I suggest that AAPL buy NFLX, spend money on buying up lots of quality content, and continue to develop it as best of breed. Perhaps add the ability to buy movies or TV shows for 99 cents without a $7.99 subscription. they can bring NFLX to millions of iOS users. NFLX is best of breed in the video on demand space.
AAPL should then buy Dreamworks and Lionsgate (and Sony?) and a few media companies. Then spin off the production part, but keep the content library, maybe spend $10 -$12 Billion on content. Then they would make 100% profit when people rent these movies vs 30% with iTunes and APPS.
Disclosure: I am long AAPL.