Analysis & Opinion

Television 2.0: It’s Not Your Father’s CRT

February 9, 2011 MullenLowe

We’ve all seen the latest work from Goodby Silverstein showcasing Logitech’s partnership with Google in “Kevin Bacon,” a commercial featuring the namesake actor and his greatest fan, Ivan Cobenk.  The spot positions Google TV as the preeminent way to indulge in everything Kevin Bacon and asks viewers to ponder an intriguing question: can watching too much Kevin Bacon with Google TV actually turn you into Kevin Bacon?  Cobenk certainly has his fingers crossed.

Indeed, the Logitech Revue is perfect for “devoted” fans like Cobenk because it allows consumers to sift through TV and broadband content using a keyboard to identify their favorite shows, actors and movies.   But what about the rest of us who might be a bit less fanatical? Would we be better off going with a competitor like Apple TV, Roku, and Boxee, or should we bypass the box altogether and go to a trusted name like Sony, Samsung or Vizio to get a TV with the web interface already built in? The choices are endless, and with no clear category leader, the decision can be overwhelming.

In the race for formalizing the blending of TV and Internet there are three key entities: TV set manufacturers, technology companies and content providers.  The fusion of the three is inevitable, but the question remains, will this happen in conjunction with the major distributors, or in spite of them?

On the technology and manufacturer side other than the inclusion of a box or hardwired infrastructure, the only appreciable difference is the price point.   For $299, Logitech/Google TV connects to your set top box and cable box and transforms your TV into a full internet browser.  For $230, Boxee allows the user to stream the web and access a library of apps, and for $99, Apple TV functions in virtually the same way but offers exclusive access to the iTunes library. At just $60–a mere two weeks’ worth of Starbuck’s venti lattes–Roku is perhaps the most affordable of all connected devices.

However, as each of these brands works to strengthen and differentiate its offerings, content providers are striking back.  Programs like The Daily Show and The Colbert Report are no longer available on hulu, for example, largely because the producers of these shows cannot find a way to monetize the site.  With content available for free the day after it airs commercially, avid users feel that they don’t need to subscribe to a cable provider.  This next-day availability has fostered a “cord cutting” phenomenon among consumers, and with fewer consumers willing to pay big dollars for cable, content providers have pulled back until they can find a way to make it work financially.

The right business model can ultimately solidify the content distributors’ place in the food chain.  And while hulu remains in limbo, Apple is making strides to solve the content availability problem with its vast iTunes library and legions of devoted customers who are accustomed to paying for content.  After substantially dropping the price of Apple TV, the company is also succeeding on the branding front, with one millennial noting that “Apple TV enables you to access the iTunes store on your TV, but honestly it owes as much of its appeal to the ‘Apple’ name as to the functionality.”

With a variety of price points and content models, there’s no clear winner yet, but it’s apparent that TV innovation is here to stay.  Stand-alone boxes that bring the internet to big-screen TVs have not yet caught on with the public, but over time, the inclusion of the same functionality in televisions will slowly bring the technology to the masses.  Consumer education about Internet-connected TV’s may be lacking, but that will change as manufacturers like Sony begin to launch ad campaigns to market this new technology to consumers.   And once someone develops an easy to use model that will pass the “mom test,” we will know that connected TV is here to say.  While the past decade focused on technological advances bringing consumers small screen multifunctional devices, there’s no doubt that within a few short years the TV, the largest screen in your house, will become the central hub of activity.