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It was no big surprise that broadcasters like ABC, (s DIS) CBS (s CBS) and NBC (s GE) would block Google TV devices (s GOOG) from accessing their content online — or at least, it shouldn’t have been. What’s at stake, of course, is the $80 billion TV advertising business that fuels the creation and distribution of prime time TV.
Over the past several years, broadcasters have been trying to figure out their web strategy through the creation of Hulu and making their TV shows available on-demand for free on their on websites. Web clips and full-length episodes started to appear a few years ago, in part, because broadcasters realized that if they didn’t make them available in a way that they could monetize, people would find ways to get at the content in a way broadcasters couldn’t monetize. They would pirate those shows. At that point, it wasn’t just a matter of digital pennies and analog dollars — it was a matter of getting any amount of money at all for content that consumers would otherwise download and watch for free.
That online video experiment has turned into a real and growing business of its own. Web video isn’t ready to supplant the broadcast advertising business, but it’s no longer a matter of digital pennies — we’re at digital dimes and nickels. Maybe even quarters. Still, to broadcasters, it’s chump change compared to what they make on broadcast TV advertising.
And let’s not forget about retransmission consent — broadcasters are increasingly asking cable providers to pay up for delivering signals that consumers used to get free over the air. Disputes over those fees have become ever more contentious and led to more TV blackouts this year than in a decade, including the recent blocking of Fox (s NWS) television to Cablevision (s CVC) subscribers. But why should Cablevision pay Fox to air its shows when Fox.com is freely available through someone’s brand new Sony (s SNE) Google TV set? (As an aside, for this reason alone it seems strange that Fox is the only broadcaster not currently blocking Google TV from accessing its full-length episodes online.)
The problem arises when the TV is just another screen for viewing web content — and that’s where Google TV comes in. In theory, Google TV really isn’t that different from hooking up your PC to the TV. And anyone who’s gone through that arduous process knows that there’s really not much keeping you from accessing Hulu, ABC.com or any of the other sites except the inconvenience of managing different cords and monitor settings necessary to do so. But that’s changing — PCs even come with HDMI outputs nowadays, making the process that much simpler.
Of course, Google TV’s whole raison d’etre is to bring web content to the TV. Not just that, but Google TV is trying to make web content available alongside your TV viewing. In other words, to make it drop-dead easy. But when you make it drop-dead easy to watch a full-length web episode of Modern Family on the TV via the web, what’s to stop a user from skipping the broadcast altogether?
The truth is that users are skipping the broadcasts anyway. We’ve covered study after study showing that viewers — especially young viewers — are no longer tuning into their favorite TV shows at a set time; instead, they’re increasingly using DVRs, online video and even mobile devices to watch content when they want and where they want. It’s too easy to blame online video for accelerating a shift in behavior that viewers were making anyway. And it’s too easy to block Google TV access simply because it allows a user to get freely available online content on the TV.
For broadcasters, picking a fight with Google TV, or Boxee, or holding their content back from being rentable on Apple TV (s AAPL) isn’t going to change this fundamental shift in user behavior. What they need is a strategy that allows them to gracefully embrace — and monetize — the new ways that viewers are accessing their content, whether it be on a DVR, on the web, or on a mobile device.
The funny thing is that Google TV should be able to help them do this. Theoretically, Google TV should be able to provide them with all of the advanced demographic and audience behavior data that they currently don’t get from Nielsen ratings. It should enable them to provide better and more relevant ads to their viewers, creating a higher-value business for online video than they have already.
Sure, in the short term it won’t replace the broadcast TV dollars they receive. But with audiences shrinking and getting older, broadcasters need a plan for reaching out and finding audiences where they are, not blocking them from viewing the content they actually want to see. Which is why blocking Google TV — or any device, really, for online viewing to the TV — is short-sighted, at best.
To learn more about Google TV’s side of the story, come see Google product lead Rishi Chandra at NewTeeVee Live on November 10 in San Francisco.
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