Game On: Consoles to Rule Web-to-TV Video Delivery

Game consoles are currently the most popular way to pipe web video to TV sets and will remain the dominant delivery platform for this type of video through 2013, according to In-Stat. By then, the research firm predicts, more than 10.7 million game consoles will be used as “web-to-TV mediation devices” in the U.S.

This shouldn’t come as a big surprise. Game consoles had a bit of a head start against the rest of the TV-connected device competition. Microsoft has already moved 30 million Xbox 360s; Sony has sold nearly 23 million units; and Nintendo has topped 50 million Wii sales worldwide. And all three of these devices have varying online video capabilities.

While game console adoption appears to be healthy, fledgling rivals in the web-video-TV space aren’t faring as well, or aren’t saying how they are faring at all. TiVo (s TIVO) is losing subscribers; Vudu is making moves away from being a hardware company; ZeeVee shelved its set-top box; and HP (s HP) dropped its MediaSmart Connect. Apple (s AAPL) still considers its Apple TV a hobby, and Roku hasn’t said how many units it has sold.

There is a big opportunity in delivering web video to TV sets. In-Stat predicts that revenues from such delivery will hit $2.9 billion by 2013, while the number of U.S. broadband households watching web video on TV will grow to 24 million from 2.5 million today. And the competition is on the rise. Parks Associates predicts that by 2013, annual sales of net-connected devices will top 100 million units.

But the gaming companies aren’t sitting idle. At the recent E3 gaming convention, both Microsoft (s MSFT) and Sony (s SNE) bulked up their online video video efforts in attempts to turn their game consoles into entertainment hubs. Microsoft, which added Netflix streaming to its console last year, is throwing in social features that let you watch video with friends online (on your TV) as well as 1080p streaming, and Sony added 16 content partners and mobile support for its PSP platform.