MoneyWatch Tech

LG, Sony, Other TV Cos Take On Former Program Partners

By Erik Sherman

Updated on: July 30, 2009 / 9:30 AM EDT / MoneyWatch

Back in January, LG Electronics essentially went into competition with broadcast, cable, and satellite video providers with its NetCast Entertainment Access. Certain of its HDTV offerings provided built-in streaming from both YouTube and Netflix, as well as news, weather, and photos from Yahoo. Now it's expanding the service by integrating access to titles from Vudu, adding an extra 2,000 HD videos for purchase or rental with no monthly fees and no additional set-top box. This is just the latest indication of a fundamental shift in the media-technology partnership.

Where once electronics companies made televisions and left the programming to broadcast, cable, and satellite, now the manufacturers are walking right around their old partners. It's not just LG:

Sony and Microsoft have made deals for streaming through their games consoles.
Sony has also recently announced that it is including Netflix streaming in its Internet-enabled Bravia sets this fall.
Mitsubishi has a promotion with Vudu, offering a free set-top box and $50 in movie credits with the purchase of specific HD televisions.
Other set manufacturers, such as Samsung and Philips, have integrated Ethernet jacks into their products so they can plug into a home network and reach the Internet.

This is a kick in the face of the content provider industry, which has been pushing pay-per-view and on-demand programming for years. But now the set manufacturers are giving consumers a way to combine the two programming models directly with a much broader choice of content, presumably getting a cut of the resulting revenue stream, something that they don't get from the traditional provider industry. That suggests a few things that we can look forward to in the near:

Content providers go along with the hardware-wants-to-be-free trend and start offering "free" televisions for people who are willing to sign up for two to three years worth of service. That makes them bigger customers of the manufacturers and more able to twist arms to reduce the end-run competition.
Netflix and/or Vudu will get acquired, whether by an LG or Sony or by a Comcast or Verizon. Controlling content will be key, and given that consumer demand for streamed video is only going to grow, the streaming services are only going to get more popular.
A potential new business model would be for a Hulu to work directly with the set companies, provide authorized on-demand television shows with some ads and the combined attraction of convenient delivery and full-screen viewing. That will be popular with the studios, but less so with the broadcast/cable/satellite crowd.

Image via stock.xchng user swetko, site standard license.