AS Steve Jobs prepared to unveil the next generation of iPods last week, the internet was abuzz with rumours about the phenomenally popular music and video players. Would the next generation offer widescreen movies? Wireless downloads of songs and films? Would this be the event where Apple showed it could dominate in video as well as in digital music? By Apple's standards the event proved a damp squib. The new iPods offered all of the above and more, but analysts seemed more concerned by surprise price cuts for the iPhone. So far Apple has failed to win over movie watchers in the same way it has won over digital-music lovers. Music has migrated from the home stereo to the computer. In contrast, television has stayed largely on the box. Television is embracing the internet, but slowly. The number of people subscribing to internet television services is small - about 8m worldwide in 2006, according to a report released by Multimedia Research Group in October. By 2010, that could grow to 50m. So far no single company has come up with a winning way to connect the two as Apple did with music. Hollywood studios, Microsoft and a host of smaller rivals want to keep it that way. "Movie studios and other content-owners are treading very carefully. They saw what happened to the music industry and they want to keep greater control," said Kurt Scherf, analyst at Park Associates. "There's a lot to play for. Consumers still don't see the PC as their primary entertainment device," said Scherf. He said the holy grail was a device that seamlessly brought the choice offered by the internet to television. So far Apple TV, Jobs's attempt to link the computer and the television set, has been poorly received. Even the mighty Google has stumbled in video, axing Google Video, which offered full-length television programmes and movies, to concentrate on YouTube, where the longest video lasts no more than 10 minutes. Scherf and other analysts believe Microsoft and Sony - two companies that have suffered heavy losses to Apple - have a clear edge in the battle to dominate internet television. Sony and Microsoft make two of the leading video-gaming platforms - Playstation and Xbox. The latest generation of their games consoles come internet-ready, able to store hours of video content and all are hooked up to television. Paired with a next-generation television network, the console will work as a set-top box for tuning in internet-delivered television, recording programmes and downloading video on Game on: can video-game makers copy their success with a device to provide films such as Spiderman? demand. Sir Howard Stringer, Sony's Welsh-born chief executive, is rumoured to be about to unveil ambitious plans to use Sony's internet-ready and technology-packed Playstation 3 games console, its Bravia high-definition televisions and hand-held Playstation Portable game machines to sell television shows and movies over the internet, similar to the way Apple sells music and videos through its iTunes store and iPods. It's a move many believe Sony should have made years ago. "Many of us have looked at Sony and scratched our heads in disbelief that this company hasn't got its act together. It's something they are going to have to do if they want to be relevant in the digital age," said Scherf. In contrast, Microsoft already has well-developed plans for offering television programmes and films over its Xbox 360 console. More than 11.6m consoles have been sold in the 37 countries in which they are available. Microsoft launched its internet video-to-television business in November 2006, announcing deals with a raft of television pro-grammers. It plans to offer similar services across Europe but has yet to confirm a date. In America, Microsoft offers 2,350 hours of films and shows from 28 studios and television networks via Xbox Live. Last month Xbox struck a deal with Fox, owned by News Corp, the parent company of The Sunday Times, to make the hit animated series Family Guy available through its game console. It is the first time the series has been available for downloads on any platform. "The connection to the television set is the key," said Ross Honey, senior director for media at Microsoft's content and partner strategy group. In the past, consumers have had to make compromises with a video-internet experience, said Honey. Offering video from the internet via the television set gives the best of both worlds, he argued, combining choice with high-quality pictures and sound. Xbox now offers the largest on-demand high-definition movie library in America and is the largest player in movies provided over the internet, he said. "The PC favours shorter-form content; look at the success of YouTube," said Honey. But he said "the sweet spot" for most traditional television content and most movies remains on the television set and in the living room. "The boxes that get that content there conveniently are going to be the ones that succeed," he said. If anything, Apple's dominance of digital music had helped Microsoft sign deals with media companies, said Honey. "The video industry has seen how it has played out for music and they do not want that to happen for them. They are very focused on developing competitors to Apple," he said. Last month the NBC television network axed a deal with Apple's iTunes for video content in a disagreement over pricing. NBC accounted for 30% of Apple's television show sales. It has now signed a deal with Amazon's internet video service, Unbox. "Having one player with 80% of the market is not good for anyone. The studio deals with Amazon, with us, are all designed to create a more competitive market," said Honey. Sony and Microsoft face competition in the living room from cable firms, Amazon, TiVo and smaller rivals like Digeo, funded by Microsoft co-founder Paul Allen, and Vudu, a start-up that has signed deals with studios to deliver more than 5,000 films. But they have one key advantage. Like trojan horses, their boxes are already there. Blowing this chance - especially for Sony - would be the mistake of a lifetime.