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News
BW Predicts Winners and Losers in Broadband TV War
Sunday, January 27th, 2008 at 3:00 PM - by John Martellaro
The dream of watching both Internet TV and broadcast TV on the same display is not as distant as some have feared. Thats because the companies that will make it happen are moving quickly, and those companies dont include the traditional telecom and cable companies, according to BusinessWeek on Monday.
Gary Morgenthaler and Herve Utheza wrote that within three years, 40 percent of U.S. consumers will have some way of connecting their TV to the Internet and that number will reach 70 percent within five years. "Ironically, the prime beneficiaries of this shift wont be cable TV companies like Comcast or phone companies like AT&T -- even though theyre the ones pouring billions of dollars into building the high-speed bandwidth infrastructure thats [sic] makes this upheaval so unstoppable," the authors wrote.
The reason is the traditional business model,"Take what we offer you," used by those companies. It leads to the well known effect described by, "Five hundred channels and nothing to watch." The authors used an analogy from the 1990s when the phone carriers were boasting about the information superhighway they were building, while Netscape came along and actually created the marketplace.
The authors described three Trojan Horses that will do the same for HDTV and the Internet. The first is the rapidly increasing number of HDTVs with Ethernet jacks. The second is free, over-the-air digital broadcasts combined with premium delivery on a home broadband connection, such as Freeview used in Great Britain. However, the biggest Trojan Horse that will beat the cable and telecom companies to the punch is the game console. "At todays rapid rate of adoption, we expect there will be 35 million TV-compatible gaming consoles in American homes by 2010, representing about one-third of all households. That is a market!" Morgenthaler and Utheza wrote.
The duo explained how customers will embrace technologies like these and pit them against each other. Hollywood is also shrewd about maintaining the many different ways they deliver content. The result of all this is that the traditional carriers will not be able to keep up. "The barriers that have long inhibited Internet-based TV are beginning to crumble," the pair wrote. "The TV manufacturers will win; the gaming companies will win; the best new platforms blending personalized and branded content will win; Hollywood will win; and consumers will win. And, unless they find ways to adapt very quickly, telecoms and cable companies will lose. Messy? Absolutely."
Apple was not explicitly mentioned, however, Apples revamped Apple TV has to be considered an important stake in Apples entry to the market that includes those 35 million game consoles.
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