The Holy Grail: internet video directly from the TV.

While the primary challenges would seem to be hardware-based,  there are equally significant (and equally daunting) software challenges to be met as well, because no computer = no OS = no web browser.   Traditional operating systems aren’t appropriate for a lean-back passive viewing system on any number of levels, and studies repeatedly show that nobody really wants a full-featured browser on their television (and a keyboard on their coffee table) anyway, so in one sense it’s no great loss.  However, forgoing all that standardized functionality leaves one with a lot of design and development work to do: what about an operating system?  What should the user interface(s) look like?  Can we get by with the current button-laden remote as an input device, or should a Wii-like pointing remote be developed?  And how does the type of input device dictate what type of functionality can get built into the system itself?  All in all, a pretty heavy lift - because what we’re talking about here is the creation of an entirely new interface to the internet (potentially every bit as important as the web browser).

Into the void step Yahoo and Intel.  Just announced at last week’s CES is the Connected TV Widgets Channel, a ‘software foundation’ for internet-enabled television hardware built around a new generation of specialized Intel processors.  While the framework will be open to 3rd party software developers (according to Yahoo’s Patrick Barry, “We get a nice advantage, knowing the ins and outs, but we will not limit the platform to being addressable by us”), it’s worth noting that Yahoo and Intel are going with a lightweight “widget” model rather than a heavier-weight application model.   Running a widget on a modified JavaScript engine rather than an installed application down on the operating system itself tends to protect the OS from poorly-behaved software and also allows for more generalized control of what the software can and can’t do.  Much like the Apple App Store model, the widget model represents an attempt to strike a balance between encouraging open and innovative software development, while at the same time providing appropriate “guard rails” for what are, after all, consumer electronics devices rather than computers (look for this trend to continue as cloud computing and the overall “CE-ization” of home computing continues).

Initially at least, the Widget Channel appears to be primarily about adding ancillary features on top of the traditional cable/satellite television you already have – in other words, imagine being able to call up feeds from fan message boards or team websites in a dock at the bottom of your TV screen while simultaneously watching the big game on cable…   Or having a dashboard of specialized weather, news, or twitter feeds available while watching “Madmen” via satellite dish…

• On a purely technical level, though, there’s nothing to prevent a Connected TV widget from streaming video, either (bandwidth permitting).  At that point, things get interesting - as the innocent little ‘widget’ starts to eat into existing television distribution models.

• In fact, the terms “Widget” and “Channel” are both misleading, because the Intel/Yahoo initiative is not about merely adding additional incidental functionality -  it’s about (cue the thunderclap and the dry ice) letting internet video into your television.  In other words, that local weather report or eBay quote on the bottom of your screen is really something of a Trojan Horse (a point already probably not lost on the cable industry).

Connected TV is, um, well-connected: on the hardware side, CE manufacturers such as Samsung, Sony, and LG are already on board, and for web content, deals have been inked with traditional heavyweights such as eBay and the New York Times (among others).  For the video over IP scenario to play out, though, what Connected TV needs are video content partnerships - and there too, Yahoo and Intel seem to have things well in hand: agreements have already been signed with CBS, Netflix, Amazon, Blockbuster, and Showtime

It’s been a while since we’ve seen much good news coming out of Yahoo, but they seem to be getting a lot of things right here.

Yahoo intends to monetize the Widgets Channel through advertising, but in an effort to reach a critical mass of users as quickly as possible, will reportedly go easy on the advertising initially.  So who knows, maybe in a few years from now, Yahoo stockholders could actually be thanking Mr. Yang for turning Mr. Ballmer down at $31 per share….