The Future of the Connected Living Room: Not Far Away

One of the hottest products in the tech business these days are devices intended to bring the Web onto your television. Whether it’s Google TV, Roku, Boxee, Sezmi, Tivo, or any of many other devices, they’re all aimed at taking the Web into the last place it hasn’t yet caught on: your living room.

Today I’m at the Streaming Media West conference in Los Angeles, where content creators, tech companies, and TV people are trying to figure out what’s next in this TV-Web maelstrom–as evidenced by countless panels looking at every angle of this issue that is top of mind everywhere from Silicon Valley to Hollywood and Madison Avenue.

The first panel is Internet-Enabled TVs and the Future of the Connected Living Room. On the panel: Evan Young, director of product marketing at Tivo; Andrew Kippen, VP of marketing at Boxee; Olivier Manuel, director of content for TV maker Samsung; and Dale Pistilli, VP of marketing for disk drive maker Western Digital. The moderator is Dave Habiger, CEO of Sonic Solutions.

Q: Who’s in control of the living room today–and who will be in five years? Kippen says it’s still content owners and delivery platforms like Comcast and Time Warner in addition to broadcasters like ABC, CBS, ABC, and Fox. But there are a ton of new options out there. We see the content owners really taking a tighter hold on the living room and forging a direct relationship with consumers. Five years from now, I’d like to say there will be a good alternative to cable TV. I think you’ll see a large shift to Internet-delivered content via boxes such as Boxee.

Manuel says the shift toward openness will make a big difference.

Young says the consumer is clearly in control of the living room already–through Tivo, Boxee, etc. But they don’t necessarily have all the tools they want, or unified on one platform. You can’t yet get down to a single box in the living room.

Kippen says consumers still don’t have a lot of options that aren’t really techie. So they don’t have the control yet.

Q: Is the content going to be bundled five years out, or will it be distributed?

Kippen thinks the over-the-top solutions will allow all the business models to happen on the same platform, so ads, subscriptions, and pay-per-view can coexist on the same boxes.

Pistilli says the consumer still isn’t in control; the cable companies are. He thinks there will be huge innovation on the user interface, the best way to access their content.

Bundling and windowing are still really important, if only because of the contracts between content providers and distributors, says Young.

Samsung’s Manuel says the company’s TVs have a 50% connection rate to the Internet through all these add-on boxes. Kippen says ultimately the content becomes commoditized, so the key will be the experience pulling it all together. Tivo’s Young notes that content creators would not like to hear that they’re just one of many different things. Content plays a different role for every viewer. So we on the panel are trying to add to each content experience. Kippen says he didn’t intend a negative connotation–though I bet they’ll see it that way.

Q: Is the drop in cable subscriptions recently an anomaly or real? (In other words, is cord-cutting real?) Young says you have to get your broadband somewhere, often from your cable or telco. So they give you an incentive to continue to take linear (regular) TV. Manuel thinks these new content experiences are adding to, not replacing, regular TV. Pistilli says there’s a limit to how much streaming can happen, and it may get more expensive if everyone is streaming vs. watching broadcast or cable TV. Broadcast is a great medium for things like popular sports, Manuel says. But if you want to offer a lot of long-tail content, broadband streaming works better.

What people want from TV has not changed that much, says Manuel. People want to relax. The apps that do best on our TVs are ones that offer that leanback experience–Pandora, Netflix, etc. We also see casual games as something people want to do. But we don’t know all the things that will be popular. That’s why Samsung is running a $500,000 app contest.

Q (from audience now): On the issue of subscription services or ownership, isn’t there a case for downloading to ease the bandwidth load? Most people want to watch something once, says Young. So ownership isn’t as important. Manuel says it depends on the content–gaming and music are download (ownership) models, while the preference for TV shows and movies is streaming.

Q: How will search play out on the TV–will results be mostly big channel or show providers, or will independents have a chance? Tivo’s Young says there’s no paid placement but, just what they think users want. Manuel says the problem with search is that it’s a lean-forward experience, so most people don’t want to mess too much with it. Discovery is more important. Boxee’s Kippen says it’s going to be important to provide social and other recommendations that will help people discover what they want to watch.

Q: What’s going to be different with Web/TV efforts this time, since they tanked the last time out, and won’t cable companies be in the pole position? Manuel says the older Web TV solutions were more computerlike experiences, which didn’t catch on, and the underlying technologies like chips and broadband are much more advanced. Pistilli says it’s video services like Netflix that offer a different experience now that’s closer to what people want from their TV.

Q: What percentage of people will attach their TVs to the Net a year from now? Young says nearly every TV or Blu-ray device a year from now will have an Internet connection in the back, and he thinks half of them will be attached to the Internet. Kippen says all these devices coming out this fall will prompt applications developers to come out with really new, appealing experiences hard to imagine just yet. But a year from now, around 70% of viewers will be watching some form of online content on their TVs. Pistilli says the Internet attach rate now is about 7.5% and will double to 15% a year from now.

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