For a peek at how televisions might connect to the Internet in the future, take a look at Yahoo Inc.'s (YHOO) widget engine.

At the Consumer Electronics Show in Las Vegas this week, the Sunnyvale, Calif.-based Internet giant announced it had signed deals to embed its technology in microprocessors made by MIPS Technologies Inc. (MIPS) and Sigma Designs Inc. (SIGM), whose products are used primarily by television manufacturers.

Yahoo's technology works like a bridge between Web sites and television screens, allowing Internet content to be rendered correctly on displays designed for living rooms rather than desktops. To make the widget engine more compelling, Yahoo has also struck deals with streaming-video aggregators Brightcove Inc. and Zeevee Inc., which offer hundreds of online video channels.

"We've opened the spigot to an endless amount of content," said Russ Schafer, a senior director who helps oversee Yahoo's widget project. Schafer said more televisions containing widget technology will hit electronics showrooms throughout the year.

Whether couch potatoes will turn on the digital tap Yahoo has created remains an open question. While the Web opens up vast archives of streaming video, manufacturers are convinced television viewers don't want to replicate the experience of using a laptop on a wall-sized television and have avoided adding features, such as Web surfing, to their products.

"I don't think anyone can seriously say they know what the next killer app is," said Scott Smyers, chairman of Digital Living Network Alliance, which represents makers of software that networks home electronics.

While consumers have expressed interest in Web-enabled televisions, what they actually use complicates the matter, industry executives say. In Singapore, the top Internet feature accessed by television is weather news even though the island nation's climate rarely changes because it is so close to the equator, said Tracy Geist, senior vice president of business development and marketing for OpenTV Corp. (OPTV), which provides software for Internet-enabled TVs.

Meanwhile, no one has figured out how best to make money from Internet features delivered over televisions. Ideas have ranged from selling ads to selling subscriptions. Yahoo is mulling a model that makes many sites free but offers premium sites at a subscription.

Yahoo is trying to push its widgets as an industry standard. At CES, the company said it was opening its developers kit--the software tools needed to make Web-based features compatible with its widget technology--to all comers. That sets the stage for distributing widgets via software bazaars such as Apple Inc.'s (AAPL) App Store, which offers free and for-pay programs for its iPhone smartphone.

Still, skepticism remains.

"We're extremely positive about the capabilities of connecting TV to cloud," said Nick Colsey, a vice president in the U.S. marketing arm of Sony Corp. (6758.TO, SNE), referring to always-accessible Internet service. "But what are those applications?"

-By Ben Charny, Dow Jones Newswires; 415-765-8230; ben.charny@dowjones.com

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