For Christmas I bought my wife an Apple TV, which is the second generation of the device. We've been using it for the past week, and I thought I'd share some of my thoughts on what it's like.
tl;dr It's fantastic for movie rentals via iTunes, makes no sense for television.
Living, as we do, in northern Canuckistan, there are many strikes against us when it comes to accessing media. First, our only option for television service is satellite. We use Bell Express Vu with a PVR, allowing us to receive a few hundred SD and HD channels. For television this works quite well. We basically "tape" (I know, I'm old) all the shows we care about, and watch them when we want, skipping commercials or other objectionable content for our children. We never watch live TV. Ever (we refuse to watch commercials, and despite what some people tell us, we don't want to "interact with brands.") We can't really access TV in any other form, since any legal web option is blocked at the US border--no Hulu, lots of "Sorry, you suck" messages on YouTube, etc. It probably doesn't matter that much, since I don't want to "watch" much on my computer and would rather watch on the couch with my wife or kids.
Movies are another story. While I don't really watch television, I do enjoy movies. We live quite far from any movie theaters, and with young kids, my wife and I probably end-up going to the movies once or twice a year. A decade ago, our answer to this would have been to rent movies at Blockbuster or the like. Today that's impossible, as the local video rental businesses have all gone out of business, literally. The paradox is that while we've entered a time of logarithmic growth in digital media, we've simultaneously found ourselves almost completely in the dark where we live. There are thousands of movies from the past 5 years or so that we've never seen because we simply can't access them in a way that makes sense for us.
We could use Bell Express Vu's Pay-Per-View channels. This typically costs $5.99 per movie, and is incredibly limited. At any given time there are a dozen movies on offer, each playing on regular rotation on as many channels. We can't choose to watch a movie now (it might be starting again in the next 2 hours, though). We also can't choose which movies we want to watch--the selection is a joke. Why they don't make more movies available, I don't understand. But then, it's Bell: doing what their customers don't understand is how they roll.
We could buy movies on DVD. Neither of us are film fanatics, and while I do reread books, I rarely rewatch movies--owning them doesn't make sense for us practically. As such the price of most DVDs is crazy for a single viewing. We could subscribe to some sort of DVD-by-Mail service, however these are quickly going out of style. Also, the lack of immediate access is a problem for me. We could use NetFlix, but their Canadian selection, while quaint, isn't what I'm after (I know many of my friends like it, though).
We could get movies from the library, which we do on occasion. However, this always involves multiple steps, since nothing is ever on the shelves in our small branch, and has to be ordered. The fact that this is possible at all is amazing, and for certain types of content, it continues to be a good option. However, like DVD-by-Mail, it isn't instant, lacks selection, doesn't give us access to more recent titles, and requires multiple trips into town. Another viable option would be stealing content using BitTorrent. Yes, I think it's stealing and it doesn't appeal to me. I won't scold you for doing it, but it isn't something that I can justify doing myself.
Then there's Apple TV. We plug it into our TV (HDMI) and it connects by wireless to our home network (if we had an ethernet drop by our television, that would work, too). There are many videos of what it's like to use, so I won't repeat that here. The point is that it's suddenly possible for us to once again rent movies. Lots of movies. Renting a movie costs either $3.99 or $4.99, depending on how new it is. Before you rent you can preview, which means either a trailer or 1-2 minutes of the movie itself. Once rented it is available to watch for 30 days, and after you press play, you have 48 hours to complete it. We've rented half-a-dozen movies this week, and it's been a seamless and enjoyable experience. Never have we had to wait before watching, nor buffer in the middle of a viewing. We choose to use SD content (configurable in the iTunes settings on the device) since we only have a 5Mbps connection and Apple recommends 2.5Mbps for SD and 6 Mbps for HD in order to stream. This matches our television use, since we watch 95% SD content there.
Apple TV also includes a Television menu. Here we can buy television shows and/or seasons in much the same way we access movies. I said buy. Gone are the days of the $0.99 TV show rental (I mean, they never existed here in Canada). An episode costs $2.49. Most shows have a dozen episodes or more per season, and in some cases you can buy a Season's Pass, which adds new episodes as they become available. The purchased items are available via iCloud, making it unnecessary for you to buy large storage devices or manage media locally.
I'm willing to pay $4 or $5 to rent a movie. I think that's reasonable--I'd love to pay less, but it used to cost more than that to rent them at Blockbuster, and I had to drive there and back. I'm not willing to pay $2.49 for TV shows. It seems like Apple, and whoever else is behind this pricing, isn't serious about television yet. I could buy a season of a show on DVD and format-shift it into iTunes for a lot cheaper if I wanted to (which I don't). Also, with the possible exception of kids shows, owning a television episode makes even less sense to me than owning a movie.
The device also allow us to access YouTube, Vimeo and other web content. However I find its "browse" style interface a deal-breaker: YouTube's only value, as far as I'm concerned, is deep linking. And with no bluetooth keyboard access (dumb if you ask me, Apple, since I own 3 of them), I'm not going to do Search either and hen-peck my way through the onscreen keyboard.
So the combination of television through satellite and movies through iTunes looks like the future for us. As someone who writes software myself, it's painful to watch how far behind these technologies are compared to what's technically possible right now. As I write this on New Year's Eve, I'm hopefully that it can only get better. In the meantime Apple TV with movie rentals on iTunes gets two thumbs up from us.