Summary:

Here in the United States, we tend to navel gaze a bit when it comes to technology and new media, but other countries like Japan have been leading adoption of mobile content and advertising, gaming and new content models such as IPTV for some time. Sure, […]

Here in the United States, we tend to navel gaze a bit when it comes to technology and new media, but other countries like Japan have been leading adoption of mobile content and advertising, gaming and new content models such as IPTV for some time. Sure, much of the push for new models of video consumption has been happening here in the States, with the likes of Google/YouTube, Apple/iTunes and Hulu. But while we’ve been discussing new set-top boxes from the likes of Roku, Japan has been quietly pushing networking connectivity and Internet content directly to the TV.

As you might expect, much of this push has come from the dominant consumer electronics sector. While most of us are aware of the push by Japanese CE vendors such as Sony and Nintendo to Wi-Fi enable their video games like the PSP and DS, a lesser-known trend has the been the widespread push to put Ethernet connectivity in TVs. Thanks in part to the Networked Digital Television efforts, many consumer electronics manufacturers for some time have been integrating connectivity to allow for software upgrades, Internet browsing and other connected TV services.

Many of the same TVs have also integrated web browsers. These browsers, first designed to comply with the Japanese ARIB standard for Broadcast Markup Language, have been integrated into most TVs that sell today in Japan. Companies like OpenTV have worked with Panasonic, while Japanese browser specialist ACCESS has also found some success with its BML compliant browser.

So, what are consumers watching on all these network-connected digital TVs equipped with browsers? Some manufacturers have been creating their own Internet portals for delivering web content to TVs, but in February 2007 six companies — Panasonic, Sony, Sony Communication Network, Toshiba, Sharp and Hitachi — banded together (with the prodding by the Japanese government) to create AcTVila. The typical AcTVila portal on a Japanese TV includes a variety of content such as weather (called e-weather), promotional info for TV programs, local news and merchant information.

While there has been very little information in the Western press about how the AcTVila service has performed, the consortium has announced one year after its launch 300,000 TVs have connected to the service. While 300,000 units isn’t all that impressive, it’s interesting that the effort has been so widespread and is part of a concerted joint effort.

Companies such as OpenTV and ACCESS that have sold their browsers into the market are being required to make their browsers compatible with AcTVila, and many of the major broadcasters and service providers in Japan such as NHK and NTT are actively putting content on the portal. The consortium has done a large amount of specification work on the service, going so far as to require Marlin DRM as a conditional access technology to protect premium video content.

So what does all this mean? It could be similar to other Japanese efforts to develop connected home technologies that have largely gone nowhere, but it is, in our view, a fairly forward-looking cross-industry effort among the large technology companies in a given market to make the last push to the TV, which is in many ways the holy grail in over-the-top video delivery.

That’s not to say proprietary efforts won’t eventually get traction. We at ABI Research think that companies such as Apple and Microsoft, as well as new creative efforts by startups such as Sezmi, are all going to push offerings to see if this last 100 feet to the TV can be bridged. While many such efforts are likely to go to the technology graveyard, we think some of these will eventually break through.

Sony, which is both pushing its proprietary offerings such as Sony download store via the PS3 and supporting AcTVila in Japan, will likely be a major player. Already shipping network add-ons for its Bravia line (and partnering last week with Amazon to connect the online giant’s VOD service), Sony has indicated that 90 percent of its consumer electronics devices are slated to have a network connection by 2010.  With that type of focus by one of the major consumer electronics manufacturers, it’s only a matter of time before even U.S. consumers start to watch over-the-top content on their TV — even much of it’s grainy clips from YouTube.

Mike Wolf is the Director of Digital Home Research for ABI Research and writes about Internet Video and other topics. He also blogs occasionally between report deadlines on Internet TV and other topics here.

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