I believe the only free video is
youtube. Current television series run 99c per episode (which is a relative bargain, but does add up quickly to real money), and movies are $3.99 each. You can be sure that you're going to be paying for movies and television series, one way or another. The production studios aren't charities giving away their content. Even PBS won't do that.
Be forewarned that if, like us, you have a hearing impaired person in your home, Apple TV won't work for you. While software supports closed captioning, practically none of the video has closed captions. You'd think that they'd provide closed captions on these videos, since they do when they're broadcast on regular television, but they don't. (Netflix is the same.) The law hasn't caught up to technology, and since they're not required to provide accommodation for the disabled, they decided not to. Nice. (Not.)
Putting that aside, keep in mind that the marketplace is
extremely dynamic, today. What is true right now will almost surely
not be true next year, and that goes for the good things and the bad. So buying any video device, including televisions, comes with some measure of risk that what you're buying will not provide you the same perceived and derived value next year as it does now (again, in both the good and bad directions, without any assurance that they'd balance-out).
Televisions, at least, seem to have a lot of future-proofing in them. HDMI inputs aren't going away - all newer concepts seek to capitalize on them.
DVRs and streaming video devices (like Apple TV) aren't so blessed, though. While they rely on HDMI for output, their inputs vary, in terms of the transport mechanism for data, yes, but more importantly, they also vary in terms of the structure of the service on which they rely.
Apple has to negotiate for the right to provide you (rent you) movies and episodes of television series. In this way, they're not much different from your cable company (except the cable company has to negotiate for the right to provide you a full day's worth of programming). While
right now the pricing for what they offer seems to be advantageous to customers (though, at 99c each, many customers would disagree) the reality is that the prices they're current charging are too low to be sustainable. Figure that in the long-term pricing for individual television episodes will come to rest somewhere around $1.75-$2.00 per episode (and then go up from there in synch with inflation) - less than the $4 or so that they were charging early adopters, but more than promotional pricing they're charging now to try to attract mainstream customers and get them hooked.
At that rate, you'll only really benefit from a la carte pricing if you currently watch only four or five hours of television per week. After that, package pricing will be more advantageous for you, and you'll soon be back to where you are now with your cable or satellite provider (again, once online streaming becomes a more mature service).
Also keep in mind that the FCC is peddling its AllVid proposal, which would make devices like Apple TV (and my favorite DVR, TiVo) practically obsolete. However, that's about four or five years away. No one should buy any device, television, DVR or whatever, and expect to still be using it four or five years from now. The world simply isn't like that anymore.
One thing I'm wondering, though, is how well Apple TV does with regard to reliable performance: It depends on the speed and robustness of your Internet connection, for sure, so I'm wondering what the experiences of long-time Apple TV users has been in that regard. Is it anywhere close to cable in terms of HD picture quality and how reliable the signal is? or does it suffer from the same kind of problems during peak Internet usage times that many satellite services suffer from during bad weather?