I read the reviews and online discussions before springing for the Apple TV. Most of them are from December or earlier. Without disputing the experiences of earlier reviewers, it's clear now that many of the glitches have been ironed out, and the Apple TV which I'm now watching works well, and intuitively. That said, Apple TV is not a magic trick and will perform no better than your internet connection will allow.
What it's like when it's working right
When it's operating as intended, Apple TV allows you to rent and watch HD TV for (typically) £4.99 for 48 hours access. The picture is pristine, and, once loaded, plays without any of the glitches or artefacts you get with BBC iPlayer or 4OD. You can also watch YouTube videos, and listen to radio. For some reason, you can further watch American baseball, if this appeals. As well as downloading directly from the internet, you can stream from an iPhone, iPad, or computer with iTunes installed and WiFi.
There is just one HDMI output, and no HDMI input. This means that you have to have a free HDMI port on your TV, or swap plugs, or use an HDMI splitter. Some splitters will work, others won't. Generally speaking, splitters that are actually physical switches should work, whereas splitters that look for an active signal may be more problematic. There's also an optical out, but no analogue out. You can either get this from your TV, or some other device that accepts optical audio. Getting the signal in is by ethernet or wifi. Doing it by wifi is asking for trouble, because it will slow the whole connection down, especially if there's a of competing wifi in your area.
The Apple TV can't download video faster than your network connection allows. We're on a supposedly 8 MB connection which in reality delivers 6 MB consistently. This is more or less the minimum specification -- though, since we're on ADSL at the edge of rural Warwickshire, a lot of users will get better performance. To watch a 90 minute film, we need to start downloading about 45 minutes before, if it's late at night and we're not surfing the net for anything else. Any other internet activity will increase the download time. A faster connection will download more quickly and let you start watching sooner, as it doesn't need to download everything before it starts playing.
Why it's good
Compared to the Humax Foxsat HDR 500GB Freesat HD Satellite Receiver and Digital TV Recorder
we have, and the Virgin box we had when we lived in a Cable area, the look, feel and control responsiveness of Apple TV are years ahead. You can preview films you might want to watch, quickly scan through hundreds of covers to pick something (it used to take me 30 minutes working through the text-only Virgin film-on-demand menus just checking the titles), and even watch previews of films now in the cinema. The choice of films is a _lot_ better than Virgin's ever was. The streaming from iTunes, iPhones and iPads is flawless, and the whole thing is just a much better quality device than anything I've ever previously plugged into the TV set.
It's the viewing quality which really impresses, though. On our 720p TV, the HD quality is as good as BBC HD, and approaches the quality of Blu-Ray, without the slow unresponsiveness of many Blu-Ray players. Crucially, it is streets ahead of iPlayer, 4OD and Demand5 in the smoothness of its playing. There are not glitches, sudden stops, degraded pictures of the kind that we get on other services (using the same internet connection). This is by design, and is the reason why you have to wait a long time for the film to be ready: once the viewing experience starts it's perfect.
Something else which is nice about this is that it doesn't impose itself on your other web activities. While waiting for a film to download, I watched an episode of How I Met Your Mother on 4OD. The predicted download time for Apple TV went up dramatically, but it allowed me to watch 4OD without any more than the usual connection problems. Likewise (also for a hike in predicted download time) I was able to surf the web, pick up my email. and generally not be bothered. This is important if you intend to watch a film in the mid-evening, but want to carry on surfing beforehand.
I was quite nervous of buying this because of all the negative reviews, and especially because our broadband is quite slow. In the event, the pre-download time is somewhat annoying -- I would prefer not to have to decide 45 minutes in advance what I'm going to watch. On the other hand, it's a lot quicker than nipping down the shops for a DVD, and not really less time consuming than the endless trawl through Virgin's list of available films. Available content is very strong, though by no means universal, even as regards 'classics', and you can get French, German, Italian and other world cinema.
I doubt we would have bought this if we were still on Virgin Cable -- the quality and reliability is better, but the download time is slower, and Virgin FilmFlex came with our package. For our situation -- provided that you don't expect performance that your internet connection can't deliver -- this is really very good.