Apple TV no longer just a hobby

In one fell swoop, Apple has erased the notion — enlivened by an infamous Steve Jobs quote — that the company views TV as a “hobby,” unveiling a radically reworked and re-priced Apple TV platform while setting the stage for new content economics and providing a glimpse at the future of content sharing between multiple devices in the home.

The much-anticipated annual Apple music briefing Wednesday also featured a new version of iTunes that enables a music-oriented social networking community, as well as the launch of iOS version 4.1 and a sneak-peek at version 4.2, not to mention a few new iPod devices. However, the TV-related portion of the announcement very nearly turned a music-themed event into a video celebration.

Apple’s new version of its Apple TV platform is one-quarter the size of the original version that launched in 2006 — and to widespread criticism has barely been upgraded since then. The new palm-sized unit will sell for just $99, a price which honored recent rumors that Apple was cutting the former Apple TV box price from $299 to $99. (A rumored name-change from Apple TV to “iTV” was not mentioned.) It has Wi-Fi and Ethernet connectivity and an HDMI port and a self-contained power supply.

The company also is changing its former Apple TV approach of requiring users to purchase video content downloads to a new all-rental model that allows video streaming and doesn’t require any syncing to a computer-based iTunes library. First-run HD movie rentals (those available the same day a movie launches on DVD) will now be priced at $4.99, a fee comparable to most movie-on-demand offerings from service providers. TV shows will be available for rent at 99 cents per episode, down from a previous $2.99 purchase price.

Not everyone is buying into the new economic model for movie and TV content. The re-worked Apple TV platform will launch with TV episodes from major networks ABC and Fox, but Apple hasn't gotten the others to buy in yet.

On screen, the new Apple TV platform simplifies renting and viewing through a new interface that features movie, TV, and Internet content tabs and allows users to prioritize viewing and be alerted to content they have rented but haven’t watched yet. The Internet tab features video streaming from Netflix, provided you’re a member of the movie rental service. That could be a key arrangement as Netflix looks to get more into streaming and compete more effectively against other Internet-based, box-based and service provider options.

Finally, a “computers” tab allows viewers to use Apple’s AirPlay content streaming capability (renamed from the previous audio-centric “AirTunes”) to stream video from another iOS device (iPhone or iPad, for example) to their TVs. That capability captures the essence of what service providers have long been promising in terms of advanced TV applications and content sharing but mostly have yet to deliver.

Apple CEO Steve Jobs said during the unveiling, “We launched Apple TV in 2006. It was not a big hit, but users love it. What did we learn? That they wanted Hollywood movies and TV shows in HD, lower content prices. They didn’t want to have a computer on their TV. They didn’t want to manage storage, and they didn’t want to do a lot of syncing. They also wanted the hardware to be silent, cool and small.”

Among initial analyst reactions to the announcement, Jonathan Hurd, director of Altman, Vilandrie & Co., said of Apple’s lower video content prices, “TV Everywhere and much of cable VOD is free — a value add for your cable subscription. When shows are offered on a pay-to-rent basis on cable VOD they are often 99 cents, so that pricing appears to be consistent.” He added. "It’s the convenience and affordability of the streamlined $99 AppleTV box, rather than the pricing of the TV show rentals, that make the product attractive.”

Still, Hurd said that featuring content from only two major TV networks probably means that the new approach will not initially have a significant impact on traditional TV viewing.

The ability to stream content between Apple devices is more interesting. “It’s interesting that you can stream to it using other Apple products — that adds a new dimension of simplicity and control to the user experience that is pretty attractive,” Hurd said.