With the introduction of Google TV today, the search giant has the potential to disrupt the online video industry by merging it with existing broadcast TV services. By doing so, Google (s GOOG) might render obsolete standalone set-top boxes and DVRs that pipe online video content to the TV.
But before we get too far, let’s state the obvious: Google TV is not about killing Apple (s AAPL) TV. Of course Google TV will render Apple TV obsolete — but Apple (s AAPL) TV was never very relevant to begin with. The better question is what happens to companies like Boxee, Roku and TiVo (s TIVO) when Sony (s SNE) begins manufacturing and selling Google TVs in earnest.
In a lot of ways, the big threat to the existing broadband set-top box providers is Google’s potential scale, which could prove attractive to developers once the numbers add up and enough devices are sold. Roku and Boxee each have open SDKs for publishers , and Google will be opening up an app store to allow developers to build Google TV apps. But for many publishers, you need to reach a critical mass of users before it makes sense to invest the resources in the development process.
Roku has sold more than 500,000 units, and has said it expects that number to reach a million by the end of this year. Boxee has had about a million downloads of its media center software, but it hasn’t even begun shipping its hardware product yet, with the sale of its Boxee Box set to begin sometime by the end of the second quarter. Even taken together that’s a very small market for developers.
But while Roku CEO Anthony Wood agreed scale is key to success, he doesn’t see Google TV reaching the scale necessary anytime soon due to the costs associated with Intel (s INTC) processors needed to run the platform. “I think this year [Google TVs] are going to be super-expensive, so I don’t think they’ll reach scale very soon,” Wood said.
Then there’s the question of technology. Roku, Boxee — hell, even Apple TV — aren’t about convergence; they’re about bringing web video to the TV. Which is something that Google TV does, and has the potential to do better. Based on today’s demo, Google’s interface for bringing web video to the TV will at least give them a run for their money. More importantly, Google TV doesn’t just stop there: It takes online video a step further by integrating it with traditional broadcast and cable programming.
As for TiVo — well, in a lot of ways TiVo was the precursor to today’s Google announcement, as the DVR manufacturer has been working for years on creating a unified platform for broadcast and broadband video content. But again, Google seems to take that convergence a step further, in particular by building the functionality directly into the TV, without the need for a separate set-top box.
Of course, there’s a lot left to be decided. We don’t yet know, for instance, how expensive Sony’s line of Google TV products will run. If they’re priced at a severe premium to the rest of the market, consumer demand could be limited, regardless of the underlying technology. But if Google TV does take off, you can expect a lot less people buying standalone set-top boxes or DVRs in the future, if they can get all the same technology — and more — built into their TVs.
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