Apple's Apple TV leads the pack in terms of internet video delivery devices, though market growth has been stymied by lack of available content and the cost of entry, a report claims.

ABI Research also notes that market development has also been limited by competition from cable and satellite services, and lack of clear communication as to what benefits such solutions offer users.

Things may change next year, the analysts said. They believe that solutions like the Apple TV will see shipments of 1.2 million in 2008.

"Since this category first emerged in 2004-2005 with the debut of Akimbo's public internet VoD product, vendors of these products have struggled with a number of hurdles that have so far made this market relatively unsuccessful," said research director Michael Wolf.

"The high cost of these devices, their reliance on the home network, the need for consumer self-installation, and the scarcity of content have all contributed to their lack of commercial success."

However, increased availability of content should help the market grow, the analyst said. Making high definition films available online and the evolution (and explosion) of user generated content should also help promote such services.

Despite competition from existing services, and the gradual addition of on-demand content from service providers, Wolf notes: "We believe that there is a possibility of a break-out success among these new entrants if they can create compelling content offerings, make consumer installation and management incredibly easy, and offer both the hardware and content at compelling pricing. We believe one way to achieve this is by incorporating some premium content using advertising support."