AppleTV update adds TV show buying, Vimeo

A new software update for Apple's Apple TV streaming box has added a feature that makes up for the lack of built-in storage by making purchased video content available whenever viewers want to watch it. The company's $99 box can now stream purchased TV shows on demand directly from Apple's servers, and also lets users buy content directly from the box.

The move to serve up purchased videos is no minor addition. One the Apple TV's biggest losses in the move to a rental-only model (besides no longer storing content locally) was that you ended up with a more limited selection of video content, since only a handful of TV networks were offering rentals. One workaround was to use another device with that purchased content stored on it, be it a computer or an iOS device like the iPhone or iPad. Now Apple's taken on that responsibility by storing the content on its own servers and making it available whenever it's needed.

Adding on-demand streaming for video also suggests that the feature is on its way to other devices and software, including iTunes itself, which is expected to receive its annual update next month. When debuting iCloud back in June, notably missing was a video component, though this update would suggest it's set to be added.

Along with the TV show tweaks, today's update brings Web videos from Vimeo, which joins Google's YouTube and Yahoo's Flickr as popular Web properties in app form.

In CNET's hands-on time with the update, my colleague John Falcone noted that streaming a standard definition version of a TV show directly from Apple required waiting for the box to buffer for a full six minutes on a speedy network through a controlled 802.11n network. During this time users can go about using other Apple TV features. The official version number change in the update goes from 4.2.2 to 4.3. Apple is planning to bring the box up to a full new version number with iOS 5, which will bring the streaming of iOS applications to the Apple TV using Apple's AirPlay technology.

During the last fiscal quarter earnings call, Apple chief operating officer Tim Cook once again referred to the Apple TV as a "hobby" device, and noted that the company doesn't position it with the same profile as some of its other devices since it's not "another leg of the stool."

John Gruber at Daring Fireball picked up on the software update earlier today.

Updated at 10:45 a.m. PT with additional photos and observations about the new features.

Update at 11:51 a.m. PT: MacRumors notes that the purchased TV show download feature has come to the company's iTunes software, as well as iOS devices like the iPhone and iPad, letting users on those devices re-download previously purchased content.