Web-Connected TV: A Distant Dream for App Makers

Last year, Mark Phillip unveiled Are You Watching This?!, a tool for mobile phones that alerts sports fans to can't-miss, in-progress games, such as baseball no-hitters. Thousands of users have bought the 99¢application and downloaded it to their Apple (AAPL) iPhones and other handsets. Phillip also wants to create a version of Are You Watching This?! for Web-connected TVs, which he calls the "Holy Grail" for this type of content, but that's been a struggle. "It's a tough platform to build on," says Phillip, a resident of Austin, Tex.

By the end of 2010, Americans will own more than two million Web-connected TVs, which let users access online services such as and Pandora with the same remote control they use to switch channels. Yet while developers have managed to create a wide range of apps for mobile phones, they're daunted by the prospect of building software tools for TVs. There's no easy way to create an app that can run on the wide range of sets, says Forrester Research (FORR) analyst James McQuivey. "Nobody wants to get in the business of developing separate widgets for Samsung (005930:KS), LG (066570:KS), Vizio, and Sony (SNE)," he says.

In addition to all those TVs, there's a growing range of set-top boxes, each with its own software. There's Roku and its Channel Store, which bundles movie-streaming services from Netflix (NFLX) and others with handy tools, like a Facebook photo viewer. Vudu, recently acquired by Wal-Mart (WMT), plans an Apps platform for watching video podcasts such as Diggnation. This summer, the Boxee Box by D-Link (2332:TT) will bid to become the first hardware of its kind to let developers charge for programs through the TV.

To companies such as Internet music provider Pandora, each new outlet for TV applications presents a further opportunity to reach a fresh audience. The Oakland (Calif.)-based company makes its free program available on almost every TV set and box on the market and says its TV business currently adds up to about 500,000 users. "The foundation is there for those numbers to start growing exponentially," says Tim Westergren, Pandora's founder and chief strategy officer.

A trickle of apps for Connected TV

For smaller companies looking to get a foothold, the competing makers of TVs and set-top boxes add an unwelcome layer of complexity. "We're having great difficulty in determining how much effort to put into specific technologies," says Trevor Doerksen, CEO of MoboVivo. His company, which packages TV shows and other video content into apps, gave up on TV apps two years ago when the technology was in its infancy. Instead he opted to build apps for Apple's iPhone, which opened to developers in 2008. Now MoboVivo is again eyeing TV apps, but hasn't decided which gadget to get behind. "Nobody knows how successful it's going to be in two years," Doerksen says.

Web pioneer Yahoo! (YHOO) proposed a solution in early 2009, when it announced that new TVs from Samsung, Sony, LG, and Vizio would come equipped with its Connected TV software, which is open to all developers. So far the multidevice service is getting into homes—Yahoo says more than two million sets have sold with Connected TV—but the apps are slow to come. Only about 35 full-feature apps are available on the service, according to Russ Schafer, Yahoo's senior director of product marketing. The company has received submissions for at least 80 more, which it expects to make available by summer, and Schafer says Connected TV would "optimistically" end the year with hundreds of apps.

Even that tally would make up a fraction of the apps available on Apple's App Store. Two months after its debut, the smartphone store had more than 3,000 programs. By January 2010, it had amassed more than 140,000.

customer service worries TV makers

With the pool of potential developers for TV smaller and the learning curve steeper, a slower start is understandable. Still, the process for getting apps approved may be intimidating programmers from the start. "Once Apple approves your app, you're ready to rock," says Forrester's McQuivey. With Yahoo's Connected TV service, however, apps must receive approval from Yahoo itself, along with each individual TV maker. One reason is technical: Not all TV makers can run certain types of code, such as Adobe (ADBE) Flash, which may be used in many applications. "It's sort of all over the board in terms of the different requirements that are there," says Brian Powell, CEO of Widget Realm, which makes apps on the Yahoo platform.

Consumer electronics makers are also concerned about customer service. They're the ones most likely to take the blame from customers when something goes wrong, so it's in their interest to thoroughly vet apps, says Yahoo's Schafer. "There's a cost associated with those choices," he says. Still, he says TV makers are becoming less involved in the approval process.

TV makers are now unveiling their own app stores. At a trade show in January, Samsung introduced Samsung Apps; during a Super Bowl commercial, Vizio pitched Vizio Apps. Both systems are generally compatible with Yahoo, but not all apps made by third-party developers will work on all TVs. This strategy of branding apps may help distinguish TV brands from competitors in the near term, but in the long run it could scare away developers, says Greg Ireland, analyst with IDC. "I question whether a single consumer electronics company will be able to create enough traction on their own," he says.

For now, the race will only get more crowded. Broadband providers such as Verizon Communications (VZ), which already include access to some apps in set-top boxes, plan to open up to developers. "We're moving toward an open platform," says Rachelle Zoffer, Verizon's director of Interactive TV. Even Yahoo's Web rivals appear to be eyeing the business: On Mar. 8, Google (GOOG) was reported to be testing a new service for searching TV programs, based on its Android software. Says Zeev Neumeier, a software developer with TV Interactive Systems: "The jury is still out about who is going to win the war of these interactive boxes."

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