September 17, 2009

It’s dangerous to call any technical development in TV a revolution, because they seem to happen again and again. After PVRs and HD, we’re now looking at Sky launching 3D TV.

But wandering around last week’s IBC show in Amsterdam, yet another revolution is on the horizon - and those in the firing line, for once, are pay-TV operators such as Sky and Virgin Media and the companies that make their set-top boxes.

Sony, LG, Samsung and Panasonic are about to rock the industry with TV sets that are not only flat-panel, digital and HD-enabled, but also let you plug your TV directly into your broadband connection. This allows viewers access to movies, TV shows and games without the need for Sky, Virgin or any other pay-TV platform. Delivering content to a PC is one thing, offering it directly to TV sets is another.

Sony and LG were showing on-screen EPGs at IBC and Neil Gaydon, the boss of Pace, one of the world’s biggest set-top box makers, told delegates: “I think what is happening within the industry is ominous. I feel our segment of the industry is under threat, and has some very challenging dangers to overcome, especially as regards the pay-TV industry.”

Leaf out of the Apple book

Clearly the electronics giants are trying to enhance the value of their devices and capture a recurring revenue stream from selling content.

They are taking a leaf out of the Apple iTunes playbook: sell the iPod and offer a music store for the device. Nokia has done a similar thing with its Ovi internet services that offer content to Nokia mobiles and bypass mobile operators such as Vodafone.

Sony is already gathering content that can be streamed directly into the home using new web-enabled Sony Bravia TV sets and Sony Blu-ray disc players. It is working with Netflix and Amazon in the US and offered Sony-made film Hancock to its web-enabled TV sets for $9.99 a few days after the cinema release and two weeks before its DVD release.

Earlier this month Five was the first UK broadcaster to sign up to offer shows such as Neighbours and The Hotel Inspector via Sony’s new internet TV platform.

How big a threat is this for pay-TV operators? Sky director of strategic product development Gerry O’Sullivan says offering internet services sounds good, but it’s still all about content, which Sky knows how to package and offer.

This is true, but as manufacturers look for new, recurring revenue streams and content creators look for other routes to the consumer, this is a business that can do nothing but grow. Companies the size of Sony, LG, Samsung and Panasonic won’t go away quietly.