September 2, 2010, 2:06 PM

Turning on web TV

Apple, Netflix and Amazon make moves that could kick up interest in Internet-connected TVs.

Lead Photo

Apple Inc. introduced yesterday a lower-priced version of its Apple TV device that enables consumers to stream rented movies and programs on televisions, and announced a deal with Netflix Inc. that lets Netflix subscribers stream content through the devices.

Not to be outdone, Amazon.com Inc., the world’s largest online retailer, immediately announced it will match Apple’s prices for some streamed content by offering 99-cent rentals for TV shows from ABC, Fox and the BBC. Apple’s 99-cent-per-episode price applies to shows from BBC America, ABC, ABC Family, the Disney Channel and Fox.

“We think the rest of the studios will see the light and get on board,” Steve Jobs, Apple’s CEO, said Thursday when announcing the moves. Apple will sell high-definition movies for $3.99 and up.

Amazon is No. 1 in the Internet Retailer Top 500 Guide.  Apple is No. 4 and Netflix is No. 14.

This week’s announcement marks Apple’s second major effort to win over web-TV and streaming content customers. Apple had sold TV shows for up to $2.99 and movie rentals for up to $4.99, along with another digital media receiver called Apple TV that sold for $229. The new device sells for $99.

Apple’s attempt to entice more web-TV consumers with lower prices faces a significant challenge: a lack of awareness about the technology, at least according to an August report from Forrester Research Inc. Despite all major TV makers producing high-end sets that offer Internet connectivity, 61% of consumers have yet to hear about Internet-connected TVs. The finding is based on a June survey of 3,900 U.S. adults with online access.

The report adds that only 3% of survey respondents have a connected TV or plan to buy one. And 27% said they could not think of a reason to have such a TV, while 19% said it made more sense to connect a personal computer to the TV.

“Despite enthusiasm from the supply side, there is no corresponding consumer outcry for connected TVs,” writes report author James McQuivey. One reason for the lack of demand is that consumers seem unable to imagine doing more with TVs than watching more TV, the report says.

Even so, the report adds that when it comes to possible services that could be offered through a connected TV, accessing content from services such as Netflix and being able to watch commercial-free TV shows top the list of consumer wishes.

Beyond consumer desires for the technology, the moves made this week by Apple and Amazon signal an increasing price war among online video providers, says Colin Sebastian, a stock analyst who follows digital media and Internet companies at Lazard Capital Markets.

Amazon eventually will move to a subscription offering for videos, he says. “The immediate price cuts clearly indicate a willingness to compete in the market.”

As for Netflix, the deal with Apple represents another step for the e-retailer to move beyond its DVD-in-the-mail model. Netflix late last month launched a free mobile app that subscribers use to stream video to smartphones.

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