Apple's iTunes video purchases have a rather big drawback right now: storage. The files are large, especially the high-def videos, and most users don't have a lot of hard-drive space to store them all without constant binge and purges.
According to Apple Insider, Apple's got a solution: they will bake video streaming into a future update of iTunes. This won't actually replace video downloading, but will be an option for users: either download it to disk and load it up on the iPod or iPhone, or stream it immediately, but transiently.
Obviously, this would be quite a nice little boon of a feature to Apple's flagging TV box, which has had a hard time slicing itself out a space: it's not as full featured as a PC hooked up to your television, nor as immediate as solutions like Roku's Netflix streaming solutions. Streaming functionality would help edge the Apple TV closer to the latter, if not the former.
This is a rumor, but it seems to make sense: Apple already offers "rent" ability, and streaming is just a more storage savvy way of renting content. If this one doesn't come true in an iTunes 8 update, you can color me surprised.
Apple plrepping iTunes replay on-demand video service [Apple Insider via Cult of Mac]