Analyze That: PC-TV Convergence

In each issue we’ll pose a pertinent question to a group of market analysts to give you a better sense of how the financial services sector perceives developments in the streaming media industry. Here’s this issue’s question:

At this point, just about anyone with a broadband connection, a recent-model TV, and a few hundred dollars to spend on a set-top box can watch internet-delivered video on his TV screen. We know they're able; the question is, are U.S. consumers ready and willing to embrace the PC-to-the-TV leap, or are they not quite there yet?

For all but the technologically savvy, consumer-driven internet-delivered video over the TV is not forthcoming (except perhaps what TiVo is doing). Although third-party providers such as Apple may be marketing it, cable providers are not, and to ensure mass deployment it will be necessary to get them on board. They still view it as a risk because they don’t know how they will make money on it. So, even if consumers are willing to embrace it, for now, the question is irrelevant. Importantly, when this does happen it will be a game changer for everyone in the food chain.

Colby Synesael
Senior VP, equity research telecom and data services, Merriman Curhan Ford & Co.

Inventors tinkered with the TV and came up with Pong (http://invention.smithsonian.org/resources/fa_baer_index.aspx) in the late ‘60s; there have been many attempts since then to deliver new kinds of content to the TV. Fifty years on, we are finally at a point where TiVo can deliver video from internet sites to the TV, for example, and consumers have already leapt from the TV to the PC to do a good amount of viewing. Now, consumers need a reason to want that content on the TV before we can talk of bridging the PC-TV divide. Interactivity, personalization, and niche content can be had, if consumer electronics companies and ISPs work together to deliver it.

Jim Davis
Senior analyst, networks and media, Tier1Research.com

We believe that broadband video delivered to the TV is going to happen, but not on a wide scale until the technology is simplified for the average consumer. We think that means building internet connectivity (preferably wireless) right into the TV or into a cable box. While high-end users may opt for a solution such as iTV by Apple, we don’t think solutions that require separate internet boxes will gain mainstream acceptance.

Aaron Kessler
Senior research analyst, Piper Jaffray & Co.

No, U.S. consumers will not embrace the PC-to-TV leap until the following criteria are met:

1) the necessary components are bundled into a single product;
2) there is a compelling reason to change behavior; and
3) the cost is negligable.

Despite the obvious link between the PC and television, I believe we are several years away from meaningful traction.

David Eller
Principal, Reuters