Even if Apple TV does not see the strong early demand that some analysts are hoping for, its long-term success will be critical to the online movie download market. Combined with the growing collection of movies at the iTunes Store, Apple is well positioned to take the lead in the next-generation living room media market.

Dale Gilliam, director of primary research at The Diffusion Group, noted in a recent study "Without a way to stream movies to the TV, the OMD (online movie download) sell-thru market remains little more than a niche/stop-gap between the current physical-media-dominated distribution model (the DVD) and a totally network-based distribution model where movie access is instant and physical media either does not exist or becomes part supplement and part novelty, like older technology often does."

Of all the players so far, Apple is the most likely to succeed with its Apple TV home media device. The company has already shown that it can design user-friendly consumer electronic devices with the iPod, and the Apple TV interface - which closely resembles the iPod and Apple's Front Row application on the Mac - is a natural extension of technologies that consumers are already comfortable with.

If Apple can convince consumers that movie downloads are an affordable and reasonable alternative to DVD rentals and purchases, the online movie download market will likely take hold and begin growing at a healthy rate.

"At this point," Mr. Gilliam added, "The entire OMD sell-thru market hinges on the success or failure of Apple TV."