My wife works in television and film production, and one thing I can tell you is that producing quality content is very, very expensive. It takes a lot of effort by a lot of people (and don’t ask me about those fancy dressing room requests by actors).
On May 20, Google officially confirmed at their annual Google I/O conference that they had teamed up with Intel, Sony and other high profile companies to produce a media OS for Televisions that would “bring the Web to the TV, complete with a search box that finds content, no matter where the source”. Geeks like me were cheering. Louis Gray commented how this was the opportunity that Apple did not take:
The reason this has a much better chance to succeed than Apple TV ever could? Commitment. Commitment from the company’s leadership, from partners, and to the word they keep smacking us with – openness.
But back in August, before the official launch of the hardware units, there were reports of trouble brewing between studios and Google. According to the Wall Street Journal:
Google has met with officials of TV networks including ABC, CBS, Fox and NBC to encourage them to work with the service, according to people familiar with the matter. Content owners, though, are skeptical that Google can provide a business model that would compensate for potentially cannibalizing TV owners’ existing broadcast businesses.
Basically the issue is monetization — how will broadcasters recoup their production costs with banner ads? Even though the cannibalization of TV ad revenue continues to get worse, thanks to DVRs and Torrents, the content producers have an ecosystem that brings millions of dollars via distribution channels. Mark Cuban writes:
I personally can’t think of anything stupider for the big broadcast networks to do than give their shows to Google for free. Why ? Because they are finally getting BILLIONS of dollars in retransmission fees from their distributors. This is new money. It is found money. It is money they are fighting for. Just ask Fox and Cablevision what they think of each other this week.
Yesterday we heard how CBS, NBC and Disney started to actively block Google TV units to consume episodes from their websites including Hulu. A Google spokeswoman confirmed:
Google TV enables access to all the Web content you already get today on your phone and PC, but it is ultimately the content owners’ choice to restrict their fans from accessing their content on the platform.
So why didn’t Google strike partnerships with these major studios and networks before approaching manufacturers? I think it’s because they want to follow their product launching pattern: throw it at the wall and see if it sticks.
This, of course is not good news for Google TV’s other partners. They could end up with thousands of unsold units and repeat the fate of, say, HD-DVD.
Compare this to Netflix. Studios love Netflix because they offer a highly controlled distribution channel that is monetized from the start and with a controlled released window. Netflix is also being embedded on hardware units, so it’s a win-win for everyone.
Is it too late for Google TV? I don’t think so. Potentially Google could strike the right deal with the television studios. They have the green light from HBO, TBS and the NBA so far. It will be up to Google to strike the right business deal with the major networks, but of course this is easier said than done.
Users still get other benefits with the Google TV sets, like communicating with Twitter friends while watching a show, but the main attraction of Google TV is to do a search for content and consume it immediately no matter where it is. Take this functionality away and it will feel like a DVR with Twitter on it.
P.D.: Check out this thread on FriendFeed talking about this issue (thanks Higlet) and also this brilliant post by Om Malik
Illustration by Charlie Sorrell
