Apple TV’s missed opportunity

Thursday’s announcement of HD movies sales being added to the iTunes Store may have been good news for consumers of Apple-supplied content—especially Apple TV users, who are best poised to enjoy such HD content. But it also highlights the big drawback of the Apple TV—that Apple sees it as a way to sell you more TV shows and movies, not as a way for you to access and watch all the video content out there.

Sure, you can capture and convert video files to play on your TV via an Apple TV (a time-consuming and sometimes multi-step process), but what about streaming Web video? Beside YouTube content, the Apple TV provides no way to view Web videos—free TV show episodes from sites such as Hulu, for example. This NBC Universal and News Corporation venture features content from Fox, NBC Universal, MGM, Sony Pictures Television, and Warner Bros., and is available through a standard Web browser. And it’s exactly what the Apple TV is missing.

Boxee attempted to bridge the gap with an Apple TV hack that let you install its software on your Apple TV, and in the process gain access to some of that untapped Web media to people sitting on their couches, including Hulu content (at least until Hulu told Boxee to stop doing so).

And then there are products such as the Roku Netflix Player ( ), which brings Netflix’s Instant Watching service to your TV set with a $99 box. Unlike the iTunes Store’s paid movie rentals, Netflix gives subscribers to its DVD-rental service free streaming access to more than 10,000 titles (including TV shows, which Apple only sells, but doesn’t rent).

So why hasn’t Apple opened up the Apple TV to the outside world? The most obvious answer is that such a move would cut into iTunes Store sales. But perhaps considering that Apple CEO Steve Jobs has called the Apple TV a “hobby,” Apple just doesn’t care to invest too much time or effort into it.

Phil Leigh, president of market-researching Inside Digital Media, had a different take when we talked to him about Apple’s moves regarding the Apple TV: “The principle reason is they want to move slowly into the digital living room so they don’t step on the toes of the media companies as much as possible.”

Leigh also thinks that the product wasn’t designed with Web video in mind, which leads to one of its shortcomings. “The Apple TV is a good way to access content on iTunes,” he said. “It’s not a good way to access Web sites like Hulu.”

Whatever the reason, it’s Apple TV users who miss out. Instead of an open and extensible media device that can bring together various forms of content onto your TV, Apple has provided a limited piece of hardware—and has shown little interest in making it anything more than what it is now.

And that’s a shame.

[Jim Dalrymple contributed to this story.]