Why Internet Video Devices Matter: Over The Top TV

[Josh] Now that we've published our report on Over The Top Television, I can explain a little more why Internet Video Devices make a difference.

My clients in the television business have become very interested -- okay, obsessed -- with the question of whether producers and networks can deliver content directly to the TV. Why not bypass the cable operator and send video directly to the consumer? Whether you make your money from advertising or direct consumer payments, this sounds great.

Well, it's too great to be true -- at least for a while. There are four key obstacles.

1. Devices to connect the TV to the Internet. This is what everybody's trying to do at CES and MacWorld. But it's not enough, even when those devices get going, you also need to solve . . .

2. Better home bandwidth. Right now you can't stream HDTV over home networks, and streaming DVD-quality is iffy. You can do downloads, but that means the device needs a hard drive, and you can't cache the entire world of Net video in one person's house. But you'll also need to solve . . .

3. Business models. Cable networks get paid $0.10 to $3.00 or more per subscriber per month out of your cable bill. Why would they give that up to try to get money from you directly? And then there's the wildcard.

4. Navigation. It's hard enough to find Internet video on a PC. Try navigating 500,000 Internet videos with a TV remote -- you can't. That's why preference engines like Choicestream and new pointing devices like Hillcrest's Loop are important.

Solving all of those challenges will take years. CES is just the first step. But look for new video -- especially niche video -- to come to a TV near you within the next few years. And TV will never be the same after that.

Technorati tags: Bernoff, Forrester, Internet video, Over The Top