After making waves at this year’s Consumer Electronics Show,
Internet-connected HDTVs are finally beginning to ship to retail – and they
could be game changers for the entertainment industry.Lgtv

A pair of LG models have slipped onto store shelves with the
company’s NetCast feature built in, allowing consumers to stream content from
Netflix and YouTube, among other providers. Toshiba, Sony and Philips are
working on competing products, which will be released later this year and in early
2010.

What might sound like a gimmick is expected to catch on
fast. The Yankee Group, an analytical research company, expects 50 million
people will have Internet connected HDTVs by 2013. (Another 30 million, they
say, will have connected Blu Ray players – and 11 million will have purchased
media adaptors.)

The opportunities – and the dangers – are significant.

Forward-thinking studios with their fingers in digital
distribution could find Internet connectivity to be a boost to the bottom line,
as consumers bypass the local Blockbuster and opt to download new DVD releases
directly to their sets. Microsoft and Sony have both made video streaming a key
component of their gaming systems and both are looking to expand that.

“We have a lot of work going on in the video strategy area,”
says Shane Kim, Corporate Vice President, Strategy and Business for Microsoft's
Interactive Entertainment Business.  “We
know we want to bring a lot more video content to the Xbox 360, but we have to
figure out what the best way is to do that.”

Networks will also be able to incorporate online elements
with their programming to keep viewers interested not only during broadcast,
but once a program concludes.

For instance, imagine, a running chat window off to the side
during “American Idol,” letting fans communicate in live-time or even vote
directly for their favorites.

Or, perhaps, after an episode of “Survivor,” CBS could steer
people with Internet-connected sets to watch clips from the just-voted off
contestants arriving at the Ponderosa. The network already offers these clips
on its Website – and die-hard fans of the show could be kept around long enough
to prevent them from switching over to another program.

With full Internet connectivity, though, comes another challenger
for screen time. Viewers who get bored with programming may be just as likely
to hop onto their Web browser or check their email as they are to change the
channel.

More disturbing will be the potential ability for people to
easily grab a pirated film online and stream it directly to their television.

We’re at the very beginning of the road for these sets. And
LG’s NetCast is just a first step. In fact, only two models are currently
available –

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