After five tries I keep getting "The update was not successful" message. It downloads it okay, gets to Step 1 of 2 (preparing), then fails and gives me the aforementioned message. Any ideas. I was doing this because Netflix is not working and I had seen that an AppleTV restart might fix that. When I went to Restart I saw that an update was available so thought I'd kill two birds with one stone.
Just did a straight restart of the ATV without the update and that seems to have solved both issues. After restart Netflix works, and then I was able to successfully apply the ATV update as well. Thanks, me!