Apple has signed a partnership with the video-sharing site YouTube. Beginning with mid-June, Apple TV will stream videos directly from YouTube and play them on a user's TV set. "This is the first time users can easily browse, find and watch YouTube videos right from their living room couch, and it's really, really fun," said Steve Jobs, Apple's CEO. "YouTube is a worldwide sensation, and Apple TV is bringing it directly from the Internet onto the widescreen TV in your living room."

The rumor of a partnership between Apple and Google regarding Apple Tv emerged last year, shortly after Steve Jobs introduced the first time the concept of a device that streams videos directly from Web to TV sets. At the time it was rumored that Google Video will be made compatible with Apple TV, but both companies declined to comment. Apple TV begin shipping in March and  until now it was compatible only with iTunes store.

The decision to stream the content from YouTube brings Apple in the middle of copyright battle.

Viacom, the owner of MTV and other TV stations, is currently suing YouTube because of copyright infringements.

Although, speaking with Reuters, a Viacom spokesman welcomed the chance to license their content to Apple "We're always vigilant about protecting our copyrights. But we would welcome the opportunity to license our content to Apple as we do with all distributors," a Viacom spokesman said.

Apple also announced a new Apple TV build-to-order option with a 160GB hard drive. The new larger hard drive offers four times the storage for up to 200 hours of video, 36,000 songs, 25,000 photos or a combination of each. The price of the new version will be $399.