Abstract

Having showcased its BRAVIA Internet Video Link TV Internet access product in 2007, Sony followed this up in 2008 by announcing new content sources for the BRAVIA Internet Video Link, including CBS. Sharp and Panasonic both had high-end LCD TVs with built-in Internet access capability on display in, along with details of their respective content provider partners.

Many of the leading international consumer electronics vendors have been developing ways to add direct Internet access to TV products. However, there are significant differences between the product strategies that the individual vendors have adopted.  

Varied Product Strategies Adopted by Sony, Sharp, and Panasonic

In its development of direct Internet access technology that enables TV sets to access Internet resources, Sony has developed the BRAVIA Internet Video Link. This device is designed to be sold separately from the LCD TV as an add-on product, and will be usable with all new Sony LCD TV models. By contrast, Sharp and Panasonic have chosen to build Internet access capability directly into their high-end LCD TV models. These different product strategies can be examined from several angles:

Market Potential and Value Added

By incorporating a special interface into all new LCD TV models, Sony has expanded the potential user base for its Internet access products. Shipments of Sony BRAVIA LCD TVs have been growing steadily, creating significant market potential for the Sony BRAVIA Internet Video Link. By designing the BRAVIA Internet Video Link as an add-on product, Sony has given itself maximum flexibility in terms of which LCD TV models this Internet access product can be used with.

Sharp and Panasonic have both adopted a strategy of building Internet access capability into their high-end LCD TV models. Initially, the target market for these products will be limited to high-income consumers. By positioning Internet access as a capability limited to high-end models, Sharp and Panasonic can increase the perceived value-added of these LCD TVs; they will also be hoping to strengthen brand loyalty.

Niche Market Development

The idea of using a TV set to access the Internet directly is still unfamiliar to many consumers. A survey conducted by MIC in Los Angeles showed that consumers in the United States viewed direct Internet access via the TV set as constituting a niche market, and did not consider that this function would add significant value to the LCD TV. Given this low awareness of the potential of TV Internet access, vendors will need to do more to educate consumers.

Sony's decision to include the DMeX interface in all new LCD TV models suggests a determination on Sony's part to undertake aggressive development of the TV direct Internet access market, and a high level of confidence in the potential of this new TV function. By making Internet access capability available for a wide range of LCD TV models, Sony is aiming to establish itself as the leading LCD TV vendor of the Internet era.

By contrast, Sharp's Aquos Net and Panasonic's Viera Cast reflect a much more cautious attitude towards direct Internet access via the TV. Both companies have been relatively slow to move into this new market; both firms have initially positioned direct Internet access via the TV as a niche market function for high-end LCD TVs, with the aim of laying the foundations for slow but steady development of the market.

Varied Roles Played by Sony, Sharp, and Panasonic

The key factor affecting the competition between TV Internet access technologies will be the availability of Internet content. With the Sony BRAVIA Internet Video Link, the emphasis is on video content. Initially, the content available for this device was mainly free content or Sony Pictures content; the range of content has since been expanded, but with the emphasis still on entertainment. The content available for the Sony BRAVIA Internet Video Link now includes movies, TV shows, music videos, and sports, food, travel, fashion, and lifestyle programs.

Sony's online content business model for the Sony BRAVIA Internet Video Link has evolved from a business model that relied heavily on free content to one that incorporates on-demand services. BRAVIA Internet Video Link content providers now have the option of making their content available over Sony BRAVIA LCD TVs in the form of paid, on-demand content. Sony is now doing more than just sell the BRAVIA Internet Video Link hardware; it is also playing the role of content aggregator for online content.

In the United States, the BRAVIA Internet Video Link is transforming Sony into an IPTV operator. If this business model is successful, then Sony's integration of products and services through the medium of the BRAVIA Internet Video Link will bring about a significant reduction in the overall cost of TV Internet access to the consumer. At the same time, Sony will be able to leverage its extensive experience in the video content business to secure a significant competitive advantage over vendors such as Sharp, Samsung, and Panasonic whose background is limited to hardware manufacturing.

As Sharp's Aquos Net and Panasonic's Viera Cast have only just been launched, the range of content available for these TV Internet devices is still relatively limited. With their emphasis on information services such as weather reports, traffic updates, stock quotes, and general news, Sharp and Panasonic are positioning their respective TV Internet access solutions as value-added services for high-end LCD TVs. The two vendors are anticipating that this product positioning will help them to strengthen customer loyalty in the high-income consumer segment, while also boosting the amount of added value that they are able to provide to customers. As the business opportunities in the TV Internet access market are still unclear, Sharp and Panasonic have decided to adopt a steady, cautious approach to the development of this new market.

One point worth noting is the availability of Aquos Gallery and Gallery Player - Full HD (High Definition) 1080p photo viewing services - through Sharp's Aquos Net. Sharp is making it possible for consumers to use its large-screen Aquos LCD TVs as a giant digital photo frame for the living room. If this strategy is successful, it will provide a significant boost for the Aquos brand image.