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Direct-connect Internet-enabled TV Bombshell


According to eMarketer, the Consumer Electronics Association (CEA) now forecasts a slight growth uptick (0.6 percent) in 2010 to $166 billion in overall industry revenues. What has changed?

Internet-Enabled Televisions, which connect directly to the Internet via Ethernet or Wi-Fi, are one of the hot new products that Americans will be buying -- along with continued adoption of various online video streaming and DVR services.

Americans are watching more TV than ever, and also more online video, according to Nielsen. Increasingly, however, they will be watching Internet video on their big HDTV screen.

"Marketers must start planning for the convergence of TV and the Web, as it gathers steam into 2010 and beyond," said Lisa E. Phillips, eMarketer senior analyst.

Over the past decade, consumers have upgraded their home networks from data-centric to multimedia-centric, to better accommodate their desire for digital entertainment. iSuppli predicts worldwide shipments of devices with Internet capability will nearly quintuple by 2013.

"Convenient technologies such as smartphones and wireless home networks make such convergence mainstream, and inevitable," Ms. Phillips added. "The generalizations of lean-back and lean-forward interaction still fit today, but as TVs and PCs converge viewer behaviors may change."

Total time spent watching online videos ranges between 1 and 2 percent of Internet user's overall monthly video consumption, according to various estimates, while TV gets 98.5 percent of all video viewer time, according to Nielsen.

Regardless, online and mobile video viewership, along with time spent on the Internet in general, are growing quickly. The trend is now apparent, and somewhat easier to predict.

"For marketers thinking about advertising to two audiences at once -- those watching online video on their TV sets and consumers streaming TV shows and movies on their PCs -- the solutions are more nuanced," noted Ms. Phillips.

Moreover, as legacy big-media companies contemplate transitioning their advertiser-supported offerings (such as Hulu.com) to fee-based video services, this will further fragment the marketplace and accelerate the shift in consumer behavior to discover other Internet video content sources.

The continued disruption of the traditional mass-media broadcast television business model, and the rise of TV 2.0, is inevitable. Ironically, it will be the short-sighted actions of legacy industry players, not new competition, that perpetuate the continued democratization of digital content distribution.

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