• by Mark Walsh  @markfwal, May 6, 2009

The long-awaited promise of Web-to-TV video will finally begin to materialize in the next few years, according to a new report by technology research firm In-Stat.

The company forecasts that by 2013 the number of U.S. broadband households watching Web-to-TV content will grow to 24 million, generating $2.9 billion in revenue from streaming services. In-Stat points out that almost 30% of those ages 25 to 34 already use game consoles to view streaming video off the Internet.

But in the coming years, Web-enabled televisions and set-top boxes will supplant game consoles as the main technologies for people to access Internet video on their TVs. "Consumers will have either an Ethernet jack on the back of their TVs to interconnect to the Web or through a Web-enabled set-top box," said In-Stat analyst Keith Nissen. "By 2011, Web-to-TV will be taking off because it will be very simple and convenient to do this."

Media and technology companies have long made such promises amid unsuccessful efforts to link the Internet to the living room TV. Remember Web TV and Wink? In recent years, even Apple has struggled to gain traction among consumers with its Apple TV offering. But rising demand for on-demand video services such as Hulu and a growing array of technologies that make it easier to stream Web content on television is breaking down the wall between the PC and the TV, according to Nissen.

In addition to gaming consoles like Microsoft's Xbox 360 and the Sony PlayStation, he points to devices such as a Roku, a digital video player that instantly streams high-quality movies and broadcast TV programs from Netflix and Amazon Video. There are also television services built on open Web platforms like Boxee, delivering video to home TV screens along with social networking features.

As more and more people watch on-demand Web video on TV, however, broadcast and cable networks will face a greater threat of ad revenue being cannibalized. "Increasingly, cable companies and the networks will say, 'what are we going to do about this?'" said Nissen. "And that's where they're going to have to change their business models."

He suggests that networks may have to adopt an HBO-like pay model for premium content while offering archived TV shows and second-tier cable programs on demand. But even with more on-demand options, Nissen expects most consumers to maintain their cable subscriptions for live sports events, talk shows, and other programming with a short shelf life.

"I don't see this as the demise of the cable industry or ISPs because they own the network infrastructure," said Nissen. "There's absolutely no reason why a Comcast couldn't offer both broadcast and a Web experience over its hybrid coaxial infrastructure."

To that end, Comcast last year launched broadband entertainment site Fancast, offering on-demand TV shows and movies from partners including CBS, NBC, Fox and MTV Networks.