Hmm, hard to say.
As things stand, the Apple TV product is something that really just does not appeal to me whatsoever. It left me wondering if Apple had really slipped up with its launch, as there is usually some part of an Apple product that interests me at some level, even if I won't buy it. I was a bit baffled by the Apple TV, however. So, my instinctive reaction is that this is a product that will quietly fade away.
Having said that... There were others who thought Apple TV was a great idea, when it was launched. This leaves me genuinely wondering if I'm missing something. I think that Apple TV is not likely to be a great success as it is, but if more content becomes available this could change dramatically.
There is talk that people are beginning to spend more time looking at content on the internet, such as videos on YouTube, than watching TV. I'm sure this is a slow process when looking at entire populations, but it could represent a shift. It may be that people will increasingly want to choose what programs they watch and when. Cable/satellite operators have some advantages over other forms of TV (eg. recording content on their box for later viewing, pay-per-view TV, etc.), but viewers are still mainly guided by "what's on."
If Apple could launch something major, analogous to the iTunes Music Store and iPod combination, it may tap into a big market: a sort of "TV on demand." That could be a dramatic step, but it may require a lot of infrastructure to do well, and it would certainly require big corporations to be on board.
Sooo... my thoughts are that the Apple TV, if it stays as it is, won't be a big success, but that it could be a big step if Apple put a lot of weight behind it, with lots of new content and new features being provided.