Yahoo Connected TV: Old and busted, or the new hotness?

In many ways, Yahoo Connected TV (s YHOO) seems a contradiction: On the one hand, it’s one of the oldest connected TV platforms around and so already has a decent install base. On the other, some of its existing consumer electronic partners seem to be interested in exploring new TV app development platforms. And then there’s this new broadcast interactivity feature, which promises to offer new features for consumers and revenue opportunities for broadcasters. But will it be enough to convince OEMs to stick with it? And are consumers actually interested in what Yahoo has to offer?

Yahoo Connected TV was one of the first connected TV platforms to gain wide adoption among consumer electronics manufacturers, getting its system embedded on TVs and other devices from companies like Vizio, Samsung and Toshiba. But it’s not stopping there: Yahoo TV is available on more than 8 million units that have been sold so far, and it expects that to grow to 16 million by the end of the year. And later this year D-Link will introduce a set-top box powered by Yahoo Connected TV to compete with streaming devices like Apple TV, (s AAPL) Roku and the Logitech Revue. (s LOGI)

But some of its existing CE partners have either introduced their own app platforms or begun experimenting with competing operating systems, like Google TV. Samsung, for instance, has invested heavily in growing its own TV app marketplace, while first Sony and Vizio have agreed to put the Google TV OS on some of their broadband-capable TVs.

Despite all this, Russ Schafer, senior director of worldwide product marketing for Yahoo Connected TV, remained confident that his company’s platform would outlive a lot of the newer connected TV platforms. “I think those platforms will die over time,” he said. The reason? It all comes down to money.

While Google is betting on its ability to offer better universal search and discovery of content, as well as an Android-based app store, Yahoo’s big value prop to OEMs seems to be that it has already built out a full-fledged platform for advertising. And through its broadcast interactivity technology, Yahoo Connected TV aims to surface ads and additional information connected to content people are watching online.

Broadcast interactivity, which Yahoo showed off at CES, gives broadcasters and advertisers the ability to offer up detailed info and product offers in a sidebar that can be launched from the remote control. It can also tie in with other second screen devices. Theoretically that could let broadcasters give more context to their shows, with additional info about actors on the show they’re watching, loop in games and trivia and maybe even offer up some additional multimedia content.

And for advertisers, broadcast interactivity gives them the ability to target offers at viewers or allow consumers to request more information about products that appear on-screen. It’s basically about creating a whole new performance-based inventory that Yahoo believes could drive significant revenue to CE manufacturers that allow the ads to appear on their TVs.

But will that system click with consumers?

For some use cases, it makes sense. For instance, when watching Home Shopping Network (s hsni), it makes sense to be able to click a button and make a purchase from the TV rather than calling in or looking for a featured product online. And clicking through ads to get a coupon sent to your phone could eventually resonate as a way to redeem on-air promotions.

But Yahoo may also have to improve the overall user experience to make this work. While the sidebar that comes up (thankfully) doesn’t obscure the action, like some connected TV apps do, the widget bar that runs along the bottom of the screen feels antiquated, and the search and navigation aren’t as good as one might like. There’s also a question of performance: NewTeeVee alum Chris Albrecht bought a Vizio TV with Yahoo’s platform built in and found it slow, difficult to navigate and prone to crashes.

Finally, there’s the question of whether or not Yahoo Connected TV as a development platform will be able to stick around long enough to fulfill its promise. Despite its target of 16 million connected devices by the end of the year, it seems the industry is shifting away from the platform for the future. With many of its partners pursuing other options, and more flexible TV app platforms like Google TV popping up, Yahoo Connected TV might find it difficult to continue growing the number of TVs it’s available on and consumers advertisers can actually reach with the platform.