Hybrid set-top boxes are rapidly being deployed by pay-TV operators worldwide, and especially on satellite platforms, to help them deliver advanced services and manage bandwidth scarcity in broadcast networks, according to AIB Research.

“What we think of as over-the-top boxes right now – Roku, Boxee, et cetera. – will probably not be around in five years. Those are kind of just a stop-gap measure until the TVs, the Blu-ray devices, potentially even cable boxes, have the app platforms built in, because why would you buy the standalone box when your TV already does it?” asked Justin Eckhouse, senior product manager for CNET/CBS Interactive.

Streaming set-top boxes

Spotify and Boxee are two services with current solutions, letting you access streaming music service from your TV.  The two have teamed up to enable access the social music streaming service though your TV using the media center.  The Boxee Box allows you to watch many of your favorite movies and shows that are online through your TV.   The Spotify integration will now allow you to listen to your favorite music through Boxee too.

There is a caveat here, in that you’ll need to be a Premium Spotify subscriber to take advantage of the Spotify Boxee app.  However, if you have signed up to the $9.99 per month Premium offering, you’ll be able to enjoy on-demand access to Spotify through your TV (yet another reason to pay up, right?).

An undercooked Apple

Meanwhile, even with the new Apple TV, Apple is not yet bringing their ‘A-game’ to the media entertainment hub. General consensus – including ours here on Techi – is that the Apple TV is a neat little device, but one that is currently undercooked.

But Apple has two not-so-secret weapons up its sleeve: the iTunes universe and iOS. iTunes is of course the largest digital media store in the world.  Unfortunately, that wealth of content has yet to come to the living room (well, unless you count the iPad you use on the couch as a living room device).  If Apple can expand the content available on Apple TV and match what the cable networks are cooking up, it would become much more compelling, and perhaps do for set-top boxes what the iPhone did for smartphones.

Android for every device?

Google on the other hand is pushing into the living room in the form of Google TV. Unlike Apple TV, however, Google TV looks to layer Google’s software on top of pre-existing services like cable or satellite providers, making it searchable while also adding in YouTube access and Android apps to be used on a TV.

While this has its upsides, it also has some serious limitations.  Cable companies, like most large media conglomerates, are concerned with maintaining their hold on a special, privileged distribution channel.  By approaching things this way, Google is reliant on other operators to build a living room presence.

PSN vs Xbox

As much as Sony may talk about their plans to ‘finally compete’ in digital media, they have struggled to take their digital plans mainstream.  Of course, despite Sony’s efforts at including services on their BRAVIA TVs, Sony’s “Trojan horse” into the living room is obviously the PS3.

In many ways, the PS3 offers an excellent value proposition.  Beyond its capacities as a Blu-Ray/DVD player and gaming machine, it also supports Netflix, Hulu Plus and its own PSN Video Store. The problem for Sony is that the PS3 is successful within a particular demographic – but not across a wide range of groups.  Your average Jane or Joe just isn’t going to pick up a Dual Shock 3 in order to use Netflix when they can use a TV remote or something else that’s simpler and more accessible.

Moreover, Microsoft has, quite famously, had trouble in their attempts to create a family entertainment hub. But while their previous tries were well-known failures, the Xbox 360 has proved a resounding success.

Though obviously first and foremost a games machine, Microsoft has carefully expanded the offerings on Xbox Live – with the inclusion of apps like Netflix, Facebook, Twitter and now video chat through Skype – to a point that it’s got some serious potential as the hub for your digital living room.  The key here is one simple approach: in a way they’ve never really demonstrated before, Microsoft gest what people want from an online gaming service.  And unlike Sony, they didn’t slowly patch in features, but built a system that worked from the start, and then augmented it.

Who will own your living room?

Think about it: unlike so many other sector of society, the living room is one in which traditional approaches to media still largely dominate. DVD sales still dwarf streaming and online video in both numbers and revenue, while the web has yet to make any serious inroads onto people’s TVs.

So when it comes to the living room hub of entertainment, which of the tech giants who currently have a foothold is best positioned to succeed?  It’s a matter of consumer use and appeal, and we’re only going to see more consolidation in a market that’s bridging a pretty wide gap across devices.  It’s no easy feat at such a large scale, but mobility and increased access to the web are paving the way to the digital home’s future.