From goggle to Google: TV meets the internet

Television viewers are doing it for themselves – hitching up to the web for more control over their viewing. Hardware and content providers are scrambling to keep up, Stephen Foley reports

So I'm back from holiday, and I need to catch up on a couple of weeks of American Idol. The older shows I found via file-sharing services and watched on the laptop last night; the most recent are safely stored in the cable television's digital video recorder, so I'll settle on the sofa for those tonight.

But with so much reality-TV flummery still to get through, I won't have time to catch the live airing of Modern Family, ABC's great new sitcom. Happily, that's available on Hulu.com, with a fraction of the irritating ad interruptions, so that could be a treat for the weekend. I'm giving up Gossip Girl, but if I change my mind, I can always pop to Apple's iTunes to buy it and watch it on the iPhone on the way back from work.

How do you watch TV?

With so many ways to find, and places to watch, television, these are rich and exciting times for viewers. Now we can build our own television schedule around the other things we want to do, instead of having to build our lives around broadcasters' schedules. These are bewildering times for rich television industry executives, though, and every day seems to bring new upheavals.

Yesterday came news that Google, the billion-dollar gorilla of the internet, is trialling a new TV project with the No 2 satellite broadcaster in the US, Dish Network, which will install Google software in set-top boxes. The very mention of Google gets media owners hot under the collar, since it already creams off $24bn (£16bn) a year from ads sold against internet search queries, including searches of media providers' own content, as thrown up by the likes of Google News. Now it wants to start making it easier to search for – and within – the television shows available on Dish Network, and move into the lucrative area of selling television ads, something that has previously been the preserve of the broadcasters and cable firms themselves. It's an experimental project that Google and Dish Network have going, not one they are ready to discuss publicly, but ambitions of Google in this space have long been big.

It opens up the opportunity to sell more targeted ads to television users – ads which might, therefore, be more effective than existing, massive TV ad campaigns. That's the business ambition. For it to work, the viewer must be getting something, too, and that something will be much more easily searchable and accessible television on demand.

This is the internet and TV colliding. Or, as the industry calls it, converging. James McQuivey, an analyst at Forrester Research, says viewers are desperate to bring the everything-on-demand philosophy they have got used to on the internet to television. His firm estimates that 9 million Americans already connect their laptops to the television to watch videos – everything from camcorder clips, through YouTube and Hulu (a broadcaster-funded venture similar to the BBC's iPlayer), to movies downloaded via file-sharing services.

"Internet-connected television is already happening in the US in larger numbers than people are aware. It is just that people are doing it in a DIY capacity. This is not rocket science any more: you walk your laptop into the living room and use a VGA cable to connect it to your TV. But while it is not rocket science, it is not drop-dead simple either, so the fact that 9 million people do it even periodically is amazing.

"To my mind, the consumer has voted. Now it's up to makers of devices and providers of content to give people what they seem to want – and people will reward whoever does it easiest."

Although things that have become common currency in the UK – such as clicking the red button on the remote for additional content, or watching shows you missed via the iPlayer – do not yet have widely used equivalents on this side of the pond, the US is marrying online and television worlds in other ways. Digital video recorders (the equivalent of Sky Plus) are much more prevalent, built in to about half of the nation's cable boxes or available for purchase separately from the firm TiVo, allowing viewers to record TV shows to watch at their leisure – and to skip the ads. The makers of these DVRs are racing to make them more sophisticated. TiVo last week launched a new box that doesn't just record television but also has built in access to online music service Pandora (like the UK's Spotify) and Google-owned YouTube, which has augmented its diet of home video clips in recent years with lots of professional content, which broadcasters offer from streaming on YouTube in return for a share of the ads. The cable firms, meanwhile, created Canoe Ventures to set common new technical standards for set-top boxes, in the hope of launching new internet-like services and offering better ad targeting.

Robert Broughton, an analyst at the research firm Screen Digest, says: "The internet-enabled set-top box allows the collection of viewing data on a dynamic basis. You don't have to rely on audience panels any more. But all this comes with controversy. Will people want to have their data collected in that way, and will they agree to have adverts targeted at them using that data?

"Most likely, this will be a multi-stage process, starting with location and demographic-based targeting, not too dissimilar to the way TV ads are sold at the moment. And once we get down to postcode-based targeting, and people are used to that, then no doubt there will be the introduction of more – let's not say, 'invasive' – let's say, 'dynamic' ad targeting."

With so much lucre available, the race is filling up with new players. Even the television manufacturers are getting in on the act, building internet-connected TVs and stuffing them full of whatever media content they can license from the content makers. Sony, which not only makes TVs but also owns a giant film studio, has a headstart. Comcast, the cable firm, agreed last year to buy NBC Universal, a broadcaster and film studio, precisely so it can marry content with its formidable distribution network.

And then there are the new players. Games console makers, most notably Microsoft, creator of the Xbox, have been negotiating licensing deals for content, including live sport – taking advantage of the fact that their consoles are already connected to the living room TV. Boxee, a little technology company, is flogging its own device that creates an interface between internet content and the television, and Netflix, which began by sending DVDs to its members through the post, now does the same for its online movie streaming. Apple TV, another box for under the TV, from the maker of the iPod, is an also-ran, but with a powerful and bold parent that hasn't begun pushing it hard. The question is whether this will all create a frustrating echo of the early days of the internet, where service providers first tried to keep their customers in a "walled garden" of pre-ordained content, instead of letting them range over the whole internet.

"Everywhere you turn, someone is offering you 10 or 20 per cent of what you want to watch," says Mr McQuivey. "The winner will be the one that can deliver the best end-to-end consumer service."