Michelle Clancy ©RapidTVNews | 02-08-2011

Apple has finally caught up with the times, releasing a new software update for its second-generation Apple TV set-top box that will allow users to stream purchased content from iTunes directly through it. Previously, users could only directly access rented episodes and movies, and had to stream iTunes purchases through Air Play, which uses Wi-Fi to connect to an iPad, iPhone and iPod Touch. Now, shows purchased on other iOS devices or with iTunes automatically show up as available to play on Apple TV.

Also, with the 4.3 update, shows bought on Apple TV can be re-downloaded on other iOS devices, Apple has said.

The update also adds Vimeo integration to its roster of content partners (which also includes Netflix and YouTube). Apple TV users can browse and watch any of the user-uploaded videos found on the video-sharing service for free.

Apple revamped its Apple TV box last fall to better compete with the growing number of STB-based TV and movie competitors like Roku and Boxee. The second-gen version is small and light, sells for $99 and lacks a hard drive, which means that it can't store content locally - like purchased media. Now, Apple is leveraging the cloud to deliver users' purchased items.

Apple TV has failed to gain much traction with users as a television replacement, and many wonder if a fall refresh will bring major strategic changes. Apple is also reportedly eyeing the purchase of online TV company Hulu.com, which put itself on the block in an effort to capitalise on its growing premium subscription growth and profit. If an Apple-Hulu tie-up happens, Apple TV could end up a very different animal than it is today.