Often seen as an innovator, Apple is behind the PC industry on digital movie rentals by, oh, 8 years or so. But something tells me they'll do a good job, though more recent services like Amazon Unbox and, of course, the On Demand functionality on everyone's cable box sort of makes this redundant. The WSJ predicts:

 In an effort to jump-start the market for online movies, News Corp.'s Twentieth Century Fox and Apple Inc. are preparing to announce a deal in which Fox movies would be available for rent digitally through Apple's iTunes Store, according to people familiar with the matter.

Apple has for months been trying to persuade the Hollywood studios to agree to a digital rental model, in which consumers would be able to download movies through iTunes that could be played for a limited time. Until now, no studio has agreed to such a deal with Apple, and some companies have continued to resist Apple's pitch.

Sales of video through Apple's iTunes Store have failed to grow at the same pace as the site's music downloads, analysts say, while the company's video device for living rooms, Apple TV, has been a poor seller.

I actually use my Apple TV quite a bit for kids' movies, though I wish it supported more video formats and had a much bigger hard drive. But then I'm a tool in this way: Most people don't have the time, energy, or inclination to rip DVDs to a digital format so they can be used in this fashion, and really why should they? Most movies are only watched a single time anyway. What Apple TV needs is a way to browse the iTunes Store from the device and then order movie rentals or purchases. Until you can do that--something that's possible on the Xbox 360, by the way--it's an also-ran.

So why do I bother with the Apple TV at all? It's much quieter than the 360 and has a nice UI, and when you combine H.264 movies with the device and our HDTV, the end result is quite attractive. It's not perfect, but what is?

By the way: You can do virtually everything an Apple TV does with a video-capable iPod and an iPod Dock. The only difference is that you'll have to cart the device back to the PC occasionally to sync it up with content, and since Apple doesn't put the iPod UI on the screen, you'll have to jump down to the device to navigate the UI. But if you already have an iPod, it's an inexpensive way to accomplish the same thing.