According to a report by Gigaom, the new move would enable publishers to inject ads into their video content, and play normally on iPhone, iPod touch and iPad devices.
Some multimedia providers have hesitated to migrate their video content to the emerging HTML5 standard, complaining that the specification does not provide the kind of sophisticated embedded advertising that Adobe designed Flash to deliver as pre-roll, post-roll or in mid-roll commercial breaks during video playback.
It's important for many ad-supported content providers to be able to allow their advertisers to inject dynamic ads specifically targeted to a demographic, region, or time period. With plain video delivered via HTML5, providers can't easily serve up dynamic ads.
However, Apple can add support for dynamic ad placement to its iOS devices because it owns the QuickTime media playback software used to play back both local and online video content, including the standards-based H.264 videos that are now much easier to deliver on the web thanks to improved support for video embedding in HTML5.
By integrating support for dynamic ads into video, Apple's expanded iAd program would enable newspapers, magazines, and TV broadcasters to add video content to their websites and native iOS apps using standard H.264/HTML5 while still being able to monetize that content as they now do with Flash or similar proprietary video distribution technologies.
Until now, Apple has focused on enabling TV and movie studios to sell their content in iTunes, recently adding an option to let users "rent" video playback within a limited, expiring time window. With integrated ad support, iAd should enable the company to expand its offerings to pick up a broader array of multimedia providers who rely upon integrated ads to monetize their content.