June 15, 2011, 2:13 PM

IRCE 2011 Report: The TV and the web will marry, but there’s still courting to be done

Google TV and other initiatives will accelerate, but not overnight.

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The intersection of TV, the web and e-commerce is coming, but not before big search engine companies, content providers, cable TV providers and consumer brand manufacturers work out a few more bumps in the road. That’s the conclusion of James McQuivey, a vice president and principal analyst with Forrester Research, and Ben Bajarin, director of the consumer technology practice at Creative Strategies Inc., who both spoke today at the Internet Retailer Conference & Exhibition 2011 in San Diego during a general session entitled “The Convergence: How the Coming Together of the Internet and TV will change e-retailers’ business.”

By 2014 a projected 123 million homes will have a TV that enables access to the Internet for shopping and other activities even while consumers channel surf and watch TV shows, says Bajarin. Consumers in those households already are digitally connected, with 60% to 70% of consumers using their computers or smartphones while they are watching TV. “Devices of all types, including TVs, are becoming smarter and better connected,” he says.

The rapid adoption of new and better web-enabled consumer devices, such as the 6 million buyers and users of Kindle, Amazon’s electronic book reader, and the 10 million buyers of Apple Inc.’s iPad tablet, is changing the way consumers use Internet technology. “This is a whole new consumer experience,” says McQuivey.

Eventually the convergence of such innovations as Google TV, web-enabled smartphones and tablets, along with changing consumer behavior, will expedite the marriage of TV and the Internet—a trend web retailers need to watch closely for emerging e-commerce opportunities, say McQuivey and Bajarin.

But the intersection of TV and the web also needs to overcome some big roadblocks, including technology standardization, a better value proposition for consumers and the adoption by cable TV providers, consumer brand manufacturers, digital content providers and others of more open technology. “Will web TV be delivered through the browser or apps?” says Bajarin.  “That’s one of the questions that need to be answered.”

Web-enabled TV is making inroads. Google TV, already has streaming content deals with such web retailers as Netflix Inc. and Amazon.com Inc., No. 1 in the Internet Retailer Top 500 Guide. “This has the potential to alter the advertising and retail experience,” says McQuivey. “Advertising can be tailored to individual preferences based on web behavior and how consumers are connected.”

Instead of cable TV companies and closed operating systems, Google TV and other initiatives open up the TV as a new platform based on open source technology that delivers content in many digital forms, and provides retailers with new ways to deliver a web shopping experience.

In a back and forth discussion to close out their session, McQuivey said the iPad and other tablet computers will replace the TV remote over time as the main device consumers will use to channels and web surf when in front of the TV. Bajarin said the sheer number of consumers with smartphones will lead to that device replacing the remote.

Because Netflix already has technology and content deals in place, it has a chance to become the dominant digital entertainment provider in 2013, says Bajarin. McQuivey says for that to happen Netflix first must figure out how to deal with churning subscribers and finding new customers.

With a user base that is 700 million and growing, Facebook has the potential to dominate the brave new world of TV and Internet-based e-commerce, but Bajarin says Facebook still has “customer trust” issues to overcome.

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