Internet TV: When, dammit?

    by Adam Lashinsky

    Hulu touts about TV anytime, anywhere. But hooking your TV to the Net? Crazy talk!

    I had an epiphany early last year when I visited Hulu for an article David Kirkpatrick and I were writing about the unexpectedly successful young venture.

    Watching TV shows on Hulu was such a pleasant experience with Hulu that the company should encourage users to connect their PCs to televisions. Technologically it's not a difficult thing to do, but it's not terribly convenient. A PC needs to be near the TV, the remote-control experience isn't good, and so on. I remember Hulu executives smiling kindly at my suggestion but not offering much in the way of feedback.

    With hindsight, I see how naive I was.

    Hulu's owners are Fox Televion (a unit of News Corp. (NWS)), NBC Universal (controlled by General Electric (GE)), and, more recently, Disney (DIS), which owns ABC. The last thing these media conglomerates want is for their Webby startup to go around encouraging people to watch Internet videos on their TVs.

    Technology is not the problem

    Internet ads are small potatoes compared with TV spots. Online advertising may be growing, but it doesn't replace the big bucks from broadcast, cable and satellite TV. Hulu talked a good game about doing what was right for consumers, and it did build nice video viewing software on the Web. But when it comes to encourage folks to use Hulu on their TVs? No way.

    So as we head into 2010 the long-assumed dream of an "Internet bypass" or "over-the-top video" remains just that, a dream.

    Consider:

    * Boxee, a startup whose software makes it easy to connect TVs and PCs has been playing a cat-and-mouse game with Hulu for the very reasons described above.

    * Apple (AAPL) has had next to no success with Apple TV, a niche product that enables TV viewing of videos in an iTunes playlist — and nothing else.

    * Sony (SNE) recently introduced an Internet-enabled TV with the promise of customers being able to purchase a Sony movie. Yet the movie comes with an exorbitant price tag so as to avoid upsetting Wal-Mart, the nation's largest seller of DVDs and therefore an important Sony vendor.

    These are all baby steps for something that, technologically at least, seems inevitable. As Richard Greenfield of Pali Capital told The New York Times: “The time when a majority of consumers have Internet-enabled TVs is a long way off. “But it’s moving the ball in the right direction.”

    Why does it have to be so hard? That's easy. Incumbent video providers will hold on to their diminishing profit margins as long as possibly can even while saying they are embracing new technology, like Hulu. Introduced eight Bravia models that are Internet-enabled won't solve the problem.

    What will?