Apple has announced the arrival of its revamped Apple TV device, confirming that it will take a cut-price and small-size approach in a renewed bid to convince viewers to integrate the internet into their living rooms.

The new device, which connects up with high-definition televisions, will sell in the United States for $US99 ($A109), down sharply from the $US229 ($A250) price-tag for the current model. Here in Australia, the cost of the new model will be $A129.

Apple's announcement confirms speculation from earlier this year, reported in TSR, that the company was in the process of overhauling Apple TV in order to improve integration with popular devices like the iPhone and iPad, and make it more attractive to consumers. The previous model failed to take off, with Apple's chief executive Steve Jobs admitting that he regarded it as more of a "hobby" than a serious investment.

But Apple has signalled its intention to take a more determined approach to push for greater enmeshment of the web and TV with the new digital receiver. Announcing the revamped version, Jobs said:

"The new Apple TV, paired with the largest selection of online HD movie and TV show rentals, lets users watch Hollywood content on their HD TV whenever they want.

"This tiny, silent box costing just $99 lets users watch thousands of HD movies and TV shows, and makes all of their music, photos and videos effortlessly available on their home entertainment system."

Apple says that the new generation of Apple TV devices will be 80 per cent smaller than the existing range, cutting its size to less than ten square inches.

The new device will offer streaming of television shows to its US viewers at a cost of 99 cents, confirming its intention to undercut potential rivals. But there is no equivalent deal in store for Australian viewers.

First-run movies in the US will be $US2.99 for standard-definition rentals and $US3.99 for high-definition rentals. Australian rental costs will start from $A3.99 and $A4.99 for SD and HD rentals respectively.

The Apple TV also streams content from YouTube, Netflix, Flickr and MobileMe.

Caution about chances of success

At this stage, the US content deal is limited. While managing to sign deals with Disney-ABC Television Group and Fox - associated with shows like Modern Family and Glee respectively - other broadcasters have kept their distance.

Sources told Reuters that executives remained sceptical about whether the low rental price - and Apple's desire to take a 30 per cent share of the revenue - would make it financially worthwhile to enter into an agreement.

"This is a plan that is designed to sell iPads, iPods and iPhones. It is not a plan that is designed to appropriately value content," one insider said.

Other observers also expressed doubts about whether Apple's second bite of the cherry would succeed, suggesting that it was more of a step in the right direction than a revolution that would change the way that consumers approached their multimedia purchasing decisions.

Media Spy discussion: Apple TV