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Review:

Editors' note (3/24/2011): The most recent firmware update has added MLB.TV and NBA League Pass streaming video services, as well as other AirPlay enhancements.

In case you haven't noticed, there's a revolution going on in how people watch movies and TV. Traditional services like cable and satellite are losing ground, as more people are streaming content directly from the Internet, using services like Netflix, iTunes, and Amazon Video On Demand. The revamped Apple TV is the company's aggressive move to capture the streaming-video business: for just $99, you ... Expand full review

Editors' note (3/24/2011): The most recent firmware update has added MLB.TV and NBA League Pass streaming video services, as well as other AirPlay enhancements.

In case you haven't noticed, there's a revolution going on in how people watch movies and TV. Traditional services like cable and satellite are losing ground, as more people are streaming content directly from the Internet, using services like Netflix, iTunes, and Amazon Video On Demand. The revamped Apple TV is the company's aggressive move to capture the streaming-video business: for just $99, you get access to Netflix, YouTube, TV, and movies from the iTunes Store, plus all the music and videos on networked computers running iTunes. And with a pitch-perfect design and user interface, it'll be hard for Apple fans to pass it up.

The Apple TV's shortcomings are all about content, which is arguably the most important aspect of a product like this. Currently the only supported TV networks are ABC, Fox, Disney, and BBC, and even with those networks, many popular shows, such as "Modern Family" and "House," aren't available. That's a lot of missing content for people looking to ditch their cable subscription, especially when the competing Roku XDS offers Amazon VOD, which streams TV shows from every network, and will soon have Hulu Plus to boot.

That said, Apple TV's shortcomings are strictly content-based--something that could be fixed in an instant with a software update or new deals with additional TV networks. At $99, it's still a great deal, especially for those who already own compatible Apple products and want an easy way to get content to their living rooms. We hope that Apple adds even more TV content and third-party services to the device, and we're looking forward to seeing how much the forthcoming AirPlay feature helps change the content equation in just a few short weeks--at which time we'll be re-evaluating the product in detail.

Design
We knew the Apple TV was small, but we didn't realize just how tiny it was until we pulled it out of the box. It's a quarter of the size of the first-gen Apple TV and more impressively, it's even smaller than Roku's line of video streamers. Apple products are generally known as the ultimate for status-seeking gadgeteers, but the Apple TV's style is decidedly low-key. It's a small charcoal gray box, with a glossy finish around the perimeter and a matte finish on top, where the Apple logo resides. The bottom has a slight bevel and rubberized surface so it doesn't slip. There is a small white light on the front panel on the right-hand side, which unfortunately can't be turned off in the settings menu. Overall, the understated look is a winner for a home theater, where it's much better to fit in than to stand out.

The new Apple TV is much smaller than the old one, largely because it lacks a hard drive.

The Apple TV's connectivity is basic, but completely sufficient. It has built-in 802.11N Wi-Fi, so you won't need an Ethernet cord in your living room. The main connection on the back panel is the HDMI output, which can handle both high-def video and surround-sound audio. There's no component video output for older TVs, but every modern HDTV supports HDMI. If you have an older AV receiver without HDMI, the Apple TV also has an optical digital audio output, which is capable of surround sound as well. There's also an Ethernet port if you prefer the stability of a wired network connection. Rounding things out is a Micro-USB port, but that's not for general use.

The included remote is as minimalist as the box itself. It's the same superslim clicker included with iMacs, consisting just of an aluminum casing, with a directional pad, a menu button, and a play/pause button. The Apple TV's interface is simple enough that it's all you need, as long as you're familiar with standard Apple navigation; use the menu button to jump back.

Though the included remote is perfectly fine for simple Apple TV operation, the device really takes off when using an iPhone/iPod Touch/iPad as a controller, using the free Remote app. Using gesture-based controls, you can swipe and tap your way through menus, plus you have the ability to use the keyboard on your portable device to do text entry, which is much quicker than using the onscreen keyboard and standard remote. Even better is queuing up music from your iTunes library by browsing cover art. It's one of the best way we've seen to browse your digital music library.

Setup and user interface
The initial setup is as simple as it gets. Plug it in, connect an HDMI cable, and fire up your HDTV to start the guided onscreen setup. Then just pick a language, choose your router, enter your password, and you can start to use the Apple TV. To access some of the more-advanced functionality, like Home Sharing and Netflix, you'll need to enter some additional info, but it's a cinch.
The Apple TV's main user interface is the best we've seen on a video-streaming device.

The user interface is largely unchanged from the original Apple TV, which isn't a bad thing. The main screen lists the basic content categories: Movies, TV Shows, Internet, Computers, and Settings. If you select movies, a list of cover art for current top movies shows along the top, before you even jump into the main movies section.

For movies and TV shows, you can browse by top content, genres, or directly search. You also have the option to filter by networks with TV shows. Any non-Apple services, like Netflix and Flickr, are grouped together in the Internet category. Navigation feels very quick and the screens are laid out intuitively. If you're looking for eye candy, there's no competition for the Apple TV.

Netflix, iTunes Store, and a few extras
The original Apple TV was centered on syncing with your iTunes account, but the new Apple TV is all about streaming off the Web. The two main media sources you can access via the Apple TV are Netflix and iTunes.

Not only can you access your Netflix Instant Queue, but you can search and browse by genre.

Netflix: With a $9-per-month subscription, you can stream an unlimited amount of Netflix's streaming video content to your Apple TV. The user interface is one of the best we've seen, offering access to your Instant Queue, plus the ability to search and browse categories like "New Arrivals" and "Movie Genres." Your Instant Queue is laid about in a grid with box art, which is large enough to read even when we were sitting about 10 feet back. It's one of the better Netflix interfaces we've seen, outpacing the standard Netflix interface included with Blu-ray players.

The Netflix Instant Queue interface is better than that of most competitors, using a grid format to show more movies at once.

Though Netflix is a great addition to the Apple TV, it's worth pointing out that many tech enthusiasts will likely already have access to Netflix streaming in their home theaters, as its become ubiquitous on devices like Blu-ray players, game consoles, and connected HDTVs.

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iTunes Store: The iTunes Store currently has the largest selection of movies to rent, with about 8,000 titles in total and 3,500 in HD. Apple has been pushing the idea that many movies are available at the same time the DVDs are released. For some titles, that's true; "Get Him to the Greek," "Babies," and "Frozen" were available in the iTunes Store when the DVDs came out this week, but "Iron Man 2" wasn't. Still, overall we feel like there was lots of recent content and a large back library.

There's an extensive collection of movies in the iTunes Store, including some movies available the day the DVD comes out.

Though the selection for movies is extensive, TV show selection is very limited. First, only four major content providers are currently supported: ABC, Fox, Disney, and BBC Earth. That means no CBS, NBC, or any cable channels. Even worse, the selection of shows on ABC and Fox isn't comprehensive. At the time of the review, top ABC and Fox shows, such as "Dancing with the Stars," "House," "Modern Family," and "Fringe," aren't available to rent directly from the Apple TV. On the upside, all TV rentals are in HD and only cost 99 cents.

The content omissions might be acceptable if the Apple TV was the only game in town, but it's not. Amazon Video On Demand has content from all the major networks (ABC, CBS, NBC, and Fox), including many shows omitted on the Apple TV, such as "House," "Modern Family," and "Fringe." Amazon also has content from some cable channels, so you have access to shows such as "Mad Men" and "Louie," from AMC and FX, respectively. If your goal is to completely ditch your cable subscription, you'll find it a lot easier to do with products that support Amazon VOD, such as Roku's network video streamers, Panasonic's Blu-ray players, and Sony's SMP-N100.

The selection of TV show to stream is limited to just ABC, Fox, BBC, and Disney.

Making matters even more confusing is that much of the content that's missing from the Apple TV is available from the iTunes Store when accessed from a PC, although only to buy, not rent. That leads to the very un-Apple scenario of needing a PC to, say, buy the latest episode of "The Office," wait for it to download (which can take more than a half hour, even on a fast connection), then stream it off your PC. That's far from the user experience promised by the Apple TV, where you choose shows from your couch and they start streaming immediately.

Not every ABC and Fox show is available, including popular series such as "Modern Family."

We're sure Apple will continue to negotiate with content providers to add more TV content that's directly accessible from Apple TV, but currently the streaming selection is very underwhelming.

In addition to videos purchased from the iTunes Store, you can stream any other PC- and Mac-based video, so long as you first convert it to an iTunes-friendly video format. There are plenty of freeware programs that do so, but it's a time-consuming transcoding process. In other words, don't expect Apple TV to offer instantaneous compatibility if you have a giant library of DivX, MKV, WMV files, and the like. If that's a core concern for you, you'll have better luck with something like the WD TV Live Plus or theSeagate FreeAgent GoFlex TV--if not a PS3 or Xbox 360.

Extras: Aside from the big three services, the Apple TV has a few additional sources of content, including YouTube, Flickr, MovileMe, podcasts, and Internet radio. Flickr is particularly impressive, especially when using an iPhone to swipe through your gallery of photos.

On the other hand, iPhone/iPod Touch/iPad users who have become accustomed to streaming music services like Pandora and Rhapsody will be disappointed to find that those services aren't available on the Apple TV. Though the App Store has really opened up the iPhone/iPod Touch/iPad to all kinds of developers, the Apple TV remains a closed program, with Apple deciding what services get added. Which brings us to AirPlay.

AirPlay
Tech enthusiasts have been referring to AirPlay as Apple TV's secret weapon and for good reason. The basic concept behind AirPlay is that you'd be able to take any content--music or video--playing on your iPhone and "push" the content to your Apple TV with a couple of taps. The most basic implementation of AirPlay will include any media that plays in the iOS device's native media player, but the Apple representative we talked to mentioned that developers will have the ability to add it to their apps as well. So the idea is, if you're listening to Pandora on your iPad, you'd theoretically be able to easily push that to your Apple TV, getting around the issue of the Apple TV lacking an App Store. (At least for those who own iOS devices.)

That's the idea, but unfortunately we won't get to test out AirPlay until November, when Apple releases the iOS 4.2 software update. It will also depend on how many third-party apps support it. Bottom line: if AirPlay works as advertised, it has the potential to be a game-changing killer app for the Apple TV, but we'll have to wait and see.

Image quality
Much has been made over the fact that the Apple TV only supports 720p resolution rather than 1080p, but as we've explained before, the resolution spec really doesn't matter for streaming video. Rather than relying on abstract numbers, we compared the Apple TV directly with the older Roku XR using the same program material.

First up was the Season 6 premiere of "Bones." The streams from iTunes (on the Apple TV) and Amazon (from the Roku) looked excellent and nearly identical. We could make out some slight compression artifacts in the background, but we imagine most viewers would be impressed by the image quality.

Next, we compared both devices' Netflix-streaming image quality using Episode 13 of Season 5 of "Lost." The Apple TV had a slight edge here, looking just slightly sharper than the Roku, although the difference will only be noticed by enthusiasts. The bottom line is that both boxes offer excellent image quality, considering it's streaming video.

Network performance
For content streaming off the Internet, we didn't run into any issues with the Apple TV. Movies, TV shows, and Netflix content began playing after only a few seconds, using the speedy connection in our corporate testing location. As always, the speed of your home broadband connection will affect streaming speeds.

The first time we tried to stream a downloaded, HD episode of "The Office" off our laptop, we got about 35 seconds in before the Apple TV had to rebuffer. The same happened when we loaded the most recent episode of "Mad Men." Yes, both the Apple TV and the laptop were connected wirelessly, so perhaps that's a lot to ask of our home network, but we were only forced to use that scenario because the iTunes Store requires the workaround.

To be fair, buffering is still an unfortunate reality with any streaming-video solution, whether it's streaming directly from the Internet or over a home network. We did appreciate that the Apple TV will continue to cache your video if you pause, which cuts down on buffering slowdowns.

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