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Broadcasters' new competitors

I just spent an hour following the Apple press conference — rather a room of cheering hordes. I’ll get to this point later. My takeaway is that Jobs and others are out to eat broadcasters' lunch, we just haven’t yet realized it.

Steve Jobs’ unveiling of the second-generation Apple TV renews Apple’s foray into the market for Internet-enabled living room devices, which according to consumer electronics industry analysis firm iSuppli, are the fastest-growing major segment of Internet-connected products.

According to iSuppli, shipments of Internet-enabled living room devices, basically set-top boxes, are forecast to total more than 430 million units in 2014, up from 99.3 million in 2009. This represents a compound annual growth rate of 34.1 percent from 2009 to 2014. Shipments of STBs will rise even faster than other high-volume Internet-access platforms like PCs and smart phones, whose shipments will grow at a rate of 12.1 percent and 22.7 percent respectively over the same period. By 2014, sales of these Internet-connected living room device shipments will nearly equal the size of the PC and smart phone markets. (See Figure 1 to the right.)

OK, the sky isn’t falling, and broadcasters and cable operators need not reach for the shut-off switch. But for the first time in this engineer’s career, I’m beginning to see a coalescing of technology designed to deliver content into viewers’ homes that doesn’t rely on cable or OTA broadcasts.

Competition from cable TV used to be an over-the-air broadcaster’s biggest worry. Cable saw satellite as competition. Soon, Apple TV, Roku, Netflix, Flixter and a dozen other new delivery schemes may be seen as competitors. These new challengers rely on IP delivery combined with VOD, subscriptions and even free content to reach viewers. Add to this new services like Google TV and IP-friendly television sets, and the playing field gets more crowded.