While many of these game console IP interfaces remain unconnected, the enormous developing installed base represents a "Trojan Horse" with enormous potential for online gaming, music and video downloads, as well as a variety of internet-based value-added services, the research group says. Already, in late 2007 Activision announced that more than two million songs associated with Guitar Hero were accessed through Xbox live over the previous five months.

"An increasing variety of TV-centric consumer electronics devices with IP interfaces is developing," says Mark Kirstein, president of MultiMedia Intelligence. "Manufacturers are adding IP interfaces across TVs, DVD equipment, as well as cable, telco, and satellite set top boxes. While manufacturers and operators are gradually adding IP connectivity, the IP-Enabled Consumer Electronics market has not reached a true inflection point beyond game consoles for hyper-growth. However, this growing installed base of CE devices with dormant IP ports could quickly become active with a simple network connection or software upgrade."

The market for Digital Media Adapters (DMA), devices that bridge TVs into a home network, has demonstrated a series of head fakes. Many companies have bet their future on this market, but faced repeated disappointment.

"Simply integrating the DMA function into CE devices is not enough to dramatically accelerate growth," Kirstein said. "As the ecosystem of content, services, devices and business models develops, the market will develop steadily rather than explosively."

MultiMedia Intelligence’s new research also found:

° At the technical level, physical interfaces will stratify across Cat 5 Ethernet, 802.11, Powerline and Coax networking solutions, with many devices featuring multiple interfaces.

° Semiconductor revenue enabling these interfaces will exceed $2 billion by 2012.

° The value of embedded home networking middleware will approach $300 million by 2012, with about 1/3 available to third-party developers.

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