Despite all the blather about multimedia convergence, most consumer-electronics devices still live their lives apart from the Web.
Camcorders, cameras, and TV set-top boxes offer limited, if any, interactivity with the Internet. Sure, there are a few happy exceptions: Apple's (AAPL) iTunes online music store is tightly integrated with the company's iPods and iPhone. Casio has introduced digital cameras with an eBay (EBAY) capture mode to shoot pictures that fit the online auction site's listings perfectly. And dozens of manufacturers, including Philips (PHG) and Netgear (NTGR), are making phones and Internet routers designed specifically for use with Skype and other Web-calling services.
But again, those are the exceptions. Even the most popular Web sites remain largely inaccessible with anything but a computer or, to a lesser extent, a cell phone. Google's (GOOG) YouTube may help change all that.
Manufacturers Are Responding
Acquired by Google a year ago, the video-sharing site is still gaining in popularity, with users around the globe collectively uploading seven hours worth of video clips every minute. Naturally, many of those people would find it useful if more of the hardware needed to shoot and post videos was built with YouTube in mind. Now, a growing number of manufacturers are responding, introducing gadgets that are specifically designed and marketed for YouTube compatibility.
In September, Casio began shipping its new EXILIM line of still cameras, offering a customized YouTube capture mode that records video in an optimal format to post on the Web site. Though you still need a computer as intermediary, the camera also comes with software that can upload those clips to YouTube without saving them to that PC first. "It addresses a long-standing hole in the marketplace, of facilitating the sharing of video online," says Ross Rubin, a director of industry analysis at consultancy NPD Group.
Elsewhere, device makers including Apple, LG, Nokia (NOK), Netgear, Sony (SNE), Neuros Technology, and Pure Digital have come out with cameras, camcorders, set-top boxes, routers, and cell phones featuring YouTube functions. YouTube is still ramping up these syndication efforts, so there's more in the pipeline. "Everybody is talking about a YouTube Christmas," says Hunter Walk, YouTube product manager at Google.
Reviving Camcorder Sales
More optimistically, this tide of YouTube-compatibility may help reenergize sales of products that have been slack in recent years.
Take camcorders. In the U.S., the number sold has been flat in recent years, and revenues have actually declined. But with the addition of YouTube features, users might grow more inclined to tote them along to shoot clips of ordinary doings, like a pub crawl, rather than just weddings, vacations, and other special occasions. "We realized there was an opportunity to make a new category of product," says Jonathan Kaplan, chief executive officer of Pure Digital, which introduced one YouTube-enabled camcorder in May and another in September. "Sharing becomes part of a memory-capture experience, not an afterthought."
Richard Doherty, director of the Envisioneering Group, a consulting firm, says devices like Pure Digital's may "rattle the rafters of the camera market," impacting everything from camera and camcorder designs to market shares. "This may be the differentiator that causes some people to put their old cameras in a drawer," Doherty says.
A New Kind of Set-top Box
Sellers of set-top boxes see YouTube as an alluring new feature as well. Start-up Neuros Technology recently launched a new model that enables users to browse YouTube clips on a TV. Or if they're listening to songs saved on a computer, the Neuros OSD also lets them find and view related music videos on YouTube. "It's a differentiator relative to other set-top boxes," says Joe Born, CEO of Neuros. "There's a terrific interest for users to have their Internet content brought to their TV set. It's the icing on the cake."
The timing appears to be right. Of nearly 5,700 consumers NPD surveyed in August, 36% said they were interested in watching Web video on a TV. Among consumers with high-definition televisions, that number was even higher: 42%. With more than 230 million clips viewed online daily, video sharing is fast becoming as popular as photo sharing.
Strong sales of YouTube hardware may help lift other Web boats as well. Pure Digital's camcorders also allow for seamless uploads of video clips to AOL (TWX) e-mail and MySpace's social network. Amit Kapur, vice-president of business development for MySpace (NWS), is mum on his company's hardware plans beyond mobile phones, but analysts believe major hardware deals will be forthcoming from the News Corp. (NWS) subsidiary and rivals such as Facebook.
YouTube from Any Screen
There is, of course, only so much room on a piece of hardware for buttons and menu icons dedicated to specific Web brands. "There's a mad dash, and Google has more people to put on this effort than other people combined," says Doherty of Envisioneering.
Indeed, while YouTube won't say how many staffers are actively looking for and working with hardware partners, its team members span the world, with some based in consumer-electronics hubs around Asia. For now, YouTube isn't asking its hardware partners to share revenues. On the contrary, Google often throws opportunities for free promotion through its ad-placements business into the bargain, say people familiar with the deals. "It's my goal that YouTube is available on anything with a screen," says Walk.
See BusinessWeek's slide show for more on YouTube-friendly gadgets.