Analysts: Internet TV Riding a "Megatrend" But Infrastructure is the Sure Winner
Investors have some reason to be skeptical of the digerati's persistent claim that Internet-based and distributed video content really has arrived. After all, there were many false starts - from Web TV to Pseudo TV, TheDen to Entertaindom TV. And dare we say "Joost?" And even now, TV content at Hulu and the network sites tends to suck attention away from the video hubs and "digital studios" that continue to compete with YouTube and others for ad dollars. For the big money on Wall Street it is hard to know where to place bets. But one investment group that controls about $17 billion in assets is saying, "Internet TV's time is coming." Turner Investments (no relation to that Turner, so far as we can tell) declared in a research brief that the wait is almost over.
Almost. "We think Internet TV is finally beginning to realize its promise," the research team says in its brief. "We see it gaining wider consumer acceptance and commercial scale in this decade." Yeah, they said "decade." These are the stock investors, not the VC in-and-out crowd. Turner has substantial stock positions in Broadcom, Entropic Communications, NetGear and others.
Despite many false starts, this time the wave of interest in digital video is different largely because it rides a larger wave - connected devices. "Perhaps the biggest thing Internet TV has going for it is that it's part of a technological megatrend known in geek-speak as digital connectivity: the Internet is enabling consumers to connect to all manner of digital devices and systems," the authors write. Consumers are getting accustomed to everything being Web-enabled, from phones to TVs, ultimately homes and appliances. It is this Web-centricity that is blurring the distinctions among silos that were built on seemingly different technology: TV, mobile, laptop, desktop. Increasingly, the screens look and act the same. User-unfriendliness and a lack of professional content hampered Internet TV in the past, but Turner says that as consumers get more comfortable with connected devices a "virtuous circle" will occur where demand will drive suppliers to realize beneficial business models to more flexible distribution. No, don't wait for it. Turner doesn't have the magic models to make all of this work for content providers, either. They just feel confident that technological advances will grow demand enough to help make that business case. In fact, it sees jagged progress in different markets, principally because the incumbents feel threatened.And truth be told, this investment house isn't placing its bets on content. They see the stars aligning in Internet TV's favor but are placing chips on the sure things - bandwidth. Anything related to heightened network demand is the more likely winner in any future Internet TV scenario: Broadcom, Cisco, D-Link, Entropic, et. al. Content may be king, but routers, switches and networking chipsets are the crown jewels of the new kingdom.