That seems like it should have been a given from the beginning. Enable a local network and "stream" between devices. Should improve transfer speed dramatically.
Maybe using WiFi was just the quick-and-dirty way of getting something working fast...
I agree on both points. I've never understood why even my latest ATV requires my iPhone 4S to stream through my router when I'm 11 feet from the tv. Many wireless device technologies allow devices to talk to each other directly instead of via a router.
This would also allow me to put a few movies on my iPhone/iPad and take my AppleTV with me on vacation and allow the kids to watch movies. Not sure if the iPhone or iPad could stream a 2 hour movie on a battery but it would be nice!
I hope this is a software/firmware upgrade and not a new set of physical products.
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So will the iPhone 4S be able to do this or will it be an iPhone 5 only thing?
As sweet as it sounds, I've only once ever tried to use AirPlay, and it failed miserably, not on account of a wifi network, but because Apple's movie rental contracts suck. I rented a Pixar Movie on my iPhone, tried using AirPlay to play it on my TV via my AppleTV, and guess what it does? It streams just the audio. By design!
Although I don't know if your comments are accurate, this is another great example of why physical media will never die. There was also a great article recently asking what happens to all 10,000 digital/cloud movies/books/songs when you die...Apple and Amazon would not comment. They should, as most people would argue, be "transferred" to whoever is in the will.
Back on topic, I find it sooooo much easier to buy the Bluray for $10-$15, rip it to iTunes format, and play it on my ATV. I only do this for movies that will be watched a zillion times like Disney movies for kids. The 99% of other movies I buy I just plop in the player and sit back and enjoy...no "rights" issues, no timeframes to watch my movie, no excuses about video/audio quality, no risk of annoying my ISP with hundreds of gigs of bandwidth, no promises of "instant movies" which take minutes to load, no menus to sift through to "purchase" my movie, etc.
Digital/cloud movies have their place and for certain audiences. Until it is far more robust, move attractive to customers (price, licensing, ownership, transfership, etc), and easier to use, physical media will reign.