Video Content Battle Ready for Prime Time

The next time somebody gets the idea to stick a bunch of Internet egos in the same place, they should think hard about what happened last week in Las Vegas.

That was when Larry Page, Terry Semel and Bill Gates -- leaders of the Internet's Gang of Three that has come to be known as GYM -- Google (GOOG Quote), Yahoo! (YHOO Quote) and Microsoft (MSFT Quote) -- descended on Vegas for the Computer Electronics Show. Somehow, the combination of their powerful visions and formidable net worths conspired with the blinking lights and all-you-can-eat prime rib to cause all hell to break loose.

Since that event, the $140 billion market cap of Google, a single company, surpassed that of Berkshire Hathaway and all its myriad companies and investments -- proof positive that the market has, for the second time in seven years, abandoned the principles of Graham and Dodd.

Stock analysts also grew unhinged, with the maximum price target on Google rising from $550 to $2,000 in less than a week. Rumors even spread that Bill Clinton will replace Steve Ballmer at the helm of Microsoft. Seriously.

This, apparently, is how a generation weaned on television is taking the news that the boob tube, as we know it, is dying. That is: not well. Not well at all.

For investors, all this is interesting because it means the eventual and wholesale disruption of yet another industry -- a very lucrative, very powerful industry. It isn't license to buy a stock, even Google, at a triple-digit P/E multiple. And it won't happen right away, which means there is plenty of time for companies to stake out, and then lose, their place in the fast-evolving market of video-content distribution.

Much of the news that came out of CES on this front was hardly new or surprising. What's new is in the details, which are starting to make clear that the long-promised blending of television programming and the Internet and wireless devices is more than just a pipe dream -- it's inevitable.