Originally Posted by Mr. H
It would be nice if they introduced a rental subscription model on the movie side of things though.
That'd be nice, but I actually see Netflix coming to Apple TV before Apple would create their own iTunes subscription movie service. As you're probably aware, Netflix has a digital movie streaming service in addition to their DVD rentals, the latter costing them dearly. While they released a set-top-box for streaming their catalog of 10,000 movies (largely made up of older and obscure titles, with few new releases), their Instant Watch service seems a better fit for more advanced devices like the Apple TV, Vudu, Microsoft's Xbox 360 (it was recently announced the Netflix service was coming to the Xbox 360 through a software update), and even Blu-ray players (LG's BD-300, a BD player, will include the service).
In its current state, Instant Watch isn't as great as it sounds. While 10,000 movies and tv shows are available, they aren't browse-able through either that $100 Roku box, that Blu-ray player, nor the 360. You have to search through Netflix in a web browser on a computer and set up a small Instant Queue, which then syncs with the set-top-box. The movies are not downloaded to internal hard storage, so they have to buffer right off the internet, which makes rewinding and fast forwarding time consuming and more importantly, drops the visual quality based on your connection speed, making the already less-than-DVD-quality video worse. Also, when the service debuts on the 360, not only will you be paying the $10/month to Netflix, but it's locked into Xbox Live Gold memberships, which cost $50/year.
Apple is in a position to make such a service better with the Apple TV. First, they could work with Netflix to make all titles browse-able from the couch, rather than requiring set up on a computer (which Apple has tried to eliminate with the Apple TV's 2.0 software update at Macworld). They could potentially get Netflix to make the videos downloadable to the hard drive, rather than streaming straight off the internet. It would be yet another content channel on the Apple TV like the YouTube viewer, flickr and MobileMe photo album portals. You'd simply pay Netflix the $10 per month (with no annual charge like the Xbox). The best thing they could do for the Apple TV, though, would be DVD viewing. While they are certainly pushing digital distribution, they could enable those sleek $100 external SuperDrives (the ones that are optional for MacBook Air buyers) to connect and play DVDs through the Apple TV's user friendly UI by simply porting Mac OS X's existing DVD Player application. This would offer people a more gradual transition and allow Netflix subscribers to watch digital movies free in addition to DVDs sent through the mail.