The IMS Research study Market Opportunities for Internet Video to the TV reveals that an estimated 65 million households worldwide had the capability of viewing Internet video on their television set at the end of 2008. This represents growth of 134% over year end 2007. Households displaying Internet video on the TV set via a game console or proprietary device comprised the vast majority of total Internet TV households in 2007 and 2008. However, it is expected that households using a PC to deliver Internet video to the TV set via a media center PC and a media extender (or digital media adapter), will see an 85% CAGR through 2013 reaching nearly 60 million households by that time.

Shane Walker, research manager and author of the study, states, “Windows Media Center and media centers in general along with extenders have seen limited uptake, however, their use will increase as prices drop and as more PCs with media center-like characteristics replace existing PCs. These characteristics include multi-core processing power to increase performance, advanced entertainment management systems capable of delivering content to multiple screens, and support of Internet-ready connectivity throughout the home.” Media center costs are expected to fall as much as 15% annually during the next five years. Walker continues, “Demand for media extenders will diminish shortly after 2013 as more advanced Internet TV functionality is delivered via set-top boxes. However, media centers that are connected to the TV from a device other than an extender will most likely continue to grow beyond our forecast period, slowly replacing DVRs as consumers become more accustomed to managing large libraries of digital HD content.”

Retail devices such as DTT+IP boxes and Blu-ray players, which incorporate Internet video from an online aggregator, will begin to affect this market by mid-2009. Growth will come from increased consumer awareness of these devices as well as the ability to access multiple aggregators (current devices typically allow access to only one or two web aggregators). An increased variety of devices facilitating Internet TV is expected as a result from the Intel and Yahoo! Widget Channel venture, the growth of Miniweb Interactive’s platform in the UK as well as new solutions currently in trials such as Verismo, Sezmi and Zillion TV. IMS Research expects revenues for retail set-top boxes, Blu-ray players with IP connectivity and proprietary Internet TV devices to pass $1 billion worldwide by the end of 2010. Nearly half of this revenue will come from Europe with the Americas and Asia Pacific regions contributing significantly by the end of 2013.

In addition to television and broadband household forecasts (split by IP video reception and A/V network type), the study provides detailed analysis of Internet TV equipment shipments and revenues for the three major global regions with further analysis of ten key countries.