Hillcrest Labs Tapped by LG to Bring Motion Control to HDTVs; technology from Hillcrest Labs will power LG’s Magic Wand remote control. (emailed release)

Delayed DirecTV TiVo Hardware Revealed; the latest incarnation of the DirecTiVo will run on Technicolor/Thomson hardware. (Zatz Not Funny!)

Hulu Plus Access Expanded to Hulu Desktop; paying Hulu Plus users can now access the site’s premium videos through its desktop app as well. Support for Internet-connected TVs from Sony Bravia and Vizio will come in the next few months, and Xbox 360 in early 2011. (emailed release)

LOVEFiLM inks major MGM deal; Lovefilm members will be able to watch MGM titles online and on internet-enabled devices through the company’s player. (Broadband TV News)

Disney, Warner Bros. sue to stop advertising on pirate websites; studios sue ad company, alleging that it helped pirate streaming sites. (The Hollywood Reporter)

Getting rid of the low-end model isn’t too much of a surprise. As our sister site The Apple Blog writes:

At the beginning of the month, AppleInsider reported Piper Jaffray analyst Gene Munster noting long wait times for the 40GB model, resulting in predictions of a minor upgrade at the then rumored Apple event.

In today’s high-definition world, 40GB just isn’t a lot of storage, especially when Apple still requires you to purchase (not rent) TV programs. An entire season of Mad Men in HD ain’t teeny. And if you’re into buying movies as well…fuggedaboutit. But between powerhouses like Netflix and Amazon popping up on your Blu-ray players and TV sets, the future seems to belong to streaming — not downloading.

Apple has continually referred to its set-top box as a “hobby,” and the lack of innovation/care given to the platform has had us scratching our heads over what the heck was going on with the Apple TV. As we’ve written before, Steve Jobs & Co. aren’t stupid. They must see the changes happening in the living room (and the potential dollar signs that go along with it), but Apple’s inaction has opened the door for other rivals to get a foothold in the living room.

Hopefully this cleaning house is paving the way for something much bigger/better/faster/stronger.

If you are interested in seeing what the future of set-top boxes are, be sure to attend our upcoming NewTeeVee Live conference in November. Roku CEO Anthony Wood is speaking along with Matt McRae, the VP and GM of Advanced Platforms for Vizio, and many more to be announced. Get your early bird discount tickets now.

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Given Credit Suisse’s revenue estimate for YouTube, that would give the site an operating loss of $174 million this year. If you use other people’s revenue numbers — for instance, Jefferies said $500 million — the site would actually turn a profit.

Here’s where RampRate sees YouTube saving money.

• Google uses peering for an estimated 73 percent of its bandwidth; Credit Suisse did not account for this at all. Peering is where ISPs trade traffic to reduce the cost of transit, and essentially means Google does not pay for that bandwidth. Google’s peering partners are known or thought to include Level3 and AT&T.
• By negotiating for additional paid bandwidth, Google can probably bring down costs to 50 cents per Mbps.
• From the report: “YouTube content is by definition ‘long tail,’ which means the storage it requires can be of a consumer-grade commodity quality. Google’s core competency is in managing commodity server/storage farms. At current rates, its servers likely cost no more than $500 apiece, and can add a sub-$100 1TB hard drive to produce a net cost of $.60/GB. Even with an aggressive 1-year refresh cycle, that is just 30% of the $2.35/GB projected by Credit Suisse.”
• Google also lowers its serving and storage costs by using out-of-the-way locations for its server farms such as Iowa and Finland.

RampRate extends its analysis to say that maintaining an illusion of massive losses for YouTube is actually beneficial for Google. The theory is, Apple let the market think that its music-selling iTunes business was just a money-losing front to sell iPod hardware, so was able to keep its own costs and customer prices low, and therefore became a dominant force in music sales online. Likewise, the second YouTube is thought of as a money-making bonanza, its ability to negotiate goes down, and the lawsuits pile up even more than they already have. “I believe they’ve been very smart in managing the P&L to their advantage to negotiate better deals with creators,” said RampRate chairman Tony Greenberg.

Google also gets to use the tremendous YouTube audience and bandwidth to negotiate better deals for its overall business. “Basically their access to broadband eyes gives them an unparalleled negotiating chip to get lower costs,” said Greenberg. And further, through YouTube Google is able to broach new expansion initiatives like edge caching and co-location with the same ISPs.

From the report:

“Far from being an infrastructure money pit, YouTube is key to reducing
operational costs for other Google initiatives while also allowing Google to catch up to the superior
network performance of competitors like Microsoft, which currently boasts 10 times as many peers and 17% fewer hops to remote reaches of the Internet.”

Is RampRate right that Google’s non-monetization of YouTube is really a ploy? A scheme that conniving sounds a bit too much like a conspiracy theory. But we’ve seen via YouTube’s growth as a search engine how the site relates back to Google’s core business. Perhaps it fits neatly into the infrastructure expansion business as well.

Related research and analysis from GigaOM Pro:
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