Will Smart TV Alliance challenge cable operators?

LG Electronics (NYSE: LGL) and Phillips Electronics majority owner TP Vision teamed up to create Smart TV Alliance, which the companies said will focus on spurring the development of  applications that can deliver movies, music and interactive services to consumers that buy connected TVs.

LG and Phillips are the only TV manufacturers that have joined the alliance. Missing are top connected TV manufacturers Samsung (OTC: SSNLF), Panasonic (NYSE: PC) and Sony (NYSE: SNE). But LG and TP Vision said that they plan to announce that other industry players are joining the alliance.

The Smart TV Alliance could create more competition for multichannel video providers by making it easier for viewers that buy connected TVs to use applications to watch over-the-top video content from Netflix and other online video providers. But CE manufacturers could also help cable operators and satellite TV providers reduce hardware costs through smart TV apps that allow subscribers to access live and on-demand programming from their cable subscriptions without using a set-top.

"Smart TV Alliance creates a larger playing field which encourages developers to create more and better TV applications at the same time giving manufacturers and consumers the richest source of movies-on-demand, music services, games, social networking and more," LG managing director Bong-seok Kwon said in Wednesday's announcement. Kwon was named president of the alliance.

CE manufacturers could shake up the pay TV business if they were able to strike licensing deals with cable networks that allowed viewers to watch their favorite shows without subscribing to a cable or satellite programming package. But for now, cable programmers such as HBO are distributing long-form programming on smart TVs only to authenticated cable or satellite customers.

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