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Set-top, schmet-top: TV makers take it inside - September 4, 2008

The annual CEDIA Expo has been underway in Denver this week, where consumer electronics manufacturers were unveiling their newest top-of-line hardware for an audience of custom home theater installers. This year's show was heavy on (very) high-end Blu-ray Disc players from Sony, Panasonic, Pioneer, JVC and others (not much for the Wal-Mart crowd there). But it also featured hardware makers' first substantial forays into Internet-enabled TV sets, which are designed to serve as their own bridge between the Web-delivered video and the big-screen TV in the living room without the need of a separate set-top box or PC.

Panasonic unveiled four new models in its PZ850 line, which it is billing as "the industry’s first Internet enabled TVs." Which may be true, if you don't count Sony's first Bravia Internet Link models introduced earlier this year, which require a separate adaptor that attaches to the back of the set to handle IP content but which are otherwise "Internet enabled TVs." At any rate, Sony has since announced plans for new models that don't require the external adaptor.

Several other major manufacturers have Internet-enabled big-screens in the pipeline. Most see them as a way to hold onto some margin at a time when HDTV sets are rapidly becoming a commodity, with commodity prices and margins. The same thinking is behind hardware makers' Blu-ray strategies as well, although privately some have doubts that Blu-ray players will ever become a commodity (or sometimes not so privately, as in these comments from Samsung's director of consumer electronics in the UK, Andy Griffiths, who told Pocket-lint, "I think it [Blu-ray] has 5 years left, I certainly wouldn't give it 10").

Sensing opportunity, content providers are helping to spur the trend toward IP TV sets. Panasonic has arranged to enable PZ850 users to access content from YouTube, as well as to share digital photos from Picasa, get local weather updates and access to financial data from Bloomberg.

Sony has inked a deal with Amazon to bring its new video-on-demand service, which goes live today, directly to IP-connected Bravia owners.

It's no accident, of course, that many of the announcements regarding IP-enabled TV sets and content deals have been timed for the CEDIA show; for now the capability is confined to high-end models only. But ultimately, hardware makers hope to extend Internet capability throughout their lines.

At that point, we'll be ready for new tug-of-war over access to the consumer, this time between TV-set makers and cable/satellite operators, who won't be keen on being back-doored by the TV manufacturers. As more network TV programming migrates online, and made available on-demand, being able to plug it directly into the TV can only diminish the value of other types of video service.

Once TV makers start dropping in browsers, search-based program guides (i.e. not tied to proprietary video service) and some flash memory, the battle will really be on.
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