Living room TVThe battle to control content delivery to your living room is on. One week after Apple (AAPL) unveiled plans for Apple TV, a new home-entertainment delivery system, archrival Google (GOOG) has announced plans for its own TV service -- featuring full-blown Internet browsing on TV. It's set to launch this fall.

"We will work with content providers, but it is very unlikely that we will get into actual content production," Google CEO Schmidt told reporters after a speech to the IFA consumer electronics expo in Berlin on Sept. 7, according to comments cited by Reuters. The news service estimates the global TV ad market's potential at $180 billion.

"Once you have Google television, you're going to be very busy," Schmidt said in his speech, according to a dispatch from Berlin. "It's going to ruin your evening." Samsung is reportedly considering incorporating Google TV into its popular flat-screen displays.

At the same time, both Amazon (AMZN), which recently announced its own home-streaming service, and Netflix (NFLX), which has been streaming movies for some time, are girding for the new competition. And the major telecom and cable companies are currently hashing out the rules by which the new digital living room -- whatever it looks like -- will be governed.

Cable Will Go the Way of Broadcasters

So where does that leave the cable giants like Comcast (CMCSA) and Time Warner Cable (TWX)? Threatened, according to TV industry analyst Andrew Tyndall.

"The battle for the next generation of the living room has already been lost by the broadcasters, which were killed by cable," Tyndall tells DailyFinance. "In the next 10 years, the vulnerable sector is going to be cable. The question is: Are the cable channels going to be able to keep their businesses afloat, or will the disintermediation that has already happened in other industries sidestep the cable channels and completely crucify their business models?"

Who's the winner in this epic battle? You. "It's the consumer that's well positioned here," Tyndall says. "These new developments are going to cut margins, meaning that people are going to be able to get their video cheaper. The same thing happened in the music industry. Globally, the music industry lost, but the music consumer won."

Among the challengers, Apple is clearly aiming to disrupt the TV market. Just look at its track record: Apple practically revolutionized the PC, music and mobile-phone markets. "That was my first thought when Apple unveiled the iPad," Tyndall says. "They want you to have a TV with their content in each room of your house."

Apple as the Next Cable Giant

For now, of course, Apple and Google need the broadband providers to deliver their content. But among the new breed of broadband providers -- meaning Apple, Google, Amazon and Netflix -- Steve Jobs has a clear opportunity if he can make the new Apple TV product more successful than the first version, which flopped.

Gleacher & Co. analyst Brian Marshall agrees that Apple is leading the pack -- for now. "Everything is maturing, and the battle for content distribution is just going to increase over time," Marshall tells DailyFinance. He covers Apple and likes the company's prospects in this battle. "I think Apple is going to be pretty well-positioned going forward."

Marshall predicts that in one year, Apple will have over 200 million devices running its iOS mobile operating system. "I almost think of them going forward as a giant cable company with 200 million subscribers. I think Apple's power in terms of distributing applications and content is going to be pretty amazing a year from now."

"They have the best products, the best ecosystem, the best app designers and momentum that's going to be very, very difficult to stop," says Marshall. This a new model for Apple TV, Marshall notes. Whereas the previous device stored content on the unit, now users will stream content from "the cloud" with movies and TV shows actually stored on remote servers. Thank you broadband.

Speaking of the cloud, Tyndall is enthusiastic about Netflix, which he says has the potential to become "the HBO of the next generation." He singled out Netflix's offering as "impressive."

Still Work to Do

In the new Apple TV model, the company will be renting TV shows and movies for 99 cents and $4.99, respectively. Apple gets 30% of that, Marshall says, and 70% goes to the studios. Already, Fox (NWS) and ABC (DIS) are offering content via Apple TV. On its iAds mobile marketing platform, Apple takes a 40% cut.

"Five years ago, Steve Jobs referred to Sony as a competitor, and obviously now he would not because [Sony] failed to realize the significance of software and how it creates stickiness," Marshall says. He thinks Apple TV is going to be the company's "next killer product, a couple years down the road, when there is a screen on the back of it," and it's mobile and connects to wireless networks.

And when it comes to home entertainment, Marshall thinks Apple still has work to do. "What I really want to see is Apple seamlessly integrate the home office with the living room," Marshall says.

Meanwhile, Google and Apple are preparing to do battle on a different but related front: music. Google is in talks with the major record labels about a streaming music service it hopes will compete with Apple's iTunes, the online music leader with 70% of the legal Web music market.

"It's Just Broadband to the House"

In the end, according to Tyndall, the big battle will occur not between Google or Apple or Hulu, but between those services and the incumbent broadband providers like Comcast, Verizon (VZ) and Time Warner Cable.

"The cable operators, and broadband providers generally speaking, can charge a premium for cable channels because people still expect to get their video from TV stations," says Tyndall. "Once you get your video from the Internet rather than TV channels, then the cable operators' pricing power disappears. It's just broadband to your house."

As Google, Apple and others make splashy moves on the consumer front, broadband and media companies are fighting a largely behind-the-scenes battle in D.C. over the rules that will determine how content arrives at the home. The battle for your living room is just getting fired up, so grab a bevvy, take a seat and settle in: This could get entertaining.

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In fact, i am looking forward to new Google TV ,Apple TV just can be applied on IOS devices, i expected some new stuff brought by other system but IOS. i think the new google TV is a hope . And that the apple TV is too simplistic to runs many applications . for example, even if the users can download movies from Netflix, they can not use Vimeo; can see the pictures on Flickr, but can not see on Facebook or SmugMug;can play HD mp4. videos , can not play any other kinds of videos so that i must rely on Aneesoft video converter.

September 10 2010 at 5:18 AM Report abuse rate up rate down Reply

What’s the confusion???? I connected my Computer to my 42" TV four years ago. My computer is on big screen in the living room. No cable or Satellite bills for me. I created an aggregator file that has all the FREE available stuff on the internet. All the NETWORKS, plus hundreds more channels. HULU, FANCAST all that. You can also stream NETFLIX, STARZPLAY or any other Movies streaming sites for a small fee, paid directly to them. There is so much free content, why pay anything? I will gladly send you a free copy of the Aggregator file for your own personal use. Just e-mail me at FREETELEVISON@AOL.COM.

September 09 2010 at 1:04 PM Report abuse rate up rate down Reply

At last!! Subscribers have been pushing for years to have choice at reasonable prices. They are fed up with being forced to pay for 570 channels when they only want 10. I'm with Verizon now, but I've lived in areas where my only choice was "take it or leave it." I've had DirectTV, Time-Warner, Comcast, and Dish. Every one of them had at least two dozen Spanish stations. I don't speak or understand Spanish, so why was I forced to pay for them? They also had Farsi, Russian, Chinese, Hindi, and Tagalog stations which I didn't need or want. They all at one time or another gave "free" HBO, Showtime, or some other movie package, none of which I was interested in. The one thing they were all VERY short on was family programing. You know, programs with people who could actually act. Programs where writers were capable of putting together 10 words without every other one being cuss, crude, vulgar, rude, double intend re or insulting to the viewers intelligence. Programs where actors, directors and the whole crew were capable of holding the viewers attention without somebody running around half naked or flashing their bodies, or endangering life and limb by wearing clothing so tight they could barely walk. How I miss the old days. TV had ads every few minutes and we were promised a future of "pay TV with no ads." Well, this is that future. Not only do we pay for TV, we STILL have ads (more than before) and they've developed a way to intrude on the programing you are watching by overlaying ads, inserting crawls, and taking as much as half of your viewing space with promos for what's "coming next" or "coming tomorrow" or "coming soon." That's what the TV guide stations are for, and what I can find in my daily newspaper.

September 09 2010 at 12:46 PM Report abuse +1 rate up rate down Reply

I have a backround in computer engineering. The TV will be the new computer because it's more usefull and saves space you can even watch tv and surf the net at the same time on a split screen without having to power both a pc/mac and a tv.Google offered a TV internet all in one a few months ago, even samsung is getting into the same business. Technoglogy is a better way of life, But we still have a long way to go. we still need to go green as well to improve the worlds way of life for a better future.

September 09 2010 at 12:33 PM Report abuse rate up rate down Reply

By pass all this and implant communication chips in everyone’s heads , TV , News , Commercials , Weather , all 24/7 total bombardment Media controlled . all crap all the time . Hollywood hasn't any new ideas it is the same crap over and over again with a different twist , face it , IT HAS BEEN DONE ALREADY. Death , someone saving someone from Death , Cheaters/Soaps , Sci-Fi , Talk , pretty much sums up major TV , JUNK .

September 09 2010 at 12:33 PM Report abuse +1 rate up rate down Reply


September 09 2010 at 11:45 AM Report abuse +1 rate up rate down Reply

the writer speaks of apple renting tv shows for 99c and movies for $4.99...Hulu- free NetFlix- $8.99 unlimited streaming...if you think people will pay what apple is proposing, i want some of what you're smoking

September 09 2010 at 11:43 AM Report abuse rate up rate down Reply

Cable Co as well as the Sat. Industry have gotten by on 1 and 2 year commitments. Once you are locked in customer service disapears. I personally cannot wait to ditch all of them for a third, lower priced, option of better quality.

September 09 2010 at 11:03 AM Report abuse +2 rate up rate down Reply

It is ridiculous the prices you have to pay for cable. I disconnected cable recently and the company wanted to give me a courtesy discount for a while. I said “No thank you.” I have no cable anymore and I feel free! If I want to see something use the internet. I am saving more than $70 dollars a month which amounts to almost $900 a year. Cable companies are desperate, so if you want I discount I recommend you calling them and telling them you are discontinuing their service, and there is more than a 90% chance you will be offered a discount. Good Luck!

September 09 2010 at 9:41 AM Report abuse +2 rate up rate down Reply