Microsoft's announcement that it will start offering movies on the Xbox Live Marketplace heralds the arrival of Internet TV to the masses - by which I mean video chosen on and delivered to the TV set over the open internet.
With Apple and (possibly) Sony soon to follow, it is now clear that 2007 will be the year of Internet TV. By the end of 2007, the industry buzz will no longer be about web video: it will be about video in a ten-feet experience. The web-video brands being built for the web today will be relevant, as much of the infrastructure, content and technology will be reused. But not everything will translate: form factors will be different, gatekeepers could play a larger role than on the web, and there will be disputes about online rights.
In a year's time Internet TV will still be nascent, but the trend, the opportunities and the risks will be clear enough to everyone - and they will be substantial enough to make the current craze over online video look like just a (very important) warm-up. This time there will be no pretense of complementarity: Internet TV will eat directly into TV, cable and operator-run VOD. Net neutrality will be even hotter than today.
Still, a lot is still unclear: will there be a Google in these platforms? Will there be an open platform like the web in addition to the closed silos of Microsoft and Apple? Will there be a concept of "sites" that can be launched and controlled by anyone? All of these questions will take a few years to get answered. In the meantime, Internet TV will be a walled-garden affair - like Compuserve and AOL before the web.
Related: An earlier post on convergence.
:Later: Read Andy Kessler on 'virtual pipes':
How do you keep users in your corral? Circle the wagons, pardner. It ain't easy. Packets go where they damn please. It's the Wild West - an open prairie. You've got to be creative. Use a tractor beam to get them into your camp and a mind meld to keep them there. Or something like that.