the second year in a row, Ars Technica's John Siracusa has published a keynote Bingo card (available in PDF format here and in iPhone format here), with boxes to be filled in as Jobs makes his announcements, introduces his guests and trots out his trademark rhetorical flourishes. (The rules of the game are spelled out here.)

Nobody has yet shouted out "Bingo!" in middle of a Steve Jobs presentation — a moment brilliantly anticipated in IBM's buzzword Bingo TV ad (link) — but this could be the year.

Some of Siracusa's boxes are obviously more important than others. A couple (Mac Pro and Xserve) were preemptively filled last week, and there are a few key possibilities that he missed. Watch especially for:

• A Skinny MacBook. Probably the leading candidate for Jobs' one-more-thing moment, it's already been named — Macbook air, thin, nano and mini — and imagined in PhotoShop (see here, for example) by bloggers who should know better. Likely specs: 12 to 13-inch. LED backlit screen, under 3 lbs., half as thick as today's MacBooks, 32, 64 or even 128GB solid-state flash drive, priced around $1,600.
• iPhone updates. A bump in capacity from 8GB to 16GB and maybe 32GB is expected, as well as a preview of the software developers toolkit (SDK) promised for February; we might even get a few demos from developers, like EA, who were seeded with the SDK last fall. A 3G iPhone and a Newton-type tablet are reported to be in the works, but not yet ready for prime time.
• Movie rentals. This is the item Hollywood is following most closely. It's been widely reported that Fox and Disney are likely to make movies available on iTunes for overnight rental (at $3 to $5 for 24 hours) or for purchase for roughly the price of a shrink-wrapped DVD. If, as rumored, Paramount, Lions Gate and Warner Bros join them, the flood of fresh video content could breath new life into the Apple TV. (The Associated Press reported Sunday that Netflix (NFLX), anticipating such a move by Apple, will offer unlimited monthly video streaming.)
• DRM-free Music. Having famously championed the cause with his February 2007 Thoughts on Music memo, it would be surprising — and disappointing — if Jobs did not use this opportunity to announce a significant expansion of the DRM-free offerings in the iTunes Store, especially after the last of the major labels announced last week that they were putting their music on Amazon.com (AMZN) without copy protection.
• Microsoft (MSFT) Office 2008. No surprises here, since the reviews are already in, but an excuse for what should be the most lavish after-hours party of the show.
• The Beatles. It's about time. Just in case, Yoko Ono's John Lennon Educational Tour Bus mobile recording studio is making the trip from its Las Vegas unveiling at the Consumer Electronics Show to be at Macworld. A few hours after Jobs' speech, there's a press reception in the bus that's co-sponsored by Apple.

You already see the flashbulbs popping, right? But is it enough? Apple's marketing machinery is like a shark that must keep swimming or die. Even if nearly every square on the Bingo card were to be filled on Tuesday, would Jobs have delivered the kind of innovation and buzz the faithful have come to expect?

And then there's Wall Street to consider. Apple was the high-flying tech stock of year, its share prices having more than doubled in 2007. But as a CNNMoney headline put it on Friday, "What've you done for me lately?" The stock fell nearly 30 points over the last two weeks, which could be taken as a measure of traders' uncertaintly. (Or it could just be a well-timed pause to set up the Macworld effect, the short-term bump tech share prices often enjoy after a Steve Jobs' keynote.)

No matter how high the bar, Jupiter Research analyst Michael Gartenberg is confident that Jobs will clear it. "This is a company that thinks in terms of strategy," he says. "Do I think they'll deliver something as disruptive as the iPhone? No. You don't achieve that kind of disruption every week; it would be tantamount to getting into a whole new industry. But somehow Jobs always manages to meet expectations, even if the expectations are different."

To find out how different, tune in Tuesday for Fortune senior writer Jon Fortt live blogging from the keynote at fortune.com/bigtech, video coverage from CNNMoney.com and our post-keynote analysis here on Tuesday afternoon.

There are few things Steve Jobs loves more than a dramatic Macworld surprise announcement, but three weeks before his annual keynote speech, someone – my guess would be Rupert Murdoch – just stole his thunder.

Several sources this morning – including the Financial Times and the Wall Street Journal – are reporting that Apple (AAPL) and News Corp. (NWS) have struck a deal for a new video-on-demand service that could change the way digital movies are distributed, viewed and paid for.

Citing an unnamed "person familiar with the situation," the FT reports that the two companies signed an agreement that would allow customers to download the latest 20th Century Fox movies through the iTunes store and watch them for a limited time. No pricing details were available, but earlier reports suggested that Fox and Apple were talking about charging $2.99 for 30 days viewing. That's considerably cheaper than competing services from BlockBuster and NetFlix, neither of which work with iTunes, Macs or iPods.

In addition, Apple is reportedly extending its FairPlay digital rights management system for the first time to another company's product. As part of the same deal, Fox will sell its new releases on FairPlay DVDs that permit customers to transfer, or "rip" the content to a computer or video iPod. As the FT points out, there is software available to rip movies today, but using it is considered piracy and can land you in jail.

Disney is the only other studio that makes new releases available on iTunes, but only to buy, not to rent. Paramount, Metro-Goldwyn-Mayer and Lionsgate sell older library titles. But the tide may be turning, and Apple is reported to be in talks with Sony, Paramount and Warner Brothers.

"Fox and potentially other ­studios are coming around to the idea that there is nobody out there to challenge iTunes," Jonathan Weitz, a principal with IBB Consulting, told the FT. "This deal is a sign that media mobility is coming to the mainstream."

The best instant analysis of the deal this morning is on Silicon Alley Insider, where Dan Frommer seems to have stayed up all night trying to work the angles. See his winners and losers column here and his six questions here. Among the latter, our favorite is No. 6:

How will Blockbuster, Amazon, Netflix, Microsoft, Sony, cable, telco, and cellphone companies, and other rivals respond? Apple's iPod line dominates the portable media player market, and the iPhone is taking a big chunk of the smartphone market. And now, it appears, there will finally be digital rentals compatible with Apple's gadgets. Surely Jobs' rivals haven't been sitting around doing nothing. How will they fight back? Lower rental prices? More portability/less DRM? This should be a fun one!

Two developments in the wake of NBC Universal's (GE) weekend exit from Apple's (AAPL) iTunes store:

Ruport Murdoch's Twentieth Century Fox (NWS) is reported to be "actively negotiating" with Apple to put new releases and catalog titles on iTunes beginning in early 2008. According to Rich Greenfield at Pali Research (link; activation required) several things have changed to break the deadlock, including growing levels of movie piracy and new flexibility on Apple's part in terms of pricing. Greenfield's casual speculation that Apple might be willing to charge $15 per movie download has triggered some interesting analysis (see AppleInsider and Ars Technica's Infinite Loop) but should probably not be treated as gospel.

NBC Universal CEO Jeff Zucker placed his company's digital strategy last on his list of priorities in a luncheon speech at the UBS Global Media & Communications Conference on Monday. Repeating an earlier claim that NBCU's deal with Apple was worth "only $15 million" in profit, he added: "That’s nothing to sneeze at, every dollar matters. But it wasn’t the game changer for us that it was for Apple." He pointed to NBC's video offerings on Amazon and NBC Direct and singled out for praise hulu.com, its joint effort with News Corp.:

We're in the beta test with Hulu and we have 60,000 users, seven major advertisers. The online press wanted to kill it, but it's doing well. Advertisers tell us they want a safe environment. That's what this is about. They don't want a cat on a skateboard, but they do want The Simpsons or a film they like. (see Paid Content's report here)

No more ad-free episodes of The Office, 30 Rock, Scrubs or Friday Night Lights for $1.99 each.

As promised, NBC (GE) removed all its content and that of its affiliates from the iTunes Store over the weekend after its contract with Apple (AAPL) expired.

That means no shows on iTunes from Bravo, mun2, NBC, NBC News, CNBC, NBC Sports, Sci Fi, Sleuth, Telemundo or USA Network. (Some shows aired on NBC but produced by other Hollywood studios such as Viacom, Disney or 20th Century Fox are still available.)

NBC has put some of that content on NBC Direct, an ad-supported download service that runs only on Windows machines; a Mac version is due next year. Its shows will also be available on hulu.com, a joint venture with News Corp. Both services are still in beta.

NBC had been Apple's single largest partner for digital video, with more than 1,500 hours of programming representing either 30% or 40% of iTunes video content, depending which side you believe. Talks to renew the contract reached an impasse last August. NBC wanted to be able to charge more than $1.99 for its most popular shows. Apple insisted on a flat per-show rate and claimed that the network wanted to raise prices to as much as $4.99 per episode. (See Apple to NBC: Drop Dead.)

In a recent interview, NBC Universal CEO Jeff Zucker insisted its demands were "modest" and complained that Steve Jobs was undervaluing video content in order to sell more iPods.

“We don’t want to replace the dollars we were making in the analog world with pennies on the digital side,” he said, according to Variety.