Google (GOOG) has jumped headfirst into the world of content streaming.

Some users like to amass large personal collections of digital movies and TV shows and use a set-top box like the Apple (AAPL) TV to stream that content from their library to their television. Others prefer to stream video from the cloud — video game consoles like Microsoft’s (MSFT) Xbox 360 and Internet-enabled smart TVs combined with streaming services like Netflix (NFLX) are popular among this crowd.

But as more consumers arm themselves with smartphones and tablets, a third group has emerged: the casual video watcher who would like to skip the expensive media box but wants to view YouTube videos on a bigger screen.

Enter Google’s new Chromecast, a $35 device the size of a thumb drive that plugs into a TV’s HDMI port.

Chromecast streams cloud-based video directly to a TV, using a mobile device or computer as the controller. It’s cheap, easy to configure and close to platform agnostic. Now any TV can become a smart TV capable of playing video through Netflix, YouTube and Google Play, with more options coming. It does pretty much everything last year’s failed Nexus Q did (minus the amplifier and speaker jacks), but at a fraction of the price and size.

Here are the details, which are pretty impressive, especially when you consider that $35 price tag.

• Thumb-drive-sized dongle (2 inches in length) that plugs into a TV’s HDMI port, with a cable that plugs into the USB port to supply power.
• Runs a customized version of Google’s Chrome OS.
• Built-in Wi-Fi (802.11 b/g/n).
• 1080p HD output.
• OS support: Android (2.3+), iOS (6.0+), Mac (10.7+), Windows (7+) and Chrome

While the size of the device and its specs are impressive, what makes this device a potential game-changer in the living room are two things: the price (at 35 bucks a pop, you could almost buy three Google Chromecasts for the price of a single Apple TV) and that last bullet point, OS support.

What It Does: The Chromecast is designed to satisfy the desire to watch streaming video on the big screen (your TV) instead of on a smartphone or tablet. It works together with your mobile device or computer, using the device to navigate and select content. Push the “Cast” button on the supported streaming video content, and the Chromecast takes over, streaming the selected video (or music) itself and displaying it on the TV. Your mobile device then acts as the controller.

What It Doesn’t Do: The Chromecast is intended for use with cloud-based streaming video content. While an Apple TV can stream Netflix, YouTube and iTunes Store content, it also can stream files stored in a user’s local iTunes library. The Chromecast doesn’t do local content. So if you’re in that first group of home video streaming consumers and you have terabytes of movies sitting on a computer, you can’t skip the Roku or Apple TV in the hopes of saving money with a Chromecast — it’s cloud-only. While AirPlay and Apple TV also offer OS-level support for mirroring iPhone and iPad games on a television, Chromecast doesn’t currently offer that ability.

Also, if your mobile device of choice is a BlackBerry (BBRY) or Windows Phone model, you’re out of luck. The Chromecast has near-universal OS support, but that doesn’t include the third- and fourth-place platforms.

However, this is likely just the start. Google didn’t just unveil the Chromecast and tie it to Android devices and its own Google Play and YouTube content. At launch, the Chromecast supports Netflix, currently the dominant online streaming service. It plays nice with a range of devices, including smartphones, tablets and computers from the competition. Google has already released a developer SDK, so you can be sure that other video streaming services that aren’t currently supported soon will be — app support (for mirroring video games, for example) also could be added via the SDK.

A beta feature also lets you push Chrome web pages to your TV too, for big-screen web browsing. This function also means that if you try to access a web video service that doesn’t currently support casting, you can open it in Google’s Chrome web browser and use its “Cast” button to accomplish the same effect.

You can bet that there are some late-night meetings taking place in Cupertino right about now. The Chromecast might not be direct competition for the Apple TV — and Chromecast lacks much of its functionality — but for two of the biggest groups of home video streaming consumers, it’s probably good enough.

And that technology is compact enough and cheap enough that it could easily be incorporated directly into future TV sets, giving Google a bigger slice of the home media center market that Microsoft, Apple, Sony (SNE) and others are jostling to control. With 13 million sold, Apple TV is no longer just a hobby for Apple, and the Chromecast probably is the biggest threat yet to its continued success, especially with that “impulse buy” price.

And if that $35 sticker wasn’t enough to give Tim Cook and company nightmares, Google is also giving away three months of Netflix with the Chromecast, bringing its effective price (assuming you already wanted three months of Netflix) down to $11.

At this point, I’d say the odds are pretty good we’ll be seeing a cheaper, smaller Apple TV by Christmas. Either that, or the current model will finally gain the iOS gaming support we’ve been expecting, helping to justify the now premium price of Apple’s set-top streaming box.

As of this writing, Brad Moon doesn’t own any securities mentioned here.