Marc Price is Openet’s CTO for the Americas.

In today’s day and age, consumers like personalization. From tailored music selections on MP3 players to customized ringtones, people know what they want when it comes to digital content, and how they want to enjoy it.

It won’t be long before television is no different from music services, either. In fact, it’s already happening. An everyday task like watching TV will soon become personalized with the introduction of technological advancements such as flexible ad insertion systems that personalize TV commercials, and new TV platforms, like Airplay via Apple TV, that deliver “long-tail” video content to all screens – the big screen, tablets, smartphones, and more.

Here’s why consumers will embrace a personalized TV experience:

An enhanced user experience

Soon, you’ll be able to request that your TV turn off commercials you despise and instead, play commercials you may actually want to watch, tailored to interests you choose to share. If you don’t have a cat, do you really want to watch ads for cat food? This applies to both live TV and time-shifted TV, where sometimes ads are no longer appropriate to recorded content. Imagine watching a show on your DVR, and being able to decide you don’t want to watch a commercial for a “sale on cars this weekend only” when the show was recorded last week. Gracenote is already set to bring this level of personalization into your living room, having debuted its ad replacement system at CES this year and is expected to ship hardware by the end of 2013.

Better service

Consumers distrust big brother when they don’t understand, or have control over, what data is being used, or how. Personalized TV services will take off when there are clear details around opt in and opt out mechanisms regarding how consumer data is to be collected and leveraged in creating a better service experience. For example, details have emerged on Intel’s smart TV platform that is said to display targeted ads based on facial recognition, gender, age range, etc. Although it won’t capture information down to the individual level, the general concept still has people skeptical. The more opt in and opt out elements that are placed under users’ control, the more they will be used, to the benefit of the consumer and the industry alike.

Consumers will be in the personalization driver’s seat

It will soon be possible for consumers to set up their own TV viewer profiles based on what they care about. And this is not just for ads! Consumers will be able to change their TV viewing experience around the electronic programming guide, recommendations, and even how search works and prioritizes responses. Apps like NextGuide from Dijit are currently available that enable users to find and browse shows on TV and online that are relevant to their interests. This concept, and the current apps available, will make content discovery of more relevant programming easier, as well as improve relevant advertising.

Tailored delivery of ads based on specific devices

As consumers add more devices, the personalized TV experience will make it possible for tailored ads to be delivered in customized ways to each of these devices. Consumers’ appetite for ads on mobile devices is not the same as for the living room TV. Mobile, despite rapid growth, accounts for just 1 percent of total ad spending worldwide, according to eMarketer. Advertisers will gain a channel to more devices, as opt-in mechanisms enable more sophisticated users to decide what is acceptable to achieve the right service experience at the right price. At the same time, measurement across devices can be centralized. Tailored delivery will ultimately improve the user experience, reducing total ad time, and reducing or eliminating ads that aren’t relevant. This also provides value for service providers, enabling ads on platforms beyond the living room TV, and enabling comprehensive measurement – inclusive of broadband/online and mobile channels – an elusive goal today. Inevitably, consumers will soon be able to interact with brands on the devices of their choice.

Final word

Personalized TV is better TV, as the concept enables you to find and enjoy the content you want, on the devices you want, and with more relevant advertising when you want it. Soon, the days of six straight commercials focused on medications for seniors’ ailments during the 6 o’clock news will be a distant memory. Technology allows us to live in a world where one size does not fit all, and that includes television.

Original TV Image via zayats-and-zayats/Shutterstock; Illustration by Tom Cheredar

Marc Price is the chief technical officer for the Americas at Openet, and has more than 20 years of experience working extensively with customers to define strategies and deploy world-class solutions for mediation, charging, rating, billing, and policy. He has helped some of the largest North American and European service providers to achieve business success. Before joining Openet, Marc was the lead software architect for a market-leading convergent real-time rating and billing system for service providers. Marc holds degrees in mechanical engineering and international relations from the University of Pennsylvania.

Anthony Wood (pictured) is Roku’s CEO, and at his house (he’s married with three kids), each person gets seven hours of TV each week — all sans cable, natch.

The family gets its fix primarily from Amazon’s pay-per-view video selection, he said, and hours are logged on a per-person basis using the BOB screen time manager.

But there is some cheating in the system; when his wife sits down for Modern Family, for example, a few others will join the viewing party without having to log in themselves, meaning most family members get more than seven hours of TV per week.

It’s a small infraction, and Wood seems generally nonplussed. The important part is the way his family gets their TV fix — via the web and a small set of services and hardware that are severing ties between consumers and cable companies.

In an exclusive interview with VentureBeat yesterday, Wood talked at length about his company, their competitors, the changing entertainment industry, and where we’re all headed over the next couple years — including Roku.

“Forcing change”

“The Internet is clearly going to revolutionize the way we get video,” Wood begins by stating the obvious. Both he and I (a happy Roku user) know that the online TV revolution is well underway. Wood sees the evolution nearing its completion relatively quickly. “I think over the next four years, most Americans are going to get their video over the Internet,” he said.

Even old-guard cable networks like HBO are rolling out online subscriptions; Wood points out that web incumbent Netflix has called out HBO Go, an online companion to the channel’s traditional subscription, its biggest competitior.

“There’s a lot of change coming; a lot of stress for the industry as it figures out how to move to this new world,” Wood continues. In a way, he sees the pressure the music industry faced ten years ago being echoed in today’s video wars; the only reason this battle is being staged ten years later is that we consumers now have the bandwidth to get what we want from almost all forms of media, not just small MP3 files.

Still, most of those heading up content creation for film and television don’t see the Internet as a primary means for getting and consuming video content. “The content owners view TV as their traditional market,” said Wood. “They view watching on your laptop or phone as a second, incremental market.” Because of this worldview, he said content creators will give Internet-enabled viewing rights to PCs a lot easier (and cheaper) than rights for Internet-connected TVs. Cable operators still see the television set as their proprietary domain.

And if you’ve ever wondered why, for example, you can watch some Hulu Plus shows on your laptop but not on your TV, this is the crux of that issue. Every few years, content creators and cable operators renegotiate the rates that the operators pay to license the content. And if, for example, ABC let Hulu give its users the ability to watch Pretty Little Liars on Internet-connected TVs, the cable operators “will use that fact to pay less during the next negotiations,” said Wood. “Or they’ll take [the content creator] from channel two and put in on channel 638.”

Still, in spite of this seeming stranglehold, Wood said, “The Internet is forcing change. Why is HBO Go around? It’s because of companies like Netflix… and the incumbents realize they have to do a lot more to compete. It’s forcing them to give consumers more choice.”

After all, for every roadblock cable operators create, creative consumers find a way around it. Whether it’s torrenting content we can’t buy online or setting up our home media servers to stream web content to our TVs, sisters (and brothers) are doin’ it for themselves. And sometimes, when we realize we’re doin’ more for ourselves than the cable and satellite companies are doing for us, we simply cut the cord.

But most of us still maintain some relationship with a tradition TV provider — for now. “We survey our customers, and we ask them what they did with their cable package after they about a Roku,” said Wood. “Around 40 percent cut back or cancel cable, and that’s split half and half,” in other words, 20 percent cancelled and 20 percent reduced their service. “And that number is pretty consistent, so the majority of Roku customers have cable or satellite, and Roku is additive. It’s an extra source of content.”

But that supplement is rapidly trending toward becoming the norm. “It used to be people watched around four hours a week on Roku,” said Wood. “Now, they’re watching 12. I think in four years, it’ll reach 30 hours, and most people today watch 35 hours each week.”

The cable connection

But cable networks and providers don’t want to get cut out of the deal completely, so they’re attempting to keep pace with consumer-driven change and innovation.

“The big trend that’s happening now — a lot faster than I thought it would — is that the cable networks and operators are embracing the Internet and doing authenticated packages,” said Wood, citing HBO Go as an example. This service, while it still requires you to be a traditional HBO cable subscriber, allows you to have access to Internet content with on-demand features and the like.

“Over the next year, all the major cable networks and operators will be on Roku,” said Wood. “The next step after that, sometime this year, will be a company that offers an over-the-top cable package… And then, all hell’s gonna break loose.”

But Wood doesn’t see à la carte service for cable content coming any time soon; the traditional system of bundles has too much money and legacy tied up with content to ravel that quickly. “I think what you’ll see is fraying of the bundles, different packages with less content bundled, different kinds of packages, some à la carte products, and a much better experience,” he said. “There are also companies looking at doing these virtual cable packages… they’ll charge a monthly fee.”

He continued to explain, “In the next couple years, a lot of customers are still going to buy a cable package from a cable operator, but you probably won’t get your box from the cable operator anymore… and then you’ll be able to sign up for a whole bunch of video options on that box. And it won’t be controlled by your cable company.”

Don’t feel too bad for the cable operators, though. Wood said they’ll continue to make money on their highest profit margin item: high-speed Internet and related products and services.

As far as fraying the cable bundle, Wood sees premium content channels such as HBO and Showtime being unbundled first. “But look at ESPN,” he pointed out. “It’s owned by Disney, Which owns about seven different cable networks. And those guys, I don’t think they have any plans to let you buy ESPN without buying the whole package.”

Another interesting challenge is sports. TV content for sports programming is often signed over to networks like ESPN for hefty licensing fees. “They paid billions of dollars for those rights, and they want to make sure they get paid for that content,” said Wood. “The industry knows they need to start offering their content over the Internet, but they don’t want to cannibalize their exsiting business.”

And while most of the major sports networks (except NFL) are on Roku right now, Wood said they’re all out-of-market because of the aforementioned licensing deals. For sports fans, he concluded, “It’ll come down to getting your local station or ESPN over the Internet.”

Apple and Google: The competition

“Our target audience is people who watch TV,” said Wood, outlaying the major difference between the $50 Roku box and the hundreds-of-dollars competition.

“It needs to work for everyone. The most common mistake tech companies make with TV is they make it too complicated.”

In fact, Wood continues, bang for the buck and drop-dead simplicity are two of the company’s core principles, the third being providing great content.

Due to its affordability, Wood said of the Roku box, “We outsell Apple TVs in the U.S…. We compete with them, they’re a streaming box, but the similarities end there. [Apple TV] is an accessory for the iPad and iTunes. Roku has over 400 channels, and none of that is on Apple TV.” Referencing AirPlay and the walled garden Apple has created for streaming media and hardware, Wood said, “Our focus is to be the non-Apple alternative.”

As for Google TV, Wood said the reason not many have been sold is one of simplicity. “It’s hard to use, and there isn’t a lot of content. …I think [Google] fundamentally believes TV should be about search and activity, and I don’t think that’s true.”

He adds, “Also, the content companies don’t really like Google; there’s a lot of conflict there.” Conflict might be an understatement. Google and content creators stood on opposite sides of SOPA/PIPA, the legislation that emphasized the deep rift between Hollywood and Silicon Valley. And over and over again, content creators have asked Google to take a stronger stance against film and television piracy, never with satisfying conclusions.

With piracy as the main point of contention — and one that’s keeping consumers from enjoying a fruitful collaboration between the entertainment and tech communities — than no party is closer to the center of that debate than Google. All this makes imagining happy partnerships between content companies and the search giant a near impossibility, at least for now.

Where Roku is going next

Currently, Roku has sold more than 2.5 million of its boxes. In 2011, sales tripled, and half those sales occured during the holiday season, when the company made a huge marketing push. Overall, said Wood, “Sales are huge, we’re getting 132 percent year-over-year growth on average.”

Wood said the company expects to sell 19 million boxes over the next three to four years. But for 2012, Wood said smart TVs are going to be the next focus for Roku. At CES, the company unveiled its streaming sticks, thumb-sided drives for MHL ports, which Wood said should be part of all new TV sets within four years.

“If you look at the way people view streamed video content, the majority of it is on game consoles,” said Wood. “But the percentage of hours on consoles is declining, and the percentage on Roku and smart TVs is growing.”

Smart TVs, he admitted, are currently a very small part of the overall market, but, he continued, “It’s a market that we want to make sure we’re participating in.” And the streaming stick, while it is a stand-alone product, is “more of a strategy for us,” he said. “We did a deal with Insignia, and we’ll be doing bundles with them. We have deals with other major TV OEMs we haven’t announced yet.”

In addition to the streaming stick and adding more authenticated channels like HBO Go, Roku will be concentrating in 2012 on bringing more games to its newly launched gaming platform.

And yes, Roku-interface haters, Wood said drastic improvements to the user interface are coming this year. “Now that we’ve got 400 channels, and more channels coming, we want to make finding and searching for channels easier, too,” he said.

Now, all Roku has to do is break into profitable territory — an as-yet-unreached goal for the company, which has been pouring money into product development and marketing.

“If you think of the range of new connected devices, at one end you have Apple. They make almost all their money on hardware,” Wood said. “And on the other end, you have companies like Amazon that sell their hardware at cost but make most of their money from content. We’re more toward the Amazon end. We make some of our money from the hardware… but we get revenue share. We did about $100 million in sales last year, but we’re still not profitable. We’ll prbably turn a profit sometime in 2013.”

Of course, with sales and revenue share from current products alone, Wood said the company could be profitable right now if it wanted to. “But theres still so much to invest in, so many opportunities.”

Best Buy, the nation’s largest gadget retailer, hopes to capture more margin in the increasingly competitive electronics business by selling its own equipment under Best Buy’s house brand, rather than selling more gadgets under a manufacturer brand name such as Sony or Samsung. It’s a strategy that has been working for a while.

This TV will be the first to use Tivo’s design interface, giving Best Buy’s customers a user interface that is well-known as a good way for browsing for shows and watching TV, without a TiVo subscription.

The TV will be available in 32-inch and 42-inch models for $499 and $699 respectively at BestBuy.com and Best Buy stores nationwide. The TVs offer a variety of ways to access movies over the web, such as Netflix, CinemaNow and YouTube. It also has applications such as Pandora, Napster, Facebook, Twitter and Photobucket.

Minneapolis-based Best Buy developed the Insignia TV from the ground up, focusing on the ease of setting it up and ease of use, said Patrick McGinnis, vice president of exclusive brands at Best Buy.

“We’ve heard from customers that smart TVs can be intimidating,” McGinnis said.

Tivo, which once focused on selling or licensing its own digital video recorders, is now licensing its user interface to other parties. Jim Denney, general manager and vice president of product marketing at Tivo, said his company collaborated with Best Buy on the design. The Insignia Connected TV also comes with applications from the popular Chumby content platform, which is used in gadgets like Sony’s connected alarm clocks.

Chumby is the way that the TV accesses apps such as Twitter, Facebook, Photobucket, Accuweather, Reuters News and Sports, stocks and traffic. People can customize their experience by selecting additional content from the Chumby network, which supports hundreds of applications.

The TV has a light-emitting diode (LED) screen running at 1080p (high-definition) resolution and 120 hertz. It comes ready for Rocketboost wireless digital audio technology (another Best Buy in-house brand).

AllThingsD’s Peter Kafka characterized Cuban’s participation as hypocritical, given Cuban’s repeated slagging of the notion that the Internet will compete with cable as a distribution network. But Cuban has never said video won’t work on the Web –- that would be insane, since video already works on the Web. His more nuanced argument is that the Internet won’t threaten cable’s distribution hegemony.

Cuban told Kafka that he simply paid out some undisclosed amount of cash to get a first look at Revision3′s shows as he shops around for content for his HDNet cable network. The investment was “relatively immaterial” (whatever that means) to Revision3, Jim Louderback, Revision3′s CEO, told Kafka.

Meanwhile, Louderback told Kafka that Revision3, best known for its show Diggnation, is “EBITDA-profitable,” which is finance-speak often used when a company is not profitable under the strictest accounting measures. But he said revenues grew by 80 percent last year.

Update: Louderback says in the comments below: “We were, in fact, both EBITDA and Net Income profitable in the 4th quarter of 2010 … and cash flow positive in December too.”

The company plans to use the funding to help market and expand the install base for its set-top box that streams Internet content to televisions. The content — which includes shows, websites and widgets — is packaged on Verismo’s side and delivered through the Internet to the set-top box.

Verismo allows content providers like cable providers and ISPs to stream traditional channels alongside web-enabled services like voice-over-Internet programs and social networking applications. That includes Facebook, YouTube and Flickr. The device can be connected physically with a broadband cable or wirelessly to a router. It can connect to a TV via HDMI or other typical cables and to computers running Windows (sorry, Mac users).

Verismo is in a long line of other companies looking to take over the Web-enabled television space. Roku, which already has the jump on Verismo in terms of content delivery like Netflix, announced recently that it will stream Hulu Plus to televisions through its Roku set-top box. Boxee, another set-top box that delivers web services to televisions, also announced recently that it will stream Netflix and Hulu Plus and ship soon.

The issue those companies now face are the titans that have entered the market. Apple recently revamped its Apple TV set-top that sells for $99 and can connect to a number of online services. Apple TV also offers movie and TV show rentals. Google also announced Google TV, which is powered by its Android mobile operating system and also delivers web-enabled services, earlier this year. On top of having the jump in terms of an operating system on the Internet TV set-top, Apple and Google have massive brand names behind them.

The Mountain View, Calif.-based company was a darling at the Consumer Electronics Show in 2009 and caught the eye of Dean Takahashi when he had a chance to chat with its executive vice president on a plane right. The company didn’t disclose how much money it has raised to date.