Google’s Chromecast and reported NFL negotiations are only the latest in a long line of attacks on the TV business. To date, this path has been littered with failures, but Google is in it for the long term. Furthermore, changing the fabric of the long standing television industry is more than just a matter of convenience for the company – it’s clearly a goal and perhaps even a necessity.
This report addresses the following points:
- The ripest adjacent market for Google is television. Online video is gaining rapidly and related advertising is beginning to show metrics exceeding the effectiveness of traditional TV. As these lines blur Google wins by gaining access to TV monies, and as dollars migrate Google increases the value of its current advertising on a per unit basis.
- Google’s summer 2013 release of Chromecast further adds to a large and growing set of tools that position Google to challenge the traditional television model.
- Google’s dominant market share in online and mobile advertising now accounts for more than 5x its nearest competitor. However, gaining a larger share will be difficult even for Google, meaning new markets will be needed.
Recent reports indicate that Google may enter into some sort of over the top pay TV equivalent. Live events – particularly sports – are critical for this equation to work, both in attracting and retaining subscribers, but also in terms of supporting an economically sound advertising payload.
The economics of the traditional cable model may be becoming unsustainable. There are a limited set of options available to the traditional providers – force unbundling, migrate to an IP based platform, consolidate for scale, leverage original programming, move to tiered and usage-based data pricing, and/or fix TV Everywhere.
There’s another radical wildcard potential move: Traditional cable companies could actually partner with the rapidly developing multichannel video partners of YouTube to flood the traditional ecosystem with abundant, narrowly targeted programming. That could flatten viewership levels across a broader content base, deleveraging TV studio and network power, and slowing the growth of programming costs.
Thumbnail image courtesy of Flickr user dailylifeofmojo