A New AppleTV?
The goal of this area of development is to produce a TV that is "easier to use and more personalized". The technology that would be used to stream this video would be similar to the AirPlay option that is currently on iOS devices. Some reports, such as the WSJ, discuss the possibility of having all of the data synced over the iCloud.
This isn't to say, however, that Apple is the only company attempting to revolutionize the TV set. Google is competing on another possible frontier with Apple (They're also competing on the human-integration aspect of the smartphone). Additionally, Microsoft, the company behind the Xbox line of console entertainment is already somewhat involved in the TV market with their Xbox Live Subscription service, which has deals with ESPN, Time Warner Cable, and other providers to provide exclusive content.
These developments have been irking TV executives for years, as the numbers of viewers watching live television has declined significantly over the past 5 years with the advent of the DVR and the popularity of streaming services such as Netflix and additionally the ease of illegal streams of shows have less and less people watching live television.
However, referring to comments made by Steve Jobs himself, he has little interest in expanding into television because the margins are not as high and TV's are not replaced as often as other electronic devices. That being said, this wouldn't be the first time Apple held a project close to the chest until it was done.