Blog Post

The hardest part about Google Fiber isn’t digging ditches, but buying TV rights

You thought that building out all that physical infrastructure is what has been slowing down Google Fiber’s expansion? Think again: Google Fiber head Milo Medin has called TV rights the “the single biggest impediment” to growing Fiber, according to the Wall Street Journal, which also quotes Medin saying that TV has been “the single biggest piece of our cost structure.” The problem is that Google, in order to win over cable customers, has to offer the same channels as the competition. But as a newcomer, it has to pay up to twice as much for some of the rights. No wonder internet TV ventures like the ones from Sony and Dish are struggling to keep costs under control.

5 Responses to “The hardest part about Google Fiber isn’t digging ditches, but buying TV rights”

  1. John Willkie

    This is the situation that also helped kill Qualcomm’s MediaFlo/FloTV. Techies think they are smarter than the people who license content. Then, the people who sell the exclusive rights to content visit your fancy new offices and double their asking price.

    The phenom is widespread: thinking (wrongly) that you are smarter than the people you do business with. Save that hubris for your views of your competitors.

  2. Tony Havelka

    Why are they trying to take over the entire value chain? Why not just be the pipe and let others deliver the content? Also, when Google goes to negotiate rights their cost is going to be a lot higher than if small company goes to negotiate rights. Let the small guys fight that battle.

    Why don’t we hear about Netflix complaining about content costs? It seems like they are using the rising costs as a growing barrier to entry. I’m not sure how long they can withstand the burn of cash but, in the short term, this strategy seems to be working.

    • You don’t hear Netflix for two reasons:

      1) It piggybacked on the DVD crazy, allowing it to get content for much less than it might normally pay because so many others were buying the DVDs. That day is gone.

      2) It is a smart company that creates its own content. So it knows how much good content costs. GOOG doesn’t have a clue because it just lets the pirates have free rein at YouTube.

  3. Well, of course. Google never shared anything with the people who created their content. They’ve always gotten a free ride on the piracy and pseudo-piracy. When they see the price of actually paying legit salaries to real creative people, they have heart attacks. They would much rather pay pennies in ad revenue to the losers who pirate for them.