Powered by TMCnet
| More

Cable Technology Feature Article

October 04, 2010

Consumer Electronics Manufacturers to Fight for Digital Living Room in New Era

By Ed Silverstein, TMCnet Web Editor

It looks like the United States will have more than 75 million broadband connected television sets fully installed by 2013, according to rough estimates worked out by Shelly Palmer, managing director of Advanced Media Ventures Group. Other estimates are usually higher.

Writing in Seeking Alpha, Palmer said there are about 115 million television households in the United States. Approximately 100 million of these households are currently cable, satellite or IPTV (News - Alert) subscribers, with the remaining 15 million using antennas to tune in television.

More than half of U.S. households are broadband connected, but that number is suspect because of the FCC (News - Alert) definition of broadband, he adds. He is only concerned with U.S. households with broadband connectivity suitable for video consumption.

These new connected televisions will be purchased by people who have excellent broadband connectivity to their homes and can afford to purchase new flat screens, he said. He added that these are the most affluent, most desirable demographic for almost every advertiser and marketer.

Palmer asked how the business will change if the very first thing you see when you turn on a TV is entertainment, sports, communications and news apps placed there by the Consumer Electronics manufacturer. How will they control the screen real estate? Advertising? Subscriptions to services?

Will people start asking the question, “Can I get that on Samsung (News - Alert)?”

“I can’t think of anything more disruptive to the business of television as it now exists,” Palmer said.

The idea of over-the-top video (using a cable modem to watch video from the Internet instead of watching video through the cable set-top box) is not new. There are dozens of boxes such as TiVo (News - Alert), Roku, Vudu, Boxee and AppleTV, which allow connecting a TV to the Internet. And GoogleTV box is coming. But users have to buy the box, hook it up and program it.

The convenience of simply plugging a TV set into a cable box and your broadband connection is unbeatable. The CE manufacturer is going to win this one and it is going to change the nature of the television business forever, Palmer predicted.

In this new era, the only entity with a true relationship with the viewer is the operator (cable/ satellite /IPTV company) that sends the customer a bill, Palmer said, adding that about 100 million households in the United States have a direct billing relationship with the incumbent operators.

Today, where there is competition for the billing relationship, it is usually between cable, satellite and IPTV providers, according to Palmer.

He said that these organizations fight for an account. But how will they fare against the new breed of competitors – a wealth of free and specialized Internet video, plus every pirated video imaginable with a single remote control click?

Palmer recalled while moderating a recent forum, someone from the audience asked,

“If Samsung is fighting for the account, why doesn’t it just give away HDTVs and sign everyone up? After all, you do it with phones.”

Ed Silverstein is a contributing editor for TMCnet's InfoTech Spotlight. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf