Apple is considering adding streaming video to its AirPlay service, which currently allows users to stream audio from an iPhone, iPad or iTunes to a home stereo or other devices. According to Bloomberg, two people familiar with the matter (who asked to remain anonymous) suggested the new feature would enable streaming video from an iPhone or iPad to television sets — and that Apple would license its software to CE manufacturers who could potentially use AirPlay in their devices for streaming movies, television and other video content.

Expanding AirPlay functionality could possibly spark more use of Apple devices and services in the home, despite the company’s limited success selling the $99 Apple TV set-top box thus far. Bloomberg reports that, “For Apple, AirPlay is a way to expand into the living room without having to introduce new products.”

While Apple and others such as Google are looking to explore the possibilities of streaming video and Web-connected televisions, a challenge for streaming content from a mobile device involves bandwidth issues and whether signals can be carried without interruption. Regardless of any technical obstacles, there is clearly a shift in how consumers are accessing TV shows and movies, with an increasing number of people accessing instant streaming services from the likes of Netflix and Hulu. Apple’s Steve Jobs — banking on a complete shift from physical media toward content distribution in digital form — has gone so far as barring Blu-ray players from Mac computers.

The Wall Street Journal reports that the Justice Department is investigating whether MPEG LA is unfairly trying to “smother” a free alternative format for delivering online video backed by Google.

Google’s open source VP8 video codec has been a concern for the MPEG LA organization, which has amassed patents covering popular video formats and collects royalties for its members, including Apple and Microsoft.

Video-streaming services such as Netflix and YouTube — as well as makers of Blu-ray Disc players and other hardware — currently pay patent royalties to MPEG LA. The antitrust probe is investigating whether MPEG LA or any of it members are attempting to knock out Google’s VP8 format by creating legal uncertainty regarding potential patent violations. WSJ suggests the probe “pits Google and open-source software advocates against some technology giants like Apple” — and raises interesting issues about the broadcast of online video in HTML5 and the future of content delivery.

The two-day OTTcon (Over-the-Top TV and Video) conference took place the first week of March in San Jose, CA. In his opening keynote entitled “What Will Television Look Like in 20 Years?”, Scott Puopolo (VP Global Service Provider Practice for Cisco Internet Business Solutions Group) offered his company’s predictions on the immersive and collaborative future of TV.

Cisco interviewed 50 television experts with a focus on technology, consumer behavior, and business models to analyze the medium’s direction. Puopolo’s blog on the Cisco site offers an insightful overview of the results, including an interesting video and the implications for Cisco Videoscape. Highlights include:

Sensory Technology: “Sensory technology will enable new creative tools for producers and new experiences for consumers. So we’ll not only see Rachael Ray’s brownies — we’ll smell them, and eventually taste them, too.”

Multipurpose Screens: “Instead of buying TV sets per se, viewers will buy multipurpose screens. A screen in a bedroom could display your favorite painting or change into a teleconference monitor when you’re not watching TV.”

Interactive Collaboration: “Viewers will break the confines of the TV episode and interact with their favorite characters in everyday life. They could, for instance, collaborate with other fans to help key characters solve a crime or mystery.”

Gestural Interfaces: “Consumers will use words, gestures, and devices such as smartphones and iPads to control their TVs. You might raise the volume or choose a different show with a simple flick of your wrist.”

Internet TV pioneer Hulu is reportedly in discussions to transform its business model. Since its 2008 launch, Hulu has been one of the leaders in free online television delivery and web-video ad dollars.

The Wall Street Journal reports that Hulu’s three owners (NBC Universal, News Corp. and Disney) are concerned that free Web versions of their TV shows are cutting into their traditional business, and the three are at odds regarding how much of their content should be offered for free.

News Corp.’s Fox Broadcasting and Disney’s ABC are considering pulling some of their free content from Hulu (and selling more content to Hulu competitors), while Hulu management is discussing the idea of retooling Hulu as an online cable operator that would use the Web to provide live TV channels and video-on-demand content to customers. If they opt to move forward with such a plan, some form of Hulu’s free service would likely remain and it is possible Hulu Plus could be folded into the new service.

Film editor and sound designer Walter Murch wrote a letter to Roger Ebert in which he discusses the pitfalls of editing and viewing 3D movies.

Ebert notes that Murch is uniquely qualified to comment on 3D, considering he has received Academy Award nominations for films edited on four different systems, including: upright Moviola, KEM flatbed, Avid, and Final Cut Pro. He also edited the 3D “Captain Eo” in the 1980s and wrote “In the Blink of an Eye: A Perspective on Film Editing” in 1995.

In his letter, Murch addresses a number of compelling points such as the inherent darkness of the 3D image, the strobe effect of horizontal movement in 3D, and what he sees as problematic issues involving how our eyes and brain interpret convergence, focus, and immersion. Murch sums up his take on 3D as, “dark, small, stroby, headache inducing, alienating. And expensive. The question is: how long will it take people to realize and get fed up?”