Online TV’s Next Big Battleground: Apps With Ads

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Google is slated to launch Android Marketplace access for its Google TV platform in May, and Apple may soon expand apps to its Apple TV platform as well, if recent findings of a mysterious new device code on the iTunes store are any indication. These apps will offer new monetization models, including advertising — and that’s where the trouble starts.

The possibility of apps that work as overlays on traditional TV programming — something that’s available on Google TV and may one day also be available to owners of an Apple-branded TV set — is cause for concerns amongst traditional programmers.

Case in point: A new German alliance of content owners, which includes public and commercial broadcasters, asked regulators last week to establish a framework that would prevent network owners from making money with TV apps displayed on top of traditional broadcast content. Representatives of Germany’s commercial broadcasters had already demanded similar steps during an industry event in January, according to heise.de, which has RTL’s media policy expert Tobias Schmid saying: “We are losing money if someone can launch an app with ads during our ad-free news broadcast.”

Granted, highly regulated media markets like Germany are different from the U.S., where TV networks themselves have fewer restrictions to monetize their content. However, U.S. broadcasters were already highly suspicious of Google TV when it launched late last year. Since then, most networks have proceeded to block Google TV devices from accessing content on their websites.

Apps with ads that are displayed as overlays over traditional broadcast content — and maybe even interact with that content — could further alienate broadcasters, by giving them the feeling that they’re losing control of the TV watching experience. But of course, that’s a feeling that could be very similar to the way broadcasters first viewed DVR capabilities.

In fact, the analogy between DVRs that allowed viewers to skip ads and TV apps may not be that far-fetched. App makers have recently begun experimenting with ways to augment the TV viewing experience with context-relevant content through audio fingerprinting. This technology, which is currently being used by ABC to serve up content on the iPad while viewers watch select episodes of Grey’s Anatomy, would be an ideal extension to apps running on a device powered by Google TV. Imagine, for example, an app that automatically recognizes ad breaks based on your TV’s audio feed, only to turn down the volume and overlay these commercials with your Twitter feed.

But even less-obtrusive apps could face resistance from broadcasters, who have long had exclusive windows for content monetization. That someone else could make some money with that content as well — even if it’s just through a small widget displayed on the bottom of the screen — could quickly get broadcasters up in arms.

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