TV image via Tomislav Pinter

Such a dramatic transformation provides opportunities as well as challenges for today’s incumbents. It also provides compelling opportunities for innovative new entrants, large and small. When all is said and done, consumers will be the winners.

There are approximately 100 million pay-TV subscribers in the U.S. who receive multichannel video service from providers such as Comcast, Time Warner Cable, DirecTV, Dish and Verizon. These subscribers watch an average of almost five hours of live TV per day or approximately 44 billion hours per month. That’s a lot of TV! But video consumption habits are changing. People today want to consume their video content anywhere and anytime, however they choose. They also wish they didn’t have to pay so much for the premium content that they currently pay for and/or don’t actually watch (the average video subscription service costs are approximately $75/month in the US). In addition, consumers have indicated that they might actually be willing to pay for different types or “bundles” of content than studios and programmers either realize or are currently willing to offer. But that’s another article unto itself, in which I’ll provide an overview of what I refer to as the coming “atomization of content.”

All of these changes in video consumption habits and desires — combined with increased broadband penetration and mobile device usage — have led to several evolving dynamics in the pay-TV ecosystem. These include an increase in cord-cutting/cord-shaving (this term refers to a consumer’s decision to completely cancel or significantly reduce their pay-TV package), a dramatic increase in online/Internet TV viewing over the last few years (today, greater than 640 million hours per month) and the creation of a parallel video ecosystem consisting of emerging TV and digital media services platforms as well as OTT/Internet TV Networks.

There are several companies leading the charge on innovation in the pay TV ecosystem. On the digital media services platform front, Roku and Apple TV are the two that have garnered the greatest consumer adoption, with approximately 90 percent combined market share in the US — and each of them has sold several million set-top boxes and a large amount of digital content. However, each one possesses a distinctive value proposition with different price points, content offerings and use cases (a comprehensive review by CNET of both Apple TV and Roku can be found here).

Regarding Internet TV networks, Netflix, Hulu and Google/YouTube have all built significant businesses to date, albeit with different content offerings, business strategies and use cases (combined, they had revenue greater than $4 billion and several hundred million users globally in 2011). Each of these entities, as well as Amazon, has also been quite aggressive at building out online video capabilities, not only by increased licensing of premium streaming video content, but also via the allocation of hundreds of millions of dollars dedicated to creating/producing new video content exclusively for distribution over the Internet.

Other technology behemoths, such as Intel and Microsoft, are also working on their own product and service offerings to participate in and help drive change in the pay TV ecosystem. Intel has had a number of Digital Home initiatives over the last decade, and now it’s intending to launch a pay TV service. The rumors about this effort include claims that Intel will deliver the service via an Intel-designed proprietary set-top box. Microsoft is aiming to have an integrated HW and content services TV offering, using Xbox as its set-top box or gateway in the home, supposedly delivering a wide range of licensed content as well as originally-produced content.

While the big technology incumbents evolve their strategies, a number of young start-up companies are innovating as well. Companies such as DecaTV, Awesomeness TV, Machinima, Filmon and others are essentially growing up as Internet TV networks, channels and/or media companies — each, in large part, developing its own video content focused on specific interest themes and demographic targets. For example, DecaTV is producing original video content for “engaged, affluent and educated women online.” Machinima has emerged as the leading video gaming entertainment network for gamers around the world, showcasing gameplay, original shows, game trailers and news. Awesomeness TV is a new Internet channel focused on teens and tweens, founded by former Nickelodeon and WB producer/director Brian Robbins. Filmon, founded by Alki David, is a global Internet TV network with a host of licensed as well as produced and owned content, and has one of the most extensive international content offerings.

Companies like Maker Studios, SkyChannel, Nimble TV, YapTV, Zeebox and others are innovating on the tools, infrastructure and services side. Maker Studios is essentially a one-stop shop for Internet TV development, production, promotion and distribution. SkyChannel is providing the most comprehensive and straightforward suite of tools for content owners to publish and charge for their content libraries on a multitude of devices, platforms and operating systems. Nimble TV is pioneering true “TV Anywhere” service with elastic cloud DVR capabilities as well as place-shifting (e.g., Slingbox-like) functionality. YapTV and Zeebox are two of the more impressive “Social TV” apps that provide a robust multi-screen, real-time viewing experience to consumers.

With the aforementioned transformations taking place in the pay-TV ecosystem, who will be the winners when all is said and done? Anyone who tells you they know for certain is wrong. What I can tell you is that although the incumbents will be challenged in a number of ways, you should not expect them to disappear anytime soon. They have tremendous resources, a history of competing vigorously in the marketplace and have shown the ability to evolve their existing businesses just enough to remain dominant. However, I do expect that there will be some new and innovative companies that will emerge as next-generation leaders in practically every part of the pay-TV ecosystem. I have my own ideas of which companies may be included in this group, but it will be the consumers who will really win — with increased content choices, more advantageous pricing schemes and the true capacity to watch whatever, wherever and whenever they want.

Daniel Leff is a Venture Partner at Globespan Capital Partners, a technology-focused venture capital firm with offices in Palo Alto and Boston. He invests in digital media companies, among other things, and is an investor in and on the board of Roku. He tweets at @dr_daniel_leff.

The investment was made as part of a $45 million round Roku raised in July, according to multiple sources familiar with the transaction. Roku raised the funds after considering an acquisition offer from Amazon.

At the time, Roku said it had taken money from several investors including News Corp. (which also owns this Web site) and BSkyB, along with an “unnamed strategic investor.” I don’t know why it didn’t want to disclose its participation, but Dish is the mystery investor. (UPDATE: A sharp-eyed reader notes that I’m not the first to suss this out: Our corporate colleagues at the Wall Street Journal made the same connection… all the way back in July.)

If Dish ever did go forward with a Web TV service, there would be an obvious benefit in a tie-up with Roku, which competes head-to-head with Apple’s Apple TV box.

On the other hand, since Roku, unlike Apple, has made a point of opening its box up to all sorts of Web TV providers, Dish wouldn’t necessarily require an ownership stake to get its service on Roku’s hardware.

A Roku PR rep says the company is “still under NDA with the unnamed strategic investor and therefore can’t comment.” I haven’t heard back from Dish.

CEO Chet Kanojia says his IAC-backed company will soon start offering programming that doesn’t come from local TV stations, which he’ll sell for an additional fee.

“We have done a few deals” with content owners, Kanojia said during an interview at a Goldman Sachs media conference this morning. “You’ll see us publicize those at some point soon.”

Kanojia didn’t offer much more detail. But asked if the deals he had struck were with “household name cable networks,” he answered: “Generally speaking, yes.”

So what does that mean? There’s no way Kanojia is working with any network affiliated with any of the four major broadcasters. They are suing his company for copyright violation, because it distributes their over-the-air programming without paying for it. So that rules out anything from News Corp. (which also owns this Web site), Disney, Comcast or CBS.

I would also be surprised if he has struck deals with any of the established cable programming giants who aren’t in the broadcast TV business, like Viacom or Discovery. Because it seems unlikely that Aereo would want to resell the all-or-nothing bundles the cable guys insist on.

More likely would be deals with programmers that don’t have full cable distribution in the U.S. I could imagine a theoretical deal with someone like Bloomberg TV, for instance, or Al Jazeera English. Asked to provide additional clarification, Aereo PR head Virginia Lam writes: “We have had conversations with a variety of content providers, including some cable networks.”

Kanojia also said his company would soon start streaming programming to PCs and laptops. Right now, users can only watch Aereo on Apple’s iPhones and iPads, and on their TV sets via Roku boxes and Apple TV. The company is also limited to the New York City area, but has already said it plans to expand to other cities.

Which is why it’s surprising that Roku is complicating its newest device by attaching it to a technical standard that’s not yet widely adopted.

You might have heard of the Roku Streaming Stick: We’ve covered it (here and here) before. Essentially, it’s Roku’s top-of-the-line 2 XS box compressed into a tiny dongle, one not much bigger than a thumb drive. The dongle plugs into a port on the back of your TV to offer you the same streaming video apps you’d get from the bigger box. Like magic, it transforms your “dumb,” or non-Internet-connected TV, into a “smart TV.”

The Streaming Stick, which Roku has been teasing since this year’s Consumer Electronics Show in January, is finally coming to market in mid to late October, the company said yesterday in an interview. It costs $99 and comes with a remote. Even better, it has dual-band Wi-Fi, for faster, higher-quality HD streaming, and has double the onboard memory of the Roku box.

But don’t throw your Roku box out the window just yet, because there’s a catch: The Streaming Stick works only with MHL-equipped TV sets. MHL is a relatively new technical standard set by a consortium of electronics makers in December 2010. So far, about 100 160 manufacturers worldwide are deploying MHL smartphones and TVs. The MHL estimates that more than 200 million MHL-enabled products will have shipped worldwide by the end of 2012, and Roku believes consumers can expect to see more MHL devices coming out of next year’s CES.

But, in the case of the Streaming Stick, Roku says there are currently only two MHL-friendly Insignia TVs — Best Buy’s in-house brand — available on the market. In the coming weeks, seven MHL-equipped Hitachi TVs will become available, followed by four Apex TVs.

The Streaming Stick can also work with select Blu-ray players, but Roku hasn’t announced any compatible models yet.

So, why would Roku go with the MHL standard? Well, the California-based start-up has a few compelling reasons. While the MHL port looks the same, physically, as an HDMI port, the MHL port channels power from the host device to keep the connected device running. So, the TV will juice the Roku Streaming Stick, which means there are no wires attached to this device. If the area behind your TV looks like mine, with its spaghetti-like pile of wires, a wire-free device is welcome.

The Roku Streaming Stick’s remote also controls the volume and other functions on MHL-equipped TVs, so, theoretically, you could pare down your stockpile of remotes and maybe use just one (or two). And when you first plug in the Stick, it fires up the Roku app on the TV without forcing you to switch inputs. The same goes for when you’re watching live TV and want to switch to Roku. Users can hit the “Home” button on the Roku remote — or their standard MHL TV remote — and Roku launches.

Lastly, Roku is making the argument that even if you invest in a new, expensive, smart TV, it will become outdated in just a few years, whereas the Roku Streaming Stick offers an inexpensive upgrade option, provided that the company continues to upgrade its device and its app platform.

Roku currently streams content from Netflix, Hulu Plus, Amazon Instant Video and MLB.tv — and Vudu, its newest partner — to name a few. Today, the company also introduced a new mobile app that works like Apple’s AirPlay, controlling and streaming content from your iPhone or iPad to the Roku app on your TV set.

While Roku certainly has a nifty idea with the Streaming Stick — one that sets it apart a bit from the existing set-top boxes on the market — it’s hard to say how quickly this will catch on when relatively few consumers have the TV sets to support it.

Update: An earlier version of this article stated that 100 electronics manufacturers are currently shipping MHL-equipped devices; The MHL consortium says it has more than 160 licensed manufacturers supporting the MHL standard.

What about a gadget that isn’t a tablet or an e-reader?

There has been lots of speculation that Amazon has big Hollywood plans to announce tomorrow, because it’s holding the event in Los Angeles. Maybe!

But if so, lots of Hollywood folks I’ve talked to are in the dark about those purported plans. And just because a big tech company holds an event in LA doesn’t mean it is holding a Hollywood event — see Microsoft’s Surface a few months ago.

So here’s another theory: Maybe Jeff Bezos will show off a video box for the living room.

I’ve heard this one floated a couple times today, but not from anyone who claims to have firsthand knowledge of Amazon’s plans.

But people who do know what they’re talking about tell me that Amazon made an offer to buy Roku, the Web TV box maker that competes with Apple TV, earlier this year. Roku ended up raising a big $45 million round led by News Corp. and BSkyB instead (News Corp. also owns this Web site).

So if Amazon was willing to buy Roku earlier this year, perhaps they’ve built their own device instead.

An alternate theory: Rather than unveil a full-fledged Web video box tomorrow, Jeff Bezos will take a half step by showing off some kind of docking device that Kindle Fire users could plug in to get their video onto their sets.

And no matter what hardware Bezos shows off tomorrow, at some point he’s going to have to come up with some way of getting all of the video Amazon is buying onto your flatscreen.

Or else he’ll end up ceding the living room to everyone else. Microsoft has been there the longest, and Apple is making a bit of progress itself. Netflix has tried to pull it off by installing itself on every possible device that could get near a living room. And even Google has taken a crack at it.

Of course, Google promptly retreated once it realized the Nexus Q was a dud. And Bezos may want to wait rather than bring out a half-baked device of his own. But I won’t be surprised to see him tackle this soon.

Who knows — perhaps next week!

Meantime, though, developers can do some interesting stuff with AirPlay, Apple’s system for beaming media between different devices.

Here’s a new example, courtesy of The Awl, Choire Sicha’s clever blog network: An Awl-branded music video app for the iPad.

This is basically the next iteration of The Awl’s music video Tumblr, and it does just what you think it does — it lets you play songs, lifted from YouTube and Tumblr, that various Awl editors and their pals enjoy hearing/watching.

So — fun, but not a big deal. But things do get more interesting once you use the app in conjunction with AirPlay and an Apple TV — all of a sudden you can, um, watch cool music videos on your TV. Just like the ’80s, with Ray-Bans and everything.

This is the kind of thing that should be commonplace on Apple TV, and competitors like Roku are already letting developers build directly for the boxes. For now, at least, consider this a preview of what things could look like.

Here’s a quick Q&A with Eric Spiegelman, who built the app and has been doing some interesting thinking about the Web and video for a while:

Peter Kafka: This is cool. Who built it?

Eric Spiegelman: My company. Throw Your Media. I guess we’re out of stealth mode.

How long did it take to build?

It’s a native iPad app, written in Objective-C. It took a couple months to build.

And what’s the point here? Is this a demo project for you? A novelty for The Awl? Any way to make money here?

We launched Awl Music because we missed the days of curated music videos, the MTV we grew up with. The Awl has a very specific cultural voice, and we thought people would like to see that applied to music. There’s a lot of work going on these days on algorithmic video-”discovery” technology. We think that’s a role best served by human beings with good taste.

Awl Music is also the first channel built on a platform we’re calling Tomahawk. Once Tomahawk is fully built out, channels like this one will be able to reach all connected television sets. It will serve ads very soon.

Would you do something differently if Apple TV opened up its SDK?

That’s a really good question. Right now, the app was designed with AirPlay in mind. If it were native to the Apple TV, we’d probably change the menu system somewhat to work better with a handheld remote control. We’ll have to see what’s possible.

And what happens when YouTube changes its API rules and forces you to run ads?

Then we’ll run YouTube’s ads! I hope they allow some flexibility as to how and where the ads show up, though, because this has a massive effect on the user experience. If you have to watch one ad before every single video, that would diminish your enjoyment of a channel like this.

Now the conventional wisdom has shifted again: No TV set, and maybe very little else from Apple on the TV front, in the near future.

The newest version of this thought comes from Pacific Crest analyst Andy Hargreaves, who met with Apple CFO Peter Oppenheimer and media boss Eddy Cue on Wednesday. Here’s his takeaway on Apple TV, published in a note yesterday, and first flagged by Fortune’s Philip Elmer-DeWitt:

An Apple Television Appears Extremely Unlikely in the Near-term
Relative to the television market, Eddy Cue, Apple SVP of Internet Software and Services, reiterated the company’s mantra that it will enter markets where it feels it can create great customer experiences and address key problems. The key problems in the television market are the poor quality of the user interface and the forced bundling of pay TV content, in our view. While Apple could almost certainly create a better user interface, Mr. Cue’s commentary suggested that this would be an incomplete solution from Apple’s perspective unless it could deliver content in a way that is different from the current multichannel pay TV model.

Unfortunately for Apple and for consumers, acquiring rights for traditional broadcast and cable network content outside of the current bundled model is virtually impossible because the content is owned by a relatively small group of companies that have little interest in alternative models for their most valuable content. The differences in regional broadcast content and the lack of scale internationally also create significant hurdles that do not seem possible to cross at this point.

Bear in mind that the above is a mashup of Hargreaves’s analysis and guidance from Apple executives. So you’ll have to do some guesswork to figure out exactly what Apple is saying and not saying.

But it makes perfect sense, because it’s what Apple has been saying consistently when asked about Apple TV or any other new product. And it also reflects the truth that anyone who has tried to tackle a TV Of The Future has figured out: Making the tech work better is (relatively) easy. Making the content work better is really hard.

As Business Insider’s Jay Yarow notes, Hargreaves’s takeaway is a bit different from the newest round of Apple TV prognostication, kicked off by reporting in The Wall Street Journal, which posits that Apple is no longer trying to “disrupt” TV, but wants to work with the existing TV Industrial Complex, by making slight tweaks to the model.

But even that reporting suggests that Apple isn’t anywhere close to getting buy-in from cable programmers or providers. And so it can’t bring out new hardware — box, screen or otherwise — until it makes progress there.

That still doesn’t rule out any advances with Apple TV. It would seem totally reasonable for Apple to open its existing Apple TV box to outside developers, which would increase the utility of that hardware significantly without requiring any buy-in from TV Land. Just as Apple TV competitor Roku has already done.

According to sources close to the situation, News Corp.’s Chief Digital Officer Jon Miller will soon be leaving the media giant.

It seems to be a cordial, although perhaps inevitable, parting — sources said Miller will remain an adviser to chairman and CEO Rupert Murdoch, as well as COO Chase Carey and deputy COO James Murdoch, for a year after his departure in late September.

Update: News Corp. confirmed the departure in a press release, which is embedded below.

His leaving brings into focus the fate of News Corp.’s overall digital strategy in an upcoming new structure. Miller was hired in 2009 to turbocharge the company’s long-troubled digital assets.

But I had noted in an article in July that the well-known Internet exec was not likely to continue at News Corp. in the wake of a complex transaction that will ultimately break the company apart into two separate entities — an entertainment company and a publishing one.

That’s a very different situation from when Miller was hired by the media giant to lead its tech and online initiatives and make digital a priority across its many divisions.

Not for lack of trying or access to powerful News Corp. head Rupert Murdoch — it has been a mixed bag for Miller in his tenure.

That’s due in no small part to a problem faced by many execs like Miller: The difficulty of successfully pushing digital initiatives inside a large traditional media organization.

His job has encompassed everything from a failed effort to revive its once mighty Myspace service to selling it and other properties off to working to improve its Hulu partnership, where he serves on the board.

It is not clear who will replace Miller as one of the News Corp. directors at the complexly-owned premium video service, which had been for sale and then not recently.

One of the brighter Miller accomplishments for News Corp. has been forging decidedly better relationships with key Internet companies, both large and small, as well as with venture investors in Silicon Valley and elsewhere.

That was most pronounced and visible between Apple and News Corp., which struck a number of deals to work together, some of which worked and some that had much less success.

Miller has also been active in China, working on several digital investment opportunities for News Corp. there. That included a recent $70 million investment in Bona Film Group.

He was key to a recent $45 million investment by the company and others in the company that sells the Roku video streaming device.

He also worked on various New Corp. efforts on creating channels on Google’s YouTube, including WIGS, a drama series. The jury is still out on these kinds of creative endeavors, of course, especially to a company with much more lucrative traditional film and television assets.

There was a possibility that, in his leaving, Miller might form a separate investment fund to focus on digital publishing and media, funded by News Corp. or even by the Murdoch family, who control the company.

But that has appeared not to have worked out, said sources.

Before he came to News Corp., Miller ran an investment fund with former Yahoo exec Ross Levinsohn called Fuse Capital. He also was chairman and CEO of AOL under its Time Warner ownership and was a top exec at IAC/InterActiveCorp.

Miller has remained an active angel investor, funding a range of start-ups such as Maker Studios, Voxer, Science, Solavei, Personal.com, as well many as others.

He is also chairman of OpenX and serves on the boards of Shutterstock and TripAdvisor.

Clearly, this is a world Miller will return to easily and it’s likely he’ll be starting something sooner than later. (Maybe bringing the band back together with Levinsohn?)

JonathanMillerAug23.2012

(Full disclosure: This Web site is owned by Dow Jones, which is owned — in turn — by News Corp.)

Like this: Today Hulu Plus subscribers can finally start using the service on Apple’s Web TV peripheral, via a software update Apple pushed out overnight. So if you’re paying the service’s $8-a-month fee, you can now stream TV shows, movies — along with ads — directly to your flat screen.

This brings Apple’s hardware to parity with other devices like the Roku devices and Microsoft’s Xbox 360, so it’s certainly not a game changer. But there are two interesting notes here:

• Like Apple’s deal with Netflix, Hulu Plus is integrated directly into Apple’s iTunes store, which means that if you aren’t a Hulu Plus subscriber, you can sign up using your iTunes account, and Hulu will bill you via Apple. Presumably this means that, just like it does with Netflix, Apple will keep a portion of Hulu’s monthly fee. And from what I can tell, just like Netflix, Hulu won’t let you use iTunes to sign up for the service via a different Apple device, like an iPad or iPhone — if you’re going that route, you’ll still need to visit to Hulu.com
• Hulu and its owner/content partners (Disney, Comcast, and News Corp., which also owns this Web site) had little choice but to get Hulu Plus onto Apple TV. Because with the new Airplay feature in Apple’s new Mountain Lion update, anyone with an Apple TV can already “mirror” the free Hulu Web service onto their TVs. Not being able to offer the paid service — which has features like a deeper content library and HD streaming — would have been quite vexing for Jason Kilar and company.

Big picture for Apple: Tim Cook refuses to say much about TV other than that Apple is interested in it. But these incremental feature adds give you a pretty good sense of where Cook may be going.

Roku, the maker of a nifty device that plays a variety of content over televisions, is getting $45 million in a new round of investment from News Corp. and British Sky Broadcasting. (News Corp. owns this Web site.)

Current investors Menlo Ventures and Globespan Capital Partners will also be part of the new funding.

The company did not disclose the new valuation with the new investment. It has previously raised $22.4 million, including from Netflix.

The investments by News Corp. and BSkyB, in which the media giant owns about 40 percent, are separate. There is also another unnamed investor in the round.

As part of the deal, News Corp.’s Chief Digital Officer Jon Miller will be joining the board.

The money will be used for expansion, as well as for other initiatives, the Saratoga, Calif.-based Roku said.

It also said it will be launching the Roku Streaming Stick this fall, which it previously announced. It is a “wireless, dongle-sized streaming device that seamlessly integrates with newer TVs and consumer electronics devices. The streaming stick is Roku’s first step in expanding its platform from streaming players to Smart TVs and other devices connected to the TV.”

Here’s the official press release that is just going out:

Roku Raises $45 Million from News Corporation, BSkyB and Others
Strategic Round Underscores Roku’s Platform Lead as Content Distribution Moves to Internet

Saratoga, Calif. — July 26, 2012 Roku Inc. today announced it has received a $45 million strategic investment. News Corporation, British Sky Broadcasting (BSkyB), prior Roku venture investors Menlo Ventures and Globespan Capital Partners as well as an unnamed strategic investor joined the round. The new relationships include both financial backing and business agreements that demonstrate the industry’s confidence in Roku as the distribution platform to bring streaming entertainment to mainstream consumers.

Roku will use the new capital to build further brand awareness through advertising, develop new international markets, and increase engineering and production to support sales growth of both hardware and digital media services on the platform including advertising, games, transactional and pay-per-view video as well as content packages. In addition to its line of popular and award-winning Roku streaming players, the company will launch the Roku Streaming Stick this fall — a wireless, dongle-sized streaming device that seamlessly integrates with newer TVs and consumer electronics devices. The streaming stick is Roku’s first step in expanding its platform from streaming players to Smart TVs and other devices connected to the TV.

“We have watched Roku maintain market leadership since the launch of its streaming platform four years ago and we look forward to deepening our relationship, having already worked closely together on the launch of several products,” said News Corporation Chief Digital Officer Jon Miller. “Roku’s significant technology advantage, coupled with a strong market position, places them in a unique position to be an integral part of the television landscape for years to come.”

“We’re delighted to have entered into this strategic relationship with Roku. As an innovative content company we’re committed to embracing a wide range of complementary platforms to create more choice and flexibility for customers,” said BSkyB Chief Financial Officer Andrew Griffith. “Coupled with the on-going strength of satellite distribution, online and mobile help us unlock even more value for customers. Working with Roku we look forward to extending our multi-platform leadership.”

“Our philosophy is to give consumers the best streaming TV experience, with the most content and at the best value in the market; and it has served us well as millions of consumers have brought Roku into their homes,” said Roku Founder and Chief Executive Officer Anthony Wood. “With the News Corporation and Sky strategic relationships, we are poised to further grow our leadership position and to become the TV distribution platform of the future.”

Jon Miller will join the Roku Board of Directors. Anthony Wood will remain Chairman of the Board.

While some of the details about the service had been announced earlier, it was not clear when it would launch or how much it would cost. Big Fish said today that the service, which will allow consumers to play games across a variety of devices — including phones, tablets, PCs, computers and TVs — will be called Big Fish Unlimited and that it went live this morning.

Subscriptions will cost $7.99 a month for unlimited access to more than 100 games. Or an ad-supported model will provide players access to 20 games for free. Big Fish also announced onstage that the service will go live on Roku, the streaming TV service, in the fourth quarter.

Big Fish’s VP and general manager of cloud gaming, Will O’Brien, demonstrated onstage how a player’s game progress can be saved in the cloud, allowing users to pause a game on the PC and then pick up exactly where they left off on a tablet.

The service represents a big switch from the company’s current model, which requires users to download large files to their PC or mobile devices for a fee.

During the keynote, CEO Paul Thelen said while there’s a lot of attention on social games, the market for paid games in such casual genres as hidden objects and strategy games is really strong. According to AppAnnie, he said Big Fish Games is the fifth largest publisher on the iPad, one notch above Zynga, and that it aspires to be No. 1, a spot currently held by Electronic Arts.

“Premium casual games is a good business to be in,” he said. “Let me pause and let that sink in for awhile.”

The launch occurs today on PC and mobile devices, including Android devices. The one big notable exception is the lack of iPad capability.

In November, Apple suddenly removed Big Fish’s subscription service from the App Store after it had been live for a couple of weeks.

But it was evident at January’s Consumer Electronics Show that the search giant — and its hardware partners — hadn’t given up on the idea of marrying Internet TV with “real” TV, mainly through small boxes, like Apple TV or Roku, that run Google TV.

And as my AllThingsD colleague Peter Kafka noted a month later, if the new and improved Google TV system works the way it has been advertised, it may actually do a nice job.

Now, TV maker (and new PC maker) Vizio has officially announced availability for its Google TV device, the Co-Star.

Available for preorder in early July, the Co-Star costs $100, comes with a Bluetooth-enabled, touch-friendly universal remote, and includes apps like YouTube, Netflix, Amazon Instant Video and iHeartRadio, as well as access to OnLive’s cloud gaming platform. Vizio also notes that the Co-Star supports 1080p full-HD and 3-D video.

Unlike most set-top boxes that bring Internet connectivity to your TV, the Vizio Co-Star can connect to your existing cable or satellite box, which Vizio says allows you to toggle easily between live TV and Web apps. Bonus: The universal remote means you won’t have to switch remotes, either.

And just yesterday, Sony made a push with its new Google TV player. The NSZ-GS7 — also known as the bland “Internet Player,” take your pick — is a set-top box that runs Google TV and includes apps like Netflix and Hulu Plus, plus access to a Web browser. It goes on sale July 22 and costs $199. It will also be sold in the U.K., Australia, Brazil, Canada, France, Germany, the Netherlands and Mexico.

LG was the third hardware maker at CES this year to hop aboard the Google TV train, though the electronics maker rolled Google TV into its existing “smart” TV platform, rather than showing off a separate box. LG’s Google TVs are also 3-D-friendly, and include motion-control technology through a “Magic Remote.”

The G2 Series Google TVs hit the market late last month, at $1,699 for a 47-inch model, and $2,299 for a 55-inch set.

A more integrated approach to TV-plus-Web may seem like an easier solution, but keep in mind that, at least in the short term, the market for interim devices like Internet set-top boxes is ripe, with many consumers clinging to their older TV models and looking for solutions to get their Web video fixes.

Vizio’s Co-Star is a third of the price of the original Logitech Revue for Google TV, and lines up with Apple TV in terms of price, though it does cost more than some Roku models.

That is, more people are watching Web stuff on Microsoft’s machine than on the iPad, iPhone or any Android machine, anywhere. And when it comes to home viewing, competitors like Apple TV, Google TV and Roku are so far behind they’re not even competitors.

This data comes from Freewheel, an online video ad company, and it comes with caveats. We’ll get to those below. But first, take a look:

Now the asterisks: Freewheel is only measuring “professional content” that runs with ads, because that’s how it makes its living. So that means it’s counting stuff from companies like NBC, CBS, ESPN and Vevo, but not YouTube cat videos. It’s also not measuring Netflix usage. On the other hand, this isn’t a poll or sample, but data compiled by the company’s own ad servers.

So it’s possible there’s some variance here with the larger Web video world, but it seems reasonable to assume that this is at least directionally correct. At the very least, it gives credence to Microsoft’s claim that Xbox users are spending more time watching videos on the machines than playing games, and that its deals with conventional TV programmers may be bearing fruit.

And it shows you how much ground Google will need to make up as it gets ready to relaunch its Google TV. Ditto for Apple, if and when it ever gets serious about transforming Apple TV into something other than a “hobby.”