Deutche Bank has warned that the Apple TV could cannibalise a slice of the $26bn DVD player market in the coming years.

In a note to clients released on Thursday night, Deutche Bank warned that the Apple TV could cannibalise a slice of the $26bn DVD player market in the coming years.

The company revealed plans to introduce YouTube support to Apple TV at an event this week. Deutche Bank believes this move will drive success for Apple, in its ‘hobbyist’ company segment.

It was also revealed yesterday that YouTube is re-encoding content into the Apple-preferred H.264 video codec in order that Apple TV can play it.

Deutche Bank analysts predict: "Apple is positioned to introduce a compelling integrated home media infrastructure solution."

"We expect Apple to continue adding video content (TV, movies, etc) to iTunes/Apple TV further increasing its appeal," the analysts said.