Blog Post

Google TV Is Ready to Change the Game

Google (s GOOG) TV has the potential to be a game-changer in the pay-TV business, by bringing web-like search navigation to traditional channel surfing, according to a new report I wrote for GigaOM Pro entitled Google TV: Overview and Strategic Analysis (subscription required). I also foresee an eventual clash between Apple’s (s AAPL) App Store and Google’s search-based platform for supremacy on connected consumer electronics devices.

I expect a slow initial ramp-up for the Android-powered Google TV devices, due to the high cost of implementation and uncertain consumer demand. The Intel Atom-based system-on-a-chip and software licensing costs are expected to add a significant premium to first-generation Google TV-enabled devices, including the Logitech set-top box and Sony HDTVs and Blu-ray players announced at the Google I/O conference. Consumer interest in surfing the web on a big-screen TV is also yet to be proved. If Google TV does prove popular with consumers, however, it could pose a highly disruptive challenge to traditional video service providers, set makers and competing TV app stores, according to the report.

“Google TV’s integrated search, combining results from the web and from traditional sources in a single user interface, encourages the user to separate the content from its source, or at least to treat the source as irrelevant,” I note in the report. As more content becomes available on the web, that dynamic will increasingly pose a challenge to traditional video service providers, whose business model is based on bundling content into high-margin subscription packages. “Search, by its nature, is the enemy of bundling,” it concludes.

Google TV could be a boon to TV set-makers by providing the software-driven functionality that spurs sales of Internet-enabled devices, the report states. On the other hand, adopting Google’s non-proprietary platform could rob manufacturers of a key point of differentiation for their products.

The Google TV announcement also comes just as fledgling TV app stores are starting to find their footing in connected devices, including the Yahoo Widget Channel, Vudu, DivX and the Roku Channel Store. While those providers obviously will be challenged by the arrival of Google TV, the report suggests a potential for market segmentation, with app stores dominating low- and mid-range connected TVs and Google TV reserved for premium models, particularly early on, given the higher costs associated with implementing the Google platform.

One app platform unlikely to concede the high end of the market to Google, however, is Apple’s iTunes App Store. Although Apple has not disclosed its plans for the digital living room, the report calls an eventual assault on the $53 billion pay-TV business “inevitable.” When it comes, it’s likely to involve extending the iTunes App Store platform to the TV, either directly, through an Apple-branded HDTV set, or through a set-top box.

In the report, I also envision a seamless, cloud-based version of the iTunes platform that will enable access to video and other content from Apple TVs, iPads and iPhones. At that point, the battle between Apple’s app-based and Google’s search-driven models for content acquisition and distribution will be fully joined.

Check out the full report, Google TV: Overview and Strategic Analysis, on GigaOM Pro (subscription required).

15 Responses to “Google TV Is Ready to Change the Game”

  1. This Line “Google TV’s integrated search, combining results from the web and from traditional sources in a single user interface” explain every thing. Google no doubt leading all search engines so it has to be spot on.

  2. OK let me guess, all the commenters here are techies who are super jealous of Google. Isn’t it obvious that searching for what to watch is a fundamental problem with TV. WHy do so many people keep flipping channels, they are searching for stuff to watch. Now its a lot easier!

  3. timekeeper

    This article should have been prefaced by “Brought to you by GigaOM Subscription Services”.

    “according to a new report I wrote” That’s preposterous! You can’t quote yourself! Just make the statement. Quoting yourself does not legitimize your statement.

    Google’s “game changer” – search – will be a difficult sell for all stake holders. 1) Viewers are indolent – clicking the remote to go to the next channel is a stretch. Asking them to key in what they are looking for will be a big barrier. 2) If they do search, what shows up? Mark Cuban just did a good writeup on this on his blog. If the Studio’s stuff does not come up first but YouTube clips do, they will block GTV faster than Hulu blocked Boxee. 3) It is only a marginal increase in utility. You need to offer at least a 50% increase in perceived utility in order for a user to change their habits. There is so much “inertia” in keeping with the incumbent technology and maintaining the status quo that GTV will find a small audience of early adopters and techno geeks.

    They have no control over the true game changer – content. By trying to control the access to that content through search, they will be cut off at the knees by the studios & networks if the search does not favor them.

  4. Chris K

    Don’t see GTV doing anything anytime soon.

    If you can’t replace cable or satellite with a viable alternative what’s the point?

    If I have cable and satellite I really don’t need Amazon On Demand or Hulu etc.

    Comcast will improve their features enough so GTV won’t take off. Comcast already gives you the ability to watch seemingly more shows on the internet than Hulu does if you’re a subscriber.

    Comcast has some basic search. I don’t think you need Google in order to search for video. Tivo has been doing this for 10 years. Right now I can search the Comcast Guide by title, keywords, etc.

    They have an iPHone app and soon an Ipad app.

    Not to say I like the glacial pace of a duopoly, but GTV ain’t an answer.

    WE just need more competition that only content providers can open the door for via the internet. And even then who controls the internet for most consumers? Cable. I have more of a choice in TV (cable, sat, OTA&itunes if I can do without live sports etc) than I have in internet.

    I suppose GTV wouldn’t be bad for OTA plus Amazon-on-demand and netflix. Still you have to give up content and you can easily spend more than a cable or satellite subscription. MOre so the more members in your household.

  5. “[]extending the iTunes App Store platform to the TV, either directly, through an Apple-branded HDTV set, or through a set-top box.”
    –> isn’t that what Apple TV already does?

    “In the report, I also envision a seamless, cloud-based version of the iTunes platform that will enable access to video and other content from Apple TVs, iPads and iPhones.”
    –> isn’t iTunes cloud-based yet? isn’t it seamless available on iPhones/iPods/PCs/Macs/iPads/AppleTV?

  6. “Search, by its nature, is the enemy of bundling,”
    What if I search for the NBA play-off game tonight, and I only get it as part of my Comcast or U-verse bundle?
    GoogleTV is more a complement to the Pay-Tv bundle than a replacement, as long as some premium content is only available from the bundle (which I guess will be the case for a while)

  7. While it is good to see conflicting views in the GigaOm family of blogs, I tend to agree with the skepticism about Google TV expressed earlier /elsewhere.

    Google TV might be ready to change the game. But does the game want the change ? Especially, a change that is hardly defined?

    You see Google TV as search based while in fact, Android is app based. Google themselves are pushing the app concept – and (i don’t know if this is strategic) surely underplaying the search concept.

    In any case, many of us consumers are not ready to change channels with a keyboard.

    More reasons at:

  8. Why do you think the Logitech box would be expensive? Acer Revo with a 160GB HDD + Atom + Windows ~ $200, Logitech gets free software, no HDD, they should manage it around 200, not that big a deal.

  9. marsofearth

    Good write up. My belief is that user accessible touch is the important ingredient in making the web integrate with the TV. The store, the “digital tv guide” still needs to be in the hands of the user. Much like how much of the younger generation uses a phone and/or laptop/netbook to socialize and surf for an enhanced experience while watching a tv show. Using a large screen to search, mouse, and collect asset content is what a computer does already, right now. It is the hand held device that merges these technologies. Sticking a computer in a tv or attached is a tough sell.

    I don’t know I could be way of base.