WIRED is reporting that Apple’s new movie rental service in iTunes is only compatible with newer iPods. So if you have one of those 5G iPods (also known as the *Video* iPod), you can’t actually watch your rented movies on the device.

Sure, the 5G has been out for a couple of years; however, they were still being sold online and in Apple stores up until the release of the iPod Touch, iPod Classic and new iPod Nano just about 6 months ago.

Apple has offered no official explanation as to why the 5G is left out; however, they did confirm that it is not compatible with iTunes video rentals.

The two theories floating around about why they aren’t compatible both involve DRM. The 5G iPod had the ability to feed an analog video signal out to a TV (or recording device), so it could be that Apple wanted to eliminate the possibility of piracy (of course, who would want to bootleg a video that is encoded at resolutions supported by the iPod?). Another theory points to the need for a secure real-time clock inside the device to prevent users from rolling back the clock on the device to prevent the rentals from expiring.

Regardless the reason, it sucks for 5G owners who have all of the hardware needed to play the video rentals, but not the firmware support from Apple to make it happen.

So what do you think of Apple’s approach? Should people have to buy new hardware to take advantage of new software?