Are TV Widgets a New Revenue Channel?

By Ian Bell March 2, 2010

While today’s consumer is most likely to watch online video on the PC screen, manufacturers like Samsung, Sony and LG are offering widgets based on screen content that runs alongside your regular viewing.

TV widgets make it easy to interact with Internet content and offer services that complement and enhance traditional TV viewing — but industry experts say consumers are not looking for the Internet on their television sets.

Content partnerships are being made between Internet companies and content providers. For instance, Yahoo! accelerated its approach to Internet access on the TV through its widget platform by announcing new distribution partnerships with Hisense, ViewSonic, MIPS Technologies and Sigma Designs. New content partners include CNBC, NBC, RadioTime, The Weather Channel, Brightcove and others.

The Weather Channel widget, for example, allows viewers to access information on current conditions and five-day forecasts while CNBC’s widget allows viewers to interact with real-time stock quotes and create real-time watch lists.

ViewSonic plans to integrate Yahoo!s Widget Engine Platform into its media player while MIPS Technologies will develop an optimized reference platform running Yahoo!’s Widget Engine for digital TV and set-top box applications.

Yahoo says its new Widget Development Kit can be downloaded by anyone who wants “to create, deploy and monetize engaging TV widget experiences.”

In-Stat analyst Keith Nissen says one of the important questions is will the devices permit the user open access to the Internet via the TV.

“When you’re subscribing to Sony’s set of online video, (which you can get directly from a Sony TV set), they have various websites or content that is available, but you can’t go to any site but to whatever Sony has programmed in,” Nissen says. “I don’t think most PC users want the TV to be a PC.”

Nissen points out Over the Top (OTT) video delivered to the TV via broadband services is starting to take place. OTT services run over the top of an existing broadband service and are not controlled by the service provider. OTT video will not be taking off until providers offer content you can’t get on the Internet, he says.

“Sony, Disney, Fox and Comcast will look at this as a new distribution channel,” Nissen says. “They want a distribution channel to market directly to the end user and monetize it.”

Nissen mentions that while widgets are nice, they are not earning money. According to Nissen, 98 percent of TV widgets are free and the amount of money earned from widgets is less than 2 percent.

“It’s a technology that service providers have to have to be competitive but no one is expecting to make money on it,” he says. “We’ve found what people want from a widget, is they want it to be complementary to what they already have access too, it’s not a slam dunk and I don’t think that’s the end game.”

Alternatively, while Yahoo! talks up its new distribution partnerships for Yahoo! Widget Engine Platform, DivX launched its embedded Internet TV platform that provides access to a line-up of online media content streamed directly to any connected device from any manufacturer.

DivX, a pioneer in bringing high-quality Internet video to consumer electronics, says LG Electronics will be the first manufacturer to license the DivX TV platform. In addition, Advanced Digital broadcast, Bluestreak, Brightcove, Broadcom, Innovation DTV Solutions, Iomega and ViewSonic also signed on.

DivX says its platform can be supported on any kind of Internet-connected consumer electronics device, including digital televisions, Blu-Ray players, gaming consoles, pay-TV operators set-top devices and mobile phones.

What’s more, Forrester Research found TV makers like LG, Samsung and Sony announced connected TV strategies that make consumer sense. “Enabled by tools like Yahoo! TV Widgets as well as IP-delivered services from Amazon.com, Blockbuster and Netflix, the connected TV is here to stay,” Forrester analyst James McQuivery says, “and millions will roll off production lines in 2010.”

Connecting the TV does not cut any existing players out of the picture, but instead, creates opportunities for content providers, advertisers, retailers and TV service providers to deepen their relationships with customers by serving their content needs, according to McQuivery.

While Internet users will stick to their PCs, widget technology looks to turn into an fascinating niche in the short term while browsing and watching content from the Internet might just be as easy as cable in the long term.

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