All of the content is streamed (rather than downloaded) and you can access your purchased movies and TV shows to rewatch as many times as you'd like. Your movie and TV show purchases can also be streamed or downloaded to other Apple devices, including the iPad, iPhone, iPod Touch, Macs, and PCs running iTunes.
Other streaming services: Improved third-party support
The traditional knock against the Apple TV was that it was short on apps, but that's not fair anymore. In addition to iTunes content, there's support for most major streaming video services, including Netflix, HBO Go, Hulu Plus, YouTube, MLB.TV, Watch ESPN, NBA, NHL, Crunchyroll, Qello, and Vimeo. There are even a couple live TV news apps: Sky News and WSJ Live. There are still some notable exceptions -- particularly Amazon Instant -- but I get the sense that most buyers will be perfectly satisfied with the Apple TV's current slate of services. And it's easy to miss that the podcast section actually includes quite a bit of web video content, including content from TED Talks, NASA, PBS and CNET.
The Apple TV is noticeably light when it comes to streaming music apps; there's no dedicated support for popular apps like Spotify, Rdio, Amazon Cloud Player and Pandora. That's not a problem if you own an iPad or iPhone -- since you can easily access those services using AirPlay -- but anyone intending to use the Apple TV as a standalone device won't have many music options.
For your personal media collection, the Apple TV's capabilities are mixed. In some ways, it bests its competitors, as it's exceedingly easy to view photos, listen to your own music, and watch home movies saved on your computer, as long as your content is managed by iTunes. But if you lean toward the geekier side, you'll be disappointed that you're limited to files that will playback in iTunes, which means often-downloaded file formats such as MKV and DivX won't work without doing some conversion. If you're looking for a box that can playback anything you throw at it, the Apple TV isn't for you, but for mainstream buyers it's better with your personal media than competitors like the Roku 3 and the Chromecast.
AirPlay: The Apple TV's killer feature, now with mirroring
AirPlay is such an excellent feature that if that the Apple TV only did AirPlay, it would still be enticing for Apple fans.
The basic idea is AirPlay lets you stream any music, video, or photo from your iPhone/iPad right to your TV. It works with nearly every third-party app, so you can load up Spotify on your iPhone, hit the AirPlay button and it will stream straight to your Apple TV, while your phone is still used for control. It also works with your personal media, so it's dead simple to browse photos or videos you shot on your smartphone on the big TV.
The Apple TV can also be used with AirPlay mirroring, which let you broadcast exactly what's on your screen -- including Flash video and free Hulu content -- to your TV. There's a few catches, though. One is that only relatively recent Macs (running Mountain Lion) support AirPlay Mirroring: specifically, iMacs (mid-2011 or newer), Mac Minis (mid-2011 or newer), MacBook Pros (early 2011 or newer).(mid-2011 or newer), and
You should also be prepared for not-quite-perfect image quality. In my testing, AirPlay mirroring tends to be a lot more reliable than Chromecast's mirroring, but it still doesn't look nearly good as HD video straight from Netflix or Amazon. When you add in the clunkiness of having to fumble with a laptop to watch videos and pause playback, I find myself using mirroring less than I thought I would. (Others may have more patience than me.).
iTunes Match: Digital music made simple
Getting your digital music collection to your living room somehow still manages to be a pain in 2013, outside of pricey (but excellent) options like a Sonos player. iTunes Match theoretically gets rid of most of the frustrations, letting you store a copy of your digital music in the cloud and stream directly to the Apple TV, iOS devices, and iTunes on a PC.
The downside is the service costs $25 a year, which stings a little considering that's a fee to listen to music you already own. (Google offers its own music storage options for free; Amazon'sis also $25 per year.) It can also , and I personally have had some difficulties with the services, but the interface on the Apple TV is a pretty slick way to listen to your digital music once you get it working properly.
The Apple TV will also support Apple's new iTunes Radio service when it launches along with iOS 7. The service will be ad-supported, but becomes ad-free if you're an iTunes Match subscriber.
What are the alternatives?
The Apple TV has two main competitors: the Roku 3 and Google Chromecast.
The Roku 3 remains my favorite streaming box. (Read my full review here.) It has more channels -- including Amazon Instant and a Time Warner Cable app -- excellent cross-platform search and the aforementioned remote with a headphone jack for private listening. Still, if you're invested in the Apple ecosystem, there's a strong argument that the Apple TV is a better buy. AirPlay is flat-out excellent, plus purchased iTunes content flows nicely between all your Apple devices. If you already own quite a few Apple devices, the Apple TV might be a better buy for you.
The main thing going for Google's Chromecast is its irresistible $35 price. Beyond that, there's only support for two dedicated apps (Netflix and YouTube), plus Android users get access to Google Play Music and TV & Movies. There's also no true onscreen interface, so you need a tablet or smartphone to serve up content. Chromecast also has the ability to mirror content from a PC, but the image quality and reliability is worse than the Apple TV's in my tests. The Chromecast has a lot of potential, but at the moment it's not a worthy alternative to the Apple TV and Roku 3 unless you're on a tight budget.
Conclusion: An excellent streamer, especially for Apple fans
The Apple TV is an overall excellent streaming box and well-worth $100 if you're heavily invested in iTunes content and the rest of Apple's ecosystem of content. But if you don't have ties to Apple's devices or services, the Roku 3 is the better buy, especially if you'll take advantage of its more extensive content offerings.