Internet Movies Spur Hope for Web-Connected TVs

Companies are to roll out new devices at next week's Consumer Electronics Show.

HP's MediaSmart TV connects to the Internet.
HP's MediaSmart TV connects to the Internet.

They won't give up. More than a decade after talk started of connecting the living room TV to the Internet, electronics companies are again hotly pursuing the marriage. They think they can learn from previous mistakes that gave "convergence" a bad name. They're hoping that it can finally be possible for consumers to get whatever entertainment they want delivered to their living room whenever they want.

The field includes risky start-ups. But this is a wide-ranging effort that involves many big companies, from PC makers like Hewlett-Packard to distributors like Netflix and Blockbuster to audio-visual behemoths like LG, Philips, and Sony. They're all rolling out new products at the Consumer Electronics Show next week that capitalize on fast broadband speeds to deliver Internet movies and TV shows to the home. They also see fresh opportunity in Hollywood studios newly willing to make movies and shows available for downloading.

The companies are not driven by existing demand. Yes, music downloading has taken off, and the industry sees good business in spreading the tunes from the PC in the den to the living room. But consumers so far have shown little interest in downloading movies and TV shows. Online consumption represents a mere revenue wrinkle for movie studios and TV networks, with perhaps $500 million sold in all digital forms last year—this in industries that each have revenues exceeding $60 billion. Some early participants have recently withdrawn, including Movielink's service to deliver movies wirelessly to the home and Wal-Mart's downloading service.

The concept has stumbled over complexity and bandwidth bottlenecks. Broadband speeds are fast expanding, opening promise of overcoming that constraint. And new devices hope to answer the challenge of linking PCs to the television, and the pair to the Internet. "You have to have an MIT computer science degree to even attempt that," says Curt Mavis, CEO of CinemaNow, one of the online movie pioneers.

One answer is to take the PC out of the equation and engineer a simpler link between Internet services and TVs, or DVD players and other set-top boxes. That way, movie downloads would be just another choice on the television's menu.

But there are no industry standards for TV-to-Internet links. That has forced a company like CinemaNow to program new software to enable each device, such as HP televisions or EchoStar set-top boxes, to download its movies and shows.

So CinemaNow recently signed on to what it hopes can become a standard with Macrovision, which has long provided copy protection for movies sold on VHS tapes and DVDs. Macrovision will offer software to electronics companies that want to build in the ability to download movies. The first service Macrovision can offer will be CinemaNow's—and later, other Internet movie services. But there's no guarantee that the electronics makers will adopt Macrovision's approach.

PC makers, meanwhile, are working to keep their computers in the mix. Partners of Microsoft are rolling out new devices that extend the reach of Media Center, which is software included in several Windows versions that records TVs and can link to video on the Internet. Consumers haven't taken to the "Media Center extenders" or to competing versions such as Apple TV. But Microsoft hopes that its new Windows Vista and faster wireless networks will make the Media Center devices simpler and more reliable for transmitting video.

Still, many don't see the Internet as the best replacement for disks in delivering video to the home. XStreamHD is turning to satellites. The start-up has new technology to transmit movies and TV shows from general-use satellites, instead of the specialized orbiters launched for Dish Network and DirecTV. The approach offers more bandwidth than Internet connections, as well as cable and other satellite services, says XStreamHD President George Gonzalez. "We can bypass all infrastructure constraints that exist today," he says.

His service can offer instant downloads of top-quality video and audio, meeting consumer demand for instant entertainment, anytime. That's the goal of everyone chasing the replacement for today's disk-based content, for which consumers wait in line at the store or online at Web delivery services. "Netflix queues," Mr. Gonzalez says, "will soon be a thing of the past."