Apple animating iTunes stream machine?

Apple will soon offer instant movie-watching gratification.

According to a report from AppleInsider, Cupertino is prepping something called iTunes Replay. This new service would allow users to stream movie and TV content directly to their Macs, Apple TVs, iPhones, and iPods without having to first download that content to those devices' storage systems.

Apparently, iTunes Replay will be rolled into an update of iTunes 8, introduced last September, and not wait until iTunes 9, which has yet to be announced.

Two advantages of the new service are obvious: First, the content wouldn't take up precious local storage space. Second, purchased content could be viewed anywhere at any time - although the report doesn't mention whether the target device would have to be "authorized" under the current iTunes five-device limitation. Nor did the report offer any details on iTunes Replay's pricing structure.

iTunes Replay may give a boost to sales of the Apple TV, the plain-vanilla version of which can hold a meager 40GB. With a two-hour HD movie consuming about 4GB, a Apple TV-using movie-lover must quickly decide which movies to archive and which to keep available on the device.

Not so, if iTunes Replay is real. Apple's servers would house your purchased movies and TV for you. And thanks to its recent deal with the Limelight content-delivery network (CDN) - adding to its long-standing relationship with Akamai - Apple has plenty of capacity from which to serve content.

Bandwidth is key, since a standard 1.5Mbps DSL line can choke on an HD-video stream. But Apple will most likely keep its standard download-first policy in place for HD-loving users who don't have HD-capable bandwidth. That's would provide two layers of content-download goodness - a capability unmatched by such streaming-only services such as Netflix's "Watch Instantly" selection.

Also, iTunes Replay may slow the current rush to home media servers, such as those offered by HP, Promise Technology, Iomega, and others.

It also may explain why rumors of an Apple media server may remain just that: rumors. ®