Many people thought upon seeing the Apple TV, “Huh??” All it did was make it possible for a Mac in another room to stream video to the TV–essentially the same thing as hooking up your Mac to a TV by cables, except without the cables. So why spend $300+ on the wireless equivalent? At the last MacWorld Expo, almost a year ago, Apple’s stock dropped when the Apple TV was mentioned, only to shoot up again upon news of the iPhone. The Apple TV was a non-starter.

Well, the answer, of course, was that Apple TV was incomplete. What the device was really built for was something more than just wireless TV: it was made as a rental movie box. I speculated on this as far back as last December, after discussions with my family on the topic, and six months ago, rumors of talks between Apple and the studios for online rentals flew around the net.

This potential makes the Apple TV look a lot more attractive. The product could act as a “DRM box,” a way to express movies to your TV over the Internet with the least risk of copying and distributing them. Not that such a thing is actually going to stem piracy–all they need is one copy, and ripping a rental DVD is simple enough. But it might be enough to get the studios to get over their piracy jitters enough to agree to it, and one more revenue stream could even entice them enough to sell their wares through Apple (though don’t hold your breath for Universal).

Which brings us to today’s story:

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.

That will certainly help. You can probably bet that Disney and their affiliates will be on board, and maybe even Paramount (they sell older movie titles over the iTunes Store). Interestingly, the article only mentions the Apple TV in terms of its poor sales, and not in its potential as a part of the rental movie deal. But the article does mention this:

In a related move, Fox also plans to release DVDs that use Apple’s digital rights management system, a move that would allow consumers to make legal copies of the disc that could be played on an iPod or other device, such as a computer.

Now, that’s an unexpected move–unless somehow they make it so that you are allowed to do this for an additional fee, which would fit much more into the studios’ “pay as often as possible” paradigm. But if it can be done at the same cost as usual DVDs, then that would be a nice added bonus.

An additional boost to the legitimacy of the claim: the report comes from the Wall Street Journal, a newly-acquired property of NewsCorp (play Darth Vader’s theme here), which also owns 20th Century Fox. That doesn’t make it a lock, but it certainly enhances the possibility that the report is true.

Unsurprisingly, Apple Stock surged over 200 again, and may stay there this time.

If you want full disclosure, I bought a largish chunk of Apple stock back when it was at $90. So, nyah.