It has snuck in quietly under the radar, but the fact that TV is fusing with the internet should surprise no one. With the web already wirelessly viewable on laptops, mobile phones and PDAs, it's a wonder the internet has escaped the single biggest screen in our homes for so long.
Previous attempts to deliver internet to television have failed not because the technology was lacking - it has long been possible to hook a PC or games console to a TV set - but because the application wasn't compelling enough.
The key to unlocking the internet over TV is to strike a balance between the viewing differences between the television and the computer. The PC functions as an immersive, often solo and typically information-based pursuit, whereas TV entertainment is still best enjoyed on a large screen watched from a distance of 10 feet in the company of friends and family. These fundamentals haven't changed.
What has changed is that consumers are much more familiar with interactivity across all media.
For example, the BBC iPlayer - on iPhone, Nintendo Wii and Virgin's V+ service - is widely credited with not only bringing online TV viewing into the mainstream, but also fostering a wider familiarity with the concept of on-demand.
Michael Comish, chief executive of film and TV website Blinkbox, says: "People already interact with programming by text, phone or online vote - there is proven demand. All technology is doing is bringing it all together in one place."
Alex Green, managing director of portal at Virgin Media, adds: "It's important to look at actual viewer behaviour rather than technology for technology's sake. Consumers don't care how content is delivered. They want greater choice, greater control and, to a degree, the personalisation and interactivity of broadband, combined with the video quality and responsiveness of television."
Green claims Virgin Media is at the vanguard of driving on-demand TV viewing, having delivered a third (95 million) of all iPlayer views last year, with 4oD and ITV Player also on its platform.
A recent survey by the Association for Television On-Demand revealed that one in five of the population uses VoD every week, with 48% of those doing so through the TV set, 41% through PCs and 30% through laptops.
"The market for internet to TV is currently a patchwork of mobile devices and boxes that do the job in various ways," Green adds. "The question is how to make it as easy as possible for a family to access the internet concurrently across multiple screens, and so enjoy multiple forms of entertainment."
Internet-delivered programming is available via set-top boxes in a number of ways - and Nigel Walley, managing director at Decipher Consultancy, emphasises the distinctions between the three levels of internet connectivity.
First, the Virgin cable infrastructure uses internet protocol standards, but runs it through its own cable, so it is "internet-like", but not the true internet, according to Walley. In this way, he argues, the iPlayer service on Virgin is a "fake" iPlayer, since it is not connected to the internet or the main iPlayer servers.
Next, there are services such as BT Vision and Tiscali, which run over the open internet, but do not use web standards. Each uses a proprietary coding system, creating an IPTV walled garden with software standards under the companies' individual control. Walley explains: "This most definitely is the internet, but it is not the web. When you see content from Channel 4 on these services it is not the C4 website, but a page in the EPG written in the BT Vision or Tiscali software."
Finally, services such as Fetch TV, PlayStation3 TV, Apple TV and Yahoo TV Widgets go one step further and effectively use the open web to deliver TV content to the boxes. Walley explains: "What you see are versions of actual websites, repurposed for the TV screen. For instance, there is a version of both YouTube and iPlayer written for big TV screens. It is likely the Freeview and Freesat world will move towards this specification and create free-to-air boxes with web TV in the back."
Later this year, the iPlayer is expected to launch on Freesat's ethernet-connected boxes alongside Freeview, while Samsung has just launched the first of a new wave of sets enabled with Yahoo TV Widgets software.
These devices - Panasonic, Sony and Sharp have launched similar products (see box, page 22) - offer selections of internet programming called widgets displayed like bookmarks on a PC. Yahoo's UK channels include widgets for news and sports reports, YouTube and Flickr.
Robert Shaw, general manager at Samsung, says: "We are trying to bring relevant online applications into the TV environment. For example, iPlayer or ITV's catch-up services are watched on PC only because viewers have no other choice."
Samsung is in talks with UK broadcasters about incorporating their on-demand players into its own widget gallery. Further applications include Time Out listings and Skype, and viewers may soon be able to check their eBay auction, recommend shows to friends via Facebook, and instant- message using the remote control.
However, what could make IP-delivered VoD really rocket is Project Canvas, the BBC, ITV and BT Retail proposal currently under review at the BBC Trust.
If it goes ahead, set-top boxes will be available in shops in 2010. The £24m project has been conceived as an upgraded form of Freeview and Freesat, to ensure BBC and ITV catch-up services are available on a free-to-air TV platform.
Simon Pitts, controller of strategy at ITV, says: "Canvas will futureproof our free-to-air platform and keep it competitive. Our share of viewing is significantly higher in a Freeview home than in a pay-TV home, which plays directly into higher revenues for ITV. When consumers upgrade from Freeview to a PVR or an HD or IP-enabled box, we want them to choose the Freeview option."
Although its catch-up content will be IP- delivered, Project Canvas will not be marketed as internet TV. "This is about delivering a greater range of TV content, some of which is only available for the majority of people online," says Pitts. "It is not about websites or widgets, which will only confuse people. Will there be the potential to access TV-rendered websites? Yes, but that isn't the focus of the project.
The volume of content hitting the TV screen from a potential blend of digital terrestrial television, pay-TV and internet TV makes it imperative that consumers can find relevant content easily.
Jacques Le Mancq, product manager for VoD at technology vendor Thomson, says: "An EPG of several hundred channels is not a pleasant experience. If you don't know what you want to watch, you are more likely to accept anything on a linear channel rather than plough through a large catalogue in case something catches your eye."
The EPG needs to include linear, free catch-up and pay-per-view content, as well as personalised channels, all offered in the same way, so the psychological barriers between on-air and on-demand content are dissolved.
Jonathan Beavon, director of segment marketing at software developer NDS, comments: "When the internet arrives in the living room, you don't want people to have to alter their behaviour from lean-back channel zapping to lean-forward browser-based search."
The area of TV search and discovery is ripe for innovation. For example, Intel/Yahoo has the widget bar approach, games consoles are experimenting with virtual worlds, and Blinkx is working on contextual search engines.
Canvas will seek to establish a standards-based internet TV browser and a guide to allow the content to be found. This is likely to include a recommendation engine of the sort used by online retailers, which will suggest similar video that other people have found useful and give users the chance to compile personalised channels.
For broadcasters, the advantage of internet-connected TV is the ability to build profiles of individual subscribers and so deliver targeted advertising. This marks the second key commercial incentive for ITV and Canvas.
"A connected set-top box enables us to provide tools to advertisers that are currently only available online," says ITV's Pitts. "A set-top box can quickly learn the sort of content viewed by different members of a household, and this information can be sold at a premium to advertisers."
If broadcasters are to raise significant revenues from time-shifted viewing, a new metric that aggregates all views of a programme is required - and Barb has been briefed to work on such a model for launch next year.
Chris Allen, joint head of MPG's video integration unit, believes a "gold-standard system of measurement that combines traditional linear viewing with video consumption via the internet" is hugely important. He says: "In the future, targeted advertising will allow messages to be served to relevant households, and from the ethernet return path, we will be able to measure the actual reach of content, together with the degree of engagement with the commercials within it."
A recent report from consultancy Coda Research suggests Canvas would cause linear viewing to drop 15% to 160 million hours a day, and that it would limit the growth of PVR viewing to 14 hours. Coda predicts ad revenue from VoD will hit £500m by 2015, 60% of which will come from TV.
For the PSB commercial broadcasters, targeted advertising represents a paradigm shift in the advertising model that can't arrive quickly enough, but it is important not to get carried away by the impact of on-demand.
A study from Viacom Brand Solutions, Digital Drive, suggests that, while on-demand has a role to play in the home, linear TV will continue to outperform it. The study, carried out between 2007 and 2008, found that 57% of audiences view linear TV, 23% view via a PVR, 12% view via on-demand, and the remaining 8% view via mobile, despite having an array of devices and options to choose from.
This trend has informed Sky's decision to serve tailored ads into existing commercial breaks in the linear schedule, a service planned to reach Sky+ homes by 2011.
Griffin Parry, Sky's director of on-demand, says: "On-demand in the living room will be another part of the ecosystem, but it won't be a complete game-changer."
Meanwhile, Virgin is developing its own next-generation IP-based platform, which is intended to address "the convergence of TV and internet through a single connection", according to Green.
He says: "We are in a unique position to provide services to multiple screens in the home over a two-way fibre-optic network."
According to Nick Hopkins, Virgin Media's head of advanced technology, the future lies in providing access to content that people want, in a network and platform-independent manner.
Hopkins describes Virgin's prototype as "a cross between a TV channel and browsing the internet".
The end game is to exchange media from PC to mobile to TV with the minimum of fuss and a continuity of viewing experience. "You should be able to watch the media you've paid for, regardless of screen," says Sky's Parry.
"BSkyB's online VoD portal, push VoD to the PVR, streaming video, and mobile TV services must be viewed as part of a whole subscription experience and not in isolation."
Internet-enabled TV sets hit the shops
Brand name: Internet@TV Content Service
TV models: 6 or 8 series Plasma, 8000 or 7000 series LEDs
Price: 40-inch, £1,600
Launch: March 2009
Brand name: VieraCast
TV models: Z1/V10/G15
Price: from £1,049.99 (LCD) to £4,999.99 (plasma)
Launch: May, June, July 2009
Brand name: Bravia with AppliCast
TV models: Most new Bravias including WE5, W5500, E5500 and V5500
Price: from £550.00
Launch: throughout 2009
Brand name: Net TV
TV models: 8000/9000 series/Cinema 21:9
Price: from £800.00
Launch: May 2009
Brand name: Aquos Net
TV models: Aquos