Over the past few weeks, there have been a flurry of announcements from Microsoft, Netflix, TiVo, YouTube, Roku and others detailing how their devices can be used to play movies and other video-based content, delivered via the Internet, on the TV. Industry insiders are speculating that with these announcements the tide is finally turning, that Internet-delivered video will soon make a big impact in the consumer living room.

When looking at any new technology offering, however, market penetration rates are crucial. As we’ve seen in the past, the best technology is not what always wins — all that matters is what consumers adopt. With that in mind, here is a breakout of the numbers for these TV-connected devices and content offerings:

• Xbox 360: 10.5 million units sold in the U.S. (source: NPD)
• Netflix: 8.2 million members (source: Netflix)
• PS3: 4.9 million units sold in the U.S. (source: NPD)
• TiVo Series 3: 250,00 units sold (estimate). While TiVo won’t say how many have been sold, they did say that 750,000 Series 2 and Series 3 units are connected via broadband. Estimate assumes that two-thirds of them were Series 2.
• Apple TV: Roughly 350,000 units sold (estimate). While Apple won’t say exactly how many have been sold, published reports put the figure at less than 400,000, missing Apple’s goal of 1 million units.
• VUDU: 15,000 units sold (estimate). While VUDU won’t confirm a number, they did say that sales are in the “five figures.”
• Netflix Player by Roku: 10,000 units sold (estimate). Roku isn’t saying how many they’ve sold, but realistically speaking, how many could they have sold in just a couple weeks before they ran out?

By adding up the above numbers we’re left with 19.3 million units sold. On paper, that seems like a half-way decent number. But if we break down these numbers even further, the real number of consumers capable of getting these content offerings is much smaller — so small, in fact, that they barely register.

Take for instance the recent Microsoft and Netflix announcement. While neither side will say just how many consumers have both an Xbox Live account and a Netflix account, it’s clearly less than half of Netflix’s 8.2 million members. So if we estimate on the high side and assume that a third of Netflix’s members have an Xbox 360 console and an Xbox Live account, we come up with a mere 2.7 million consumers.

As for the PS3, Sony only launched their online video service late last week, so it’s hard to estimate any numbers. But of the 4.9 million PS3s sold in the U.S. to date, not all of them are online. Estimating that 20 percent of them are not connected via broadband, we’ll use an install number of 4 million consumers.

When it comes to TiVo, you have to estimate how many of the 750,000 broadband-connected TiVo units are Series 3. Estimating that a third of the units are Series 3 would give us 250,000 consumers. But how many consumers have more than one TiVo? I have two Series 3 TiVos in my house, so while I am counted as two units, I’m only one consumer. TiVo won’t say how many customers have more than one unit, but taking that into account, the number of real consumers that TiVo is reaching with the Series 3 is probably more like 200,000.

That leaves us with the Apple TV, the Netflix player by Roku and VUDU. Using the numbers above, I estimate they reach 375,000 consumers combined.

Adding up all of the new numbers gives us just over 7.2 million consumers, far lower than the original 19.3 million hardware units that have been sold. And this 7.2 million number is even more skewed in that it does not take into account unique consumers. How many of the 7.2 million consumers have an Xbox 360 and a TiVo or an Xbox 360 and a PS3? If you estimate that 20 percent of them have multiple devices, you’re left with 5.7 million unique users. That’s a very small number. And then you have to estimate what percentage of those consumers will adopt and use the new services, and over what period of time?

Even if you had 50 percent penetration from day one, which you won’t, that would still be less than 3 million consumers using these devices to get Internet-based video to their TVs. While it is good to see more content options coming to consumers, adding up all of the install numbers for these devices gives a stark picture of just how small the install base really is. The market is still too fragmented, with too many different devices, all limited by a lack of premium content.

In the long run, the cable operators still have the best shot at bringing Internet-based video to the TV. Set-top boxes still have the most penetration with consumers and provide them with multiple ways of getting content. Unless of course you’re like me and only have TiVo, in which case the single-stream cable cards that most cable operators use don’t allow for any of the functionality of cable TV set-top boxes.

Dan Rayburn is EVP of StreamingMedia.com and has his own blog at BusinessOfVideo.com.

If you were thinking of starting a set-top box company that delivers video content to the TV, let me stop you right there. There are already numerous players vying to dominate your digital entertainment future, and three of them are big names that you already know. Those three are also well-funded, well-equipped, and well on their way to becoming the center of your home video universe.

Amazon: The e-tailing giant just announced its new Video on Demand service, which will stream 40,000 movie and TV titles directly to Internet-connected Sony Bravia TVs and other devices. In addition to already having a huge user base to which it can market the service, Amazon will store all purchased movies on its end rather than with the end user, an approach that is likely to endear it to piracy-hating studios.

Currently the big sticking point with Amazon’s VOD service is that it doesn’t offer movies in HD — a must for this day and age. And hopefully the company will learn from Unbox, its earlier download video service that only worked on PCs and TiVos and didn’t exactly set the world on fire.

Netflix: The DVD-by-mail rental company is prepping for a disc-free future by streaming 10,000 of its titles to the Roku and the Xbox 360. Both offer an all-you-can-watch video buffet baked right into your existing subscription, which makes using the streaming service a snap.

But if Netflix is going to beat out the competition, it needs to build that catalog far beyond just 10,000 titles (most of which are pretty lame). It also needs to offer HD video. The Roku and Xbox 360 are HD-capable, but no word yet as to when HD titles will be available.

Apple: Steve Jobs & Co. helped spark the latest digital video revolution through iTunes and Apple TV, the set-top box that pipes iTunes content directly to your TV. Titles from all the major studios are available on the same day they’re released on DVD, plus the signature Apple simplicity and style makes it hard to beat.

Apple has said it’s renting or selling 50,000 movies a day through iTunes and the service is projected to pump out 18.25 million movies this year. But what we don’t know is how many actual Apple TV boxes the company has sold. The device was projected to sell 1 million units in 2007, but barely sold 400,000. It was then relaunched in January of this year with a renewed effort behind it; popular shows like “The Office” and “30 Rock,” however, still aren’t available.

And while these three have the best shot of succeeding in the digital video download space, they are by no means the only ones trying.

Game consoles, long considered a way for companies like Microsoft and Sony to establish a beachhead through which they could offer more services, are now boasting video capabilities as well. In addition to the Netflix streaming capabilities of the Xbox 360, there is also the Xbox Live Marketplace, from which you can purchase downloadable movies and TV shows. Meanwhile, Sony just launched its video service for the PS3. But the appeal of these devices will always be largely limited to gamers.

Televisions with Internet functionality built in could eliminate the set-top box altogether by offering access to web video directly or using the new tru2way technology to deliver interactive TV functionality. A shift from set-top boxes to the TV would benefit Amazon and Netflix most, as Apple would likely be loathe to give up that much control.

The real wild card in this battle will be the efforts of the cable and telecom companies. Their set-top boxes have a huge footprint in the market (Comcast alone has 24.7 million cable customers), and they have proven, by throttling certain kinds of traffic, that they can play dirty. Now they’re even considering usage-based pricing, which would mean that the more video you download or stream through the Internet, the more you pay.

There are other participants, some that are well known, like HP with its HP MediaSmart Connect, or TiVo. And some are upstarts, like Vudu, Zv, Verismo and Sezmi. But the future belongs to Amazon, Netflix or Apple. It’s still too early to tell which one will win the race to your big-screen TV, but they all have the right combination of size, recognition and content to get there.

This was originally published in BusinessWeek.com.