Apple’s much anticipated press event is only less than 24 hours from now, and I’m looking forward to several potential announcements: iTunes in the cloud, TV show rentals, a redone Apple TV (renamed iTV), and a revamped iPod Touch.  However, I’m eyeing two markets in particular where Apple can make significant inroads: Video calling and console gaming.

Video calling

Ubiquitous video calling is one of the greatest unfulfilled promises in the mobile industry. Despite several attempts by carriers and third parties alike, video calling has yet to gain significant popularity. With Facetime, Apple is vying to change that.

So far, however, Facetime has seen slow adoption, primarily because of its limited availability and the lack of a strong use case for video calling. This can change if Apple launches Facetime on iPod Touch and iTV.

Reach. The high bandwidth requirements for reasonable video quality are currently unsupported by most cellular networks. 4G networks such as WiMax and LTE are expected to provide the necessary bandwidth and speeds, but 4G deployments are thus far limited. Mindful of current restrictions, Apple decided against waiting for 4G advancements and pushed Facetime forward to work solely with WiFi.

While video calling on WiFi only can deliver better video quality and thus change the way people think about video calling, the limited availability prevents Facetime from reaching a critical mass. If Apple revamps its iPod Touch with a front-facing camera and Facetime capabilities, and iPod Touch sales at least match those of iPhone 4, the number of video calling users could very well double. Furthermore, if iTV comes equipped with Facetime and an add-on camera, the user base for video calling would expand, magnifying the popularity of Facetime and the ubiquity of video calling.

Use cases. Despite their use in public places, mobile phones are inherently personal. Users typically do not want to publicize their private conversations and engagements. This poses a serious problem for video calling: the mobile phone must be held at a distance, requiring the speaker to speak louder and accept a generally less private conversation. Video calling is thus undesirable in many situations. Unless device form factor changes radically, this problem is not going to go away.

Video calling from the comfort of your couch (using WiFi) or video sharing (sharing what you see) is another matter, however. Moreover, if Apple launches Facetime with iTV, video communications between a mobile device and a big screen TV could make for a very strong use case, particularly for office meetings and conferences.

Despite the promise, Apple will have to overcome two major challenges if it truly wants Facetime and video calling to become ubiquitous.

First, video encoding and compression technologies have yet to advance sufficiently for video to be encoded optimally on a mobile device and transmitted efficiently over a cellular network. Standard codecs such as H.264 are far from being optimal for mobile video calling. 4G deployments are going to take a while, and until that happens the reach is going to be very limited no matter how hard Apple tries to expand the number of its Facetime devices.

This is precisely why Apple has decided to open up the Facetime platform to encourage innovation and allow interoperability between different (non Apple) devices that can support Facetime in the future.

Second, with the limited user base, finding individuals to video call is not easy: one must know whether the called party is on a Facetime device and currently on WiFi (and thus video-callable). If Apple can resolve this, more people will be tempted to make video calls.

Console gaming

Kevin Rose predicted that iTV will change everything. While the abilities to rent TV shows (as opposed to buying them for more money) and store media in the cloud (as opposed to storing them on a local disk), coupled with the availability of iOS apps on a big screen could all be significant steps in popularizing iTV, I doubt there will be enough content on iTunes and iTV that iTV can “change everything” yet. iTV can, however, greatly broaden the base of “console” gamers. The impact on the gaming market could be similar to one Facebook had on social and casual gaming. By bringing in non-traditional gamers, who enjoy games for their ease of use and social capabilities, and providing a vast library of cheaper games, iTV does not yet pose a threat to consoles targeted to hard-core gamers, but it may greatly expand the console gaming market.

Will this event be as big as Apple’s previous two announcements (iPad and iPhone 4) were? I think it will, if Apple announces at least the two products mentioned above. Nevertheless, considering the upcoming event is more music themed, readers expecting a big TV front announcement should prepare for possible disappointment.