When you buy content from the iTunes store it is accessible from the Apple TV via iCloud without having to connect to your computer. However, when you convert the videos yourself to your iTunes Library those video will require that your Apple TV be able to connect with your iTunes Library, whether it be on a PC or Mac.
Setting up Home Sharing is different from simply using AirPlay. Instead of streaming your entire Mac screen to the Apple TV, it just streams the video or music. Also, there is no need to enable Airplay on your Mac and send the signal to your Apple TV. You can peruse the contents of your media collection from within the Apple TV, making finding that perfect Friday night movie easy to find from your couch.
#1 – Setup Home Sharing in iTunes
First things first, if not already done you need to authorize your Apple ID in iTunes. To do this, open up iTunes -> from the menu bar, select Store -> Authorize this Computer. Enter your Apple ID and password.
Next, open iTunes Preferences (menu bar -> iTunes -> Preferences). Select the Sharing tab, then enable “Share my Library on my local network”. Additionally if you want your play counts in iTunes to update when playing videos or music on your Apple TV, enable “Home Sharing computers and devices update play counts”.
Setting up Home Sharing simply shares your iTunes library on your local network. You won’t be able to access any of it while not connected to the same Wi-Fi network that your iTunes library is connected to.
Setup Home Sharing on your Apple TV
Now that we have iTunes properly setup to stream content, we need to setup out Apple TV to accept the connection.
On your Apple TV, go to Settings -> Computers -> Turn on Home Sharing -> Login with the same Apple ID as the one you used in iTunes.
Now go back out the main screen of on your Apple TV and select the Computers button.
Please excuse my poor picture taking skills…
A few more things you need to know
The Mac or PC which stores your iTunes library has to be turn on in order to stream content to your Apple TV. This doesn’t mean that it can’t be in sleep mode. If you try to stream from the iTunes library while your computer is sleeping it will automatically wake up the computers hard drive so that it can stream your media content. This only works if you have the iTunesHelper application running however.
The iTunesHelper application is by default set to always be active from the time your turn on your computer until your turn it off. You can check to make sure it is active by going to System Preferences -> Users & Groups -> Login Items. If under the, “These items will open automatically when you log in:” you can see “iTunesHelper” then it’s already set up properly.
Home Sharing doesn’t just work for you Apple TV, it also works when streaming to other computer whether it be a PC or Mac and it even streams to your iPad, iPhone and iPod… as long as they are all connected to the same Wi-Fi network.