Future-of-television Videos

Phil Leigh If you would like to learn just how rapidly consumers are gaining interest in obtaining unlimited Internet access on their TVs, this podcast is for you. We have long predicted that consumers will ultimately want unlimited Internet access of their TVs. It enables them to watch any Internet video in a lean-back viewing experience from their living room sofa. Moreover, given a remote mouse and keyboard, it empowers them to use the TV as a giant window into the Internet for any purpose, including e-mail, online shopping, or Web surfing. Since at least the start of this year we have repeatedly noted that consumers are discovering how to get such access by connecting their laptop computers to their TVs. It’s an “under the radar trend” not officially promoted by any of the computer makers, but appears to be getting exponentially more fashionable. In short, we believe the trend will become a “forcing factor” leading set manufacturers to offer either (1) browser-centric TVs, or (2) TVs with an abundance of free applications permitting users to watch videos from the associated Websites. The growing popularity is partly inferred by way of proxy. Specifically, last March we posted an instructional video on YouTube describing “How to Connect PC-to-TV”. Initially we were getting less than 30 views per day, but in October the daily average was about 135. That translates to a 26% compounded monthly increase despite a summer slow-down.  Put another way, traffic was doubling about every three months. If the trend continues, daily viewership could rise to 270 by the end of January and to over 500 by the end of next April. When new factors obtain a green-field opportunity, they tend to grow exponentially during the early periods. Examples include bacteria in a petri dish, influenza virus among people, members of a Ponzi scheme, and nuclear chain reactions. Technologies that eventually become mass market standards also exhibit exponential growth in early adopter phases. Examples include, radio, television, railroads, automobiles, portable phones, air travel, and many more. In our analysis, the growth in consumers attaching laptops to their TVs is also likely to be exponential. Whether the function is 26%-per-month, or some other pace, remains to be seen. One possibility is illustrated by the chart below which projects the viewership of our instructional video based upon the best-fitting exponential equation provided by Microsoft Excel software. Growth in Video Views: How to Connect PC-to-TV The exponential trend-line is defined by: Y = 1,059e (exp.)0.1683x where Y is the number of monthly views and X is the number of months since February, 2009.  The equation predicts that next March our instructional video will have 9,400 views as compared to 4,150 in October and 811 last March. While the increasing viewership of our instructional video is only a proxy, the numbers are large enough for statistical inference. In short, consumer interest in getting unlimited Internet access on their TVs is rapidly increasing. It is important to understand that others posted similar instructional videos at about the same time, meaning that ours is not the only proxy. For example, this one had traffic growth that was about 70% faster thereby implying that consumer interest in unrestricted Internet access at their TVs is increasing even more quickly than the above graph indicates.

Phil Leigh During the first three decades of the twentieth century the most promising invention was radio. Scientists could see a clear evolutionary path for the technology that would revolutionize everyday life. The trip from the dots-and-dashes of Morse code, to audio transmission, and eventually to television, was all a matter of learning how to manipulate the electromagnetic spectrum. Unlike a fanciful speculation like teleportation, such things were undeniably possible within the theory underlying Maxwell’s equations. In 1912 the day following the rescue efforts prompted by Titanic’s SOS signals, American Marconi shares jumped in price on the stock exchange. From 1919 to 1929 revenues for RCA (Radio Corporation of America) rose from $2 million to $180 million, translating to a compound annual growth of nearly 60%. In 1928 RCA stock increased from $80 to $420 per share. It had formed the National Broadcasting Company in 1926. From a growth and stock perspective RCA was the Apple, or Google, of its time. But unlike (I trust) today’s Apple and Google it would compromise its innovative instincts in a Faustian bid to hold back the clock. Entering 1929 everything looked rosy from both a business and technological viewpoint. Recorded music was at the threshold of major advances from the pending launch of high quality vinyl long-playing standards. Two young television companies, Jenkins Television Laboratories and Television Laboratories, Inc., issued public shares. Both were respectable, although Jenkins utilized a mechanical image scanning technique that was much inferior to the CRT methodology developed by Television Labs. Despite the promising vantage point, broadcast television would not become a reality for another 17 years. Two developments strangled television in the cradle. One was the economic depression which also destroyed consumer demand for new recorded music formats. The second was RCA’s efforts to monopolize television. Companies like Jenkins and Television Labs found it hard to maintain funding as the financial markets collapsed. In 1932 RCA bought a nearly bankrupt Jenkins and put its technology on the shelf. Essentially, RCA was making too much money from radio to welcome the advent of television. For example, despite the Great Depression radio advertising grew from $27 million in 1929 to $185 million in 1939, thereby recording a 21% compound annual growth rate. Simultaneously, NBC grew even faster as it increased its share of stations. Since RCA controlled nearly all key wireless patents competitors could not introduce new products without licensing at least some RCA rights. In the matter of television, however, RCA faced a formidable rival at Television Labs where founder Philo Farnsworth pioneered CRT scanning. Ruthlessly, RCA attacked Farnsworth’s company with a multi-year barrage of legal patent challenges designed to bleed them white financially. When Television Labs gained temporary funding from Philadelphia Storage Battery (Philco), RCA threatened to deny renewal of key licenses for Philco radio products. The Farnsworth-RCA struggle unmistakably echoes the David-and-Goliath drama. For example, as a boy Philo entered the Naval Academy with the second highest entrance examine score, but dropped out after a few months to focus on television.  Despite having no college degree he was funded by San Francisco businessmen who unwittingly became the first venture capitalists. To demonstrate the safety of air travel for advantageously speedy business trips he took his wife aloft only to have her shout, “If you don’t make (the pilot) land, I’ll jump!” While the radio Goliath did not exactly win, its holding action combined with the Great Depression and the advent of World War II, delayed commercialization of television for nearly two decades. By that time Farnsworth was sadly alcoholic and worn out. Today the situation is similar. Revolutionary media changes are predictable based upon Internet and semiconductor technologies.  Unfortunately, we have stupidly led our economy into great difficulties. We bought houses we could not afford based-upon the obvious folly that prices would always go up and we could sell for a profit to an even greater fool. Our bankers lent money to unmerited borrowers simply because the lenders could divert the risks to the taxpayer while keeping all the rewards. We let ourselves forget that things that can’t continue forever, won’t. While the stock market recovery over the past year suggests that things might soon return to normal, rising unemployment and thinner consumer wallets cannot be ignored. No matter how promising our innovative products and services consumers need money to buy them. The new “normal” is not going to be so comfortable. Simultaneously, much like RCA in the 1930s certain powerful companies today would welcome a delay of innovations. Again, like RCA, they typically only want to compete in the court room or in Washington. They don’t want any changes unless they make them. Before he died in 1971, Farnsworth recovered from alcoholism and drug addition. Occasionally he was able to take on the role of obscure but venerated industry statesmen. When asked what he thought would be the future of television, he responded with a question: “What do you want it to be?” “If you can imagine something, sooner or later you may achieve it; conversely if you don’t imagine it, then there is no hope of it becoming a reality.” The natural evolution of media is toward the Internet. The advantages of immediate access, collaborative contribution, and massive economical distribution are overwhelming. Is that what we want media to be? To learn more about how your business can exploit or adapt to such changes, feel welcome to contact us. You may also want to consider buying our research reports Third Generation Television and Future Developments in Video Advertising.

Phil Leigh Will consumers pay to watch TV shows and movies at the hulu.com website? Hulu.com’s website hosts popular TV shows and movies after they have been released normally. Owners include Disney, NBC-Universal, and News Corporation (Fox). Viewers can watch shows for free but in exchange must also watch commercials since the videos are streamed and not downloaded. Last month, Chase Carey who is the President of News Corporation said that Hulu should start charging fees sometime next year. Presumably he envisions a premium subscription service providing more content or viewing time in exchange for a monthly fee. There are two reasons to be doubtful about the success of such a plan. First, as author Matt Ragas put it, “We all love the information highway, but we don’t want to pay a toll every five miles.” Second, incumbent media companies may be overvaluing their own content. Matt’s remark led me to examine my own subscriptions which are summarized in the accompanying table. Already I pay over $220 monthly for telephone, Internet, and video entertainment. Other services under consideration would advance the total to about $265 monthly.  Such an analysis makes me look for ways to cut, instead of add, services. Phil s Monthly Subscription Fees Naturally, I’ll focus on the bigger numbers first which come from the cable and wireless providers. However, if The Wall Street Journal (owned by News Corp)   editorial viewpoint prevails, the carriers will likely increase ISP fees even higher. That leaves consumers with thinner wallets to buy additional services from Hulu or anyone else. Even if cable and wireless charges don’t go up, consumers may calculate that they’re already paying enough in service fees. Readers of the Baltimore Sun seem to be strongly opposed to paying for hulu.com access. A polling button on the newspaper s website reveals that they voted 20-to-1 against it. You can see the results and review reader comments here. As for content value, the recent success of Paranormal Activity might serve as a reminder to media producers that we characteristically undervalue the works of people who are not like us. It’s reported that the movie was set in a single San Diego home and produced for $10,000. By the day after Halloween it had grossed over $80 million in box office receipts. Much like Internet publishing demolished the value of the printing press, low cost video cameras combined with computer-based film editing and an abundance of people seeking stardom and film-crew careers, necessitates an introspective reassessment of Hollywood’s self worth. Paranormal Activity is more than an isolated echo of The Blair Witch Project. Years from now we’ll look back to see it as data point in a connect-the-dots trend line pointing toward a future of content abundance. To learn more about how your business can exploit or adapt to thye future of media, feel welcome to contact us. You may also want to consider buying our research reports Third Generation Television and Future Developments in Video Advertising.

Download to iPhone and iPod here. Last week I was on a panel at a conference for the Entertainment Law Institute of the Texas Bar in Austin. Our panel topic was “The Future of Video Distribution”. This video podcast summarizes my presentation. Andy Grove, who was the last of the three original Intel leaders to leave, liked to encourage employees to ask “What if?” questions. He felt they could lead to new discoveries about future change. Thus, we ponder, “What if all video were on the Internet instead of Cable TV?” Consider the impact on three constituencies, (1) Consumers, (2) Sponsors, and (3) Copyright Holders. Consumers will benefit in four ways. First, all programs will be available on demand. Broadcast schedules will be irrelevant and there will be no need to remember to TiVo anything. Second, shows will be viewable on any screen from mobile phone to TV. Third, content will be searchable. You’ll find what you want to watch by Googling it. Fourth, the Long-Tail will stretch to near infinity. Sponsors gain a number of advantages. First, viewership will be measurable. Second, commercials can be held accountable. Sponsors might be able to choose to pay for only those that actually get watched. Third, ads can be interactive thereby generating sales nearly instantaneously from the viewers. Fourth, ads can be addressable in a variety of ways including demographic, geographic, and behavioral targeting. Copyright Holders also stand to benefit. First, Internet distribution provides a Global market. Second, revenue opportunities for Long-Tail content become viable because there is no need for a minimum economic production run as would apply for DVDs. Hollywood studios will be able to sell downloads from their back catalog that are seldom available in the form of physical DVDs. Third, consumers will be able to make impulse purchases since the Internet is constantly available 24/7. Fourth, the Net provides opportunities for multiple revenue streams. Among them are (1) rentals, (2) downloads, (3) subscriptions, and (4) advertising. Inevitability. For the past 30 years we’ve been gradually attaching an increasing number of appliances to our TVs. In the first half of that period the devices were not Internet-connected and included items like Cable Set-Top boxes, Video Tape Players, and Video Game Consoles. However, during the last 15 years most such appliances are Internet-connected. Examples are laptop computers, Apple TV, (modern) Video Game Consoles, and even the iPhone and iPod. As a result, the TV is being transformed into a dual function device. In one context it remains a TV as we have always known it, but in a second it is becoming a giant window into the Internet Cloud. Thus, the question is not “What if all video were on the Internet?” but instead is “When will all video migrate to the Net.” To learn more about how your business can exploit or adapt to such changes, feel welcome to contact us. You may also want to consider buying our research reports Third Generation Television and Future Developments in Video Advertising.

Phil Leigh What if sponsors paid for video ads only when they are actually watched? As John Wanamaker put it long ago, “I know that half of my advertising is wasted, I just don’t know which half.” For over half-a-Century Nielsen audience rating have supposedly addressed Wanamaker’s question for television ads. It’s the foundation supporting a $70 billion annual business. It’s supposed to tell advertisers which programs viewers are watching and for how long. Given present computer technology it’s downright stunning when one learns Nielsen’s techniques for collecting its data. With so much money on the table there’s a lot at stake. Some industry constituents want to update the measurement technology while others want no changes at all. Any changes are likely to upset somebody’s apple cart. That’s probably why progress in measurement methodology has moved at the pace of continental drift. Nonetheless, sponsors pay the bills and ultimately they’re going to demand more for their money. Nielsen’s flagship service tries to estimate the viewing habits of our entire nation from a polling process based upon imperfect diaries of 18,500 homes. Given the sample size, three-fourths of the 400 cable and broadcast networks are simply not watched enough to be accurately measured. Except for the top 20 markets, Nielsen mostly relies upon paper-logs that panel members (i.e. participating consumers) maintain on the honor system. Even in larger markets where Nielsen provides electronic log-entry, the company acknowledges that users sometimes press the wrong key resulting in a measurement error of up to eight-percentage-points. Owing to the shortcomings of Nielsen data, a number of vendors sell supplemental information. TiVo is one example. With several million DVRs deployed across the nation they provide more granular and real-time data. For example, TiVo can tell how long a viewer watches a commercial. Similarly, the CATV industry hopes to provide far more detailed and accurate data via its Project Canoe initiative. Unfortunately, Project Canoe faces a significant technical challenge. Data formats are inconsistent among different CATV systems. Some set-top boxes are incapable of capturing data and passing it back to the head-end. Each Multiple System Operator (e.g. Comcast, Time-Warner, etc) has proprietary elements in its networks. Proprietary inconsistencies are amplified to the nth degree considering that each MSO is by definition an amalgamation of independent systems typically acquired over decades. In sum, the problem of getting universally accurate measurements out of the legacy CATV and Satellite platforms is going to be as convoluted as the Gordian Knot. Ultimately, the solution could well be to simply cut the knot by putting all video on the Internet. Standards on the Net are decades old, uniform, and well understood by an abundance of developers all over the planet. Measurements can be in real-time and sliced & diced nearly infinitely. Most significantly, Internet sponsors are increasingly demanding Cost-Per-Action (CPA) advertising. Google AdWords conditioned them to expect that it is only necessary to pay when a visitor clicks on ads. Once video resides on the Net, sponsors may insist that they only pay for video ads that get watched.  The new paradigm will nearly eliminate the utility of audience measurement statistics as we have known them. We’ll want different data, but it will be more readily attained on the Net where the granularity and accuracy of measurement is infinitely better. To advertising executives who don’t want to be accountable for the performance of their ads, such a paradigm shift is so horrible as to be unthinkable. So they may choose to simply avoid thinking about it. To them, it’s a creation of Satan anyway, more destructive to their business as the ability of the iPhone to display its Internet Videos on a television screen. Yet, when sponsors pay for video ads only when they actually get watched, the ghost of John Wannamaker will break into a happy grin.

Download to iPod or iPhone If you would like to learn how to watch movies on your TV that were downloaded to your iPhone, this video is for you. Every iPod or iPhone owner knows they can buy digital music at Apple’s iTunes online store. Most also realize they can rent or purchase movies and TV shows there as well. Finally, many are aware that numerous free video and audio podcasts, some including popular TV shows, are also available. However, few understand that it is not difficult use iPods and iPhones to watch the movies stored on the portable units through a conventional flat panel TV. Today’s video shows how to do it. Apple sells two types of cable assemblies that can connect the iPhone and iPod to a TV. One is termed Component and the other Composite. The Component assembly provides a higher quality picture, but it also uses more jacks. Both assemblies retail for $50. At first glance, the wiring looks complicated for two reasons. First, it is best to provide an external power supply to the portable devices so they don’t drain their batteries. Second, and more importantly, Apple does not support the HDMI standard which can transport video and audio over a single cable. Thus, while both audio and video exit the iPhone and iPod from a single socket the constituent signals must be delivered separately to the TV. In the Composite assembly video is input to the TV via a single wire and audio enters as a stereo signal via two more wires. The Component assembly inputs the video to the TV with three wires (one for each primary color) and also uses two pins for stereo audio. A textual description makes it seem more difficult that it actually is. That is why we urge you to watch the video. The fact that consumers can easily play through a television the movies and TV shows they downloaded on their iPhones and iPods has further implications. The public is becoming increasingly aware that the flat panel TV can also readily function as a giant monitor for a variety of Internet-connected devices. In addition to iPods and iPhones, other popular examples are laptop computers, video games, and specialized appliances like Roku. Ultimately this has profound implications because it induces a trend toward more frequent viewing of Internet Video on the TV.

Phil Leigh If you would like to learn how my media usage changed during a recent period of enforced idleness, this audio program is for you. Owing to medical leave during the past two-weeks I have been relatively inactive at the office. This led to an increase, as well as a change in the pattern of, media consumption. Today’s podcast explains how. The equipment and services available in my home include CATV and broadband Internet access along with a flat panel TV that is connected to both a TiVo and a laptop computer. The laptop functions as an Internet Gateway for the TV. Thus the flat panel unit can function as either a conventional TV or a giant monitor for the Internet-connected laptop. The selection-of-function is done with a conventional TV remote unit merely by pushing one button. When used as a monitor for the laptop the Internet Explorer browser is controlled from the living room sofa with a LogiTech remote mouse and keyboard. On a typical day I would first check the TiVo “Now Showing” selections that had been recorded. About half the time I was not interested in watching the recorded shows most of which were selected by the TiVo service as opposed to ones that I programmed. If there was nothing in the “Now Showing” inventory, I would start channel surfing live TV in hopes of finding something worthwhile. Generally I could not locate anything worth a grown man’s time. However, when I did, I would let the show buffer while I went to my home office to check email and read articles. After TiVo buffered about 30 minutes of the desired show I would return to the living room to watch it. The buffering normally enabled me to watch the entire show without having to look at any commercials because I would fast forward through them. When there was nothing on TiVo or live TV that I wanted to see, I would go to my home office and search imbd.com for interesting movie titles. For example, I browsed the top 250 movies as rated by imbd.com website visitors and found 8 – 10 that I wanted to see. To find them I would first check to see if the movies were available for rental from Amazon-Video-on-Demand through my TiVo. Only a couple of them were available. One I bought and the other I rented. Both were downloaded directly to my TiVo. The first download did not work and I had to call both Amazon and TiVo to get it fixed. The second one worked okay. Second, if the movie was not available at Amazon-Video-on-Demand, I would search for it on free websites such as YouTube. Surprisingly, I found a couple of the movies there. They had to be watched in ten-minute sequential segments, but there were no commercials and it was free. As noted, with the laptop as Internet Gateway I was able to watch them on the flat panel TV screen in my living room. Third, if nothing was available on TiVo, live TV, Amazon-Video-on-Demand, or places like YouTube, I would visit Hulu.com. Generally, on Hulu I chose to watch old movies.  Selecting titles was aided by the helpful reviews of Hulu.com subscribers. Once again, I watched them on the flat panel TV by using the laptop computer as an Internet Gateway. Although they were free, I had to endure the commercials. Fourth, sometimes in the process of searching for movies to watch from the home office PC, I would discover long-tail content that was only available at websites like YouTube. For example, I read a fair number of novels each year and was able to find video interviews with some of my favorite authors. Generally, I watched them on my desktop PC, but sometimes I would watch them on the flat panel TV in the living room. The experience left me with three major inferences. One: We channel surf because we don’t like what is on TV. It is not a cliché to say of cable television, “Hundreds of channels but nothing to watch”. Channel surfing is a habituated practice that points to a future characterized by a video-centric Internet where all content is searchable and immediately available. Two: After only limited exposure to services such as Hulu.com and Apple TV and Amazon-Video-on-Demand rentals, consumers are going to abandon video rental stores like Blockbuster. Their frequency-of-visits to Blockbuster will tail-off sharply. Three: The Long-Tail is going to be far more important than the established media companies would like to think. If consumers can’t find your stuff conveniently at YouTube, Hulu, iTunes, Netflix streams, or similar services, they’re going to discover other shows to like. If you don’t believe me, experience it yourself. Searching videos on YouTube is like channel surfing on steroids. Guys who channel surf the TV are already telling you their not finding what they want. Once they get habituated to surfing for videos on the Web via the TV set, the time they spend on CATV networks will steadily decline.

Phil Leigh If you would like to learn the latest research about the audience for online video, this audio program is for you. Last week the Pew Internet and American Life Project released new research concluding that online video is growing at a rapid rate and that a leading edge of users are migrating Internet viewing to the TV screens.  The data is actually about four months olds, so we presume that market penetration has advanced even further.  Among the findings are the following: First, the popularity of video streaming websites such as YouTube and Hulu outranks many other headline snatching Internet pastimes such as social networking and Twitter. Whereas 62% of adults watched online video, only 46% participated in social networks and an even smaller 11% used Twitter. Second, audience growth for online video streams has been swift. Over the 28 months from December ’06 to April ’09 the number of adults watching Internet video streams nearly doubled from 33% to 62%. Furthermore, an increasing proportion became habituated to watching every day. About one-third of those watching online videos view them daily as compared to only one-fourth in December ‘06. Third, the practice of watching TV shows and movies online is growing at about a 100% annual rate. In April 35% of Internet users had viewed a TV show or movie online as compared to only 16% just over a year earlier in February ’07. Fourth, a significant number of us are watching online videos on our televisions. Among those who watch TV shows and movies online, nearly one-fourth connected their computer to a television screen so they could view Internet video on their TVs. Pew estimates that 8% of all Internet users had made such connections as of April ’09 which equates to about 7.5 million users. Moreover, about 30% of males watching online TV and movies were doing so via the television as compared to only about 15% of females. Since men are often leading indicators of Internet technology adoption the 100% gender differential implies continued expansion of the practice. Fifth, about one-third of those who have cut back on cable TV have “re-routed” their online video to the television.

Phil Leigh If you would like to consider the implications of a video-centric Wikipedia, this audio program is for you. As reported in Technology Review, the Wikipedia Foundation will soon be launching an editable online video encyclopedia. According to Alexa, Wikipedia is the World’s seventh most popular website. Consider how often you visit the site and ponder your reaction if many of its articles provided relevant video. In our analysis, the implications of a video-centric Wikipedia are profound. Perhaps the most important result will be transcendence in the public perception of media itself. The walls separating earlier silos of radio for sound, television for video, and newspapers for print, will collapse. In response, our culture will begin to routinely use the Internet as a mixed-media resource. This will lead to an expectation that users can access media on-demand in whatever form desired whether it be text, graphics, animation, video, or audio. Consider the following. First, the Wikipedia could become the-center-of-gravity for news. It could replace television, radio, and newspapers as the preferred destination.  Topics can be updated nearly instantaneously from a large number of self-policing “journalists”. Furthermore, the updates might include on-the-spot video and audio recordings. Finally, since most topics were prepared earlier as Wikipedia articles, each addition is automatically connected to an abundance of background and context along with branching links to sources and related material. Second, after a critical threshold of Wikipedia articles contain video we’ll expect the website to be available on TV. If the set-makers and CATV operators don’t provide it then we’ll connect our TV to a computer. That way the TV can function as both a monitor for the (Internet-connected) computer as well as a conventional TV. For example, consider someone with an intense interest in the history of World War II. Eventually, a video-centric Wikipedia will have an abundance of public domain video footage posted and indexed within the applicable article.  Moreover, the videos will be continually updated with new postings from archives from various nations. Third, once a video-centric Wikipedia is accessible on our TVs, we’re going to require a user-friendly search device. For example, a Yahoo Widget that merely transports us to the Wikipedia home page is going to be all but useless. We must be able to navigate to the desired content easily and also to explore related articles without difficulty. Such needs may imply a consumer preference for (as yet unannounced) browser-centric TVs as opposed to a Widget platform. Fourth, if Internet access to copyrighted TV shows and movies is too expensive, or limited, viewers are going to start watching other Internet videos. A video-centric Wikipedia is merely one example. But it is a potentially profound one since it is already such a popular website and has the potential to grow infinitely.

Patrick Barry, Vice President, Yahoo If you would like to learn about Yahoo’s plans to bring Internet applications to the TV, this interview is for you. Our guest today is Patrick Barry who is Vice President of Yahoo’s Connected TV initiative. Yahoo offers TV-set manufacturers a software platform enabling viewers to access Internet applications via a TV remote unit typically provided by the set maker. The on-screen interface is similar to the iPhone or iPod Touch experience. Readers may watch a Yahoo-prepared demonstration here. Yahoo’s Connected TV could be an important innovation. In short, it is extending to the TV the icon-based approach for Internet applications that the iPhone and iPod Touch have popularized. Since there are over 40 million iPhones and iPod Touches in use, a sizeable body of consumers can relate intuitively to the Yahoo Connected TV interface. To be sure, Yahoo does not merely duplicate Apple icons. However, the overall environment is similar and Yahoo also permits third parties to develop Widgets much like Apple permits third parties to develop applications for the iPhone.  Yahoo is making good progress in getting leading TV set manufacturers to enable the platform within certain models that are being marketed this year. In sum, Yahoo Connected TV Widgets has promise, but not without important qualifications. Aside from a number of “devils in the details” which can be worked-out over time, Yahoo Widgets face three major challenges. First, when Internet access is available at the TV consumers will demand an easy-to-use search capability. For example, Yahoo has a Widget for YouTube, but it is nearly useless without the ability to search for desired videos among the gigantic number available. It may be difficult to use a simple four-button remote to type-out a search string even with an on-screen virtual keyboard. One way might be to use a predictive keyboard like the one familiar to iPhone subscribers. While the approach might be satisfactory, it remains to be seen if consumers would prefer it over an ordinary wireless keyboard & mouse for use in combination with a familiar browser. Second, some websites may not want to permit Yahoo Widgets. A case in point is Hulu.com where TV shows from ABC, Fox, NBC, and others are commonly available for streaming over the Net. Earlier this year Hulu disabled software from Boxee that permitted icon-based navigation for computers that are attached to televisions. Put briefly, Hulu wanted to restrict its video streams to computers that typically have smaller screens than the TV. Since consumers can avoid both problems noted above merely by connecting a laptop computer to a flat panel TV, they may prefer that manufactures ultimately offer browser-centric TVs instead Widget-enabled units. Such sets would provide consumers with (1) a familiar interface, (2) a user-friendly wireless keyboard, and (3) unlimited Internet access, even to websites that don’t provide Widgets. Third, Apple may become a serious competitor. For example, there is no technical reason why the Apple TV fails to offer a similar platform. Given Apple’s success with the icon environment on the iPhone, it’s easy to foresee a similar approach working to make Apple products popular the living room. Widgets for Apple TV would enable older sets to use the platform whereas so far Yahoo Widgets only work with some sets made this year. Additionally, as speculated elsewhere, Apple may even consider making TV sets themselves. If so they would likely incorporate iTunes and a Widget platform. In point of fact, it is curious that Apple has not yet expanded the concept.  Presently it appears they are more interested in content sales and rentals via Apple TV. Perhaps they might also have concerns that a Widget platform would not be used by providers of popular content like Hulu. For example, Apple delayed the launch of the iTunes music store until it had content from all five major record labels. Similarly, they may not want to offer a Widget platform for Apple TV (or some future product) until major content providers like Hulu are “on board”.