Google TV Is A Bigger Deal Than You Think

It has only been a few weeks since Google announced it would create a brave, new world with its Google TV platform. In all the reactions and the commentary, I have been amazed at how little people understand what's really going on here. Let me summarize: Google TV is a bigger deal than you think. In fact, it is so big that I scrapped the blog post I drafted about it because only a full-length report (with supporting survey data) could adequately explain what Google TV has done and will do to the TV market. That report went live this week. Allow me to explain why the report was necessary.

Some have expressed surprise that Google would even care about TV in the first place. After all, Google takes nearly $7 billion dollars into its coffers each quarter from that little old search engine it sports, a run-rate of $27 billion a year. In fact, this has long been a problem Google faces -- its core business is so terribly profitable that it's hard to justify investing in its acquisitions and side projects which have zero hope of ever contributing meaningfully to the business (not unlike the problem at Microsoft where Windows 7 is Microsoft). So why would Google bother with the old TV in our living rooms?

Because TV matters in a way that nothing else does. Each year, the TV drives roughly $70 billion in advertising and an equal amount in cable and satellite fees, and another $25 billion in consumer electronics sales. Plus, viewers spend 4.5 hours a day with it -- which is, mind you, the equivalent of a full-time job in some socialist-leaning countries (I'll refrain from naming names). 

Google's goal is to get into that marketplace, eventually appropriating a healthy chunk of the billions in advertising that flow to and through the TV today with such painful inefficiency.

Okay, you give in, you say. TV's a big deal. But haven't so many tried this before? That's essentially the point Steve Jobs used to marginalize Google TV on stage at D8, the All Things Digital conference. With all respect to the man (generally, a genius). He's wrong. 

Yes, it's hard, yes it has been tried before, but no, Google TV is not in the same situation as Roku, VUDU, Boxee, or even Apple TV. Google TV is different; it's more ambitious yet more likely to succeed. First of all, timing matters. With broadband penetration at two-thirds of US households -- higher in many European and Asian markets -- and with home networks in more than a third of US homes, the base layer of high-speed connectivity to and in the home can support Google's ambitions. Plus, there's enough content online between YouTube, Hulu, and Netflix, to make it worth the bother of connecting the TV (which, by the way, is why nearly 10 million homes in the US connect their PCs to their TVs to watch that content today, so Google's asking us to do something millions of us already do). 

But the mere combination of content and technology isn't enough to make this work. There has to be a path to market that is likely to succeed and Google's list of partners is what makes this worthy of consideration. Sure, Intel has been standing in the background, eager to wedge into the TV business for some time. Logitech hopes to provide the peripherals -- boxes, keyboards, pointers, even cameras -- that will populate the living room. But none of those partners can drive a large, open market of consumers using Google TV which is precisely what developers will want to see before they ignite the innovation necessary to take the TV experience to the next level.

That's where Sony comes in. Sony has been selling connected TVs for longer than any other TV maker. It obsesses about R&D and its connected TVs are actually relatively robust compared to some others which rely on cheaper silicon and have a less elegant user interface. Yet Sony willingly set that technology investment aside  -- giddily, as Sir Howard Stringer himself said -- and tied its fate to Google TV. This will make all the difference, giving Google TV a shot at reaching millions of homes by year-end 2011. More to the point, it is Sony's involvement that will cause everyone else to accelerate their own efforts. Competing TV makers will sign up by the end of the year, mark my word. Cable companies will speed up their TV Everywhere solutions to ensure that they don't get pushed to one side. Most of all, Apple itself will have to respond.

In fact, Apple will kick itself that it didn't tackle TV in a similar fashion sooner. Jobs has admitted the Apple TV was a hobby and has painted the entire TV market as nearly impossible to overhaul. But he's hiding from the fact that his solution -- and all the other solutions tried so far -- didn't really bring the kind of power to the TV that Google TV will. The Apple TV, on a good day, is capable of taking your attention for no more than an hour, two at most, and then only if you have paid to rent or download a movie from iTunes. That's an infrequent scenario at best. Google TV will be a persistent interface that resides on your TV, giving you access to search functions (searching linear programming, web video, and even the general Web to get IMDB facts or background on the season finale of Glee) any time you're watching TV, not just when you switch the input.

It's a critical difference that makes Google TV unique compared to all previous attempts to "Webitize" the TV. And it's the difference that will matter at scale, thanks to TV manufacturers who will support it. And it's the difference that will matter to developers, who will want to appeal to millions of consumers through a persistent interface, not a sidekick box in the living room. That's why Google TV is bigger than you think -- it will occupy more of your time and attention than you think. Then, once it has your attention, it can begin siphoning away ad dollars. Oops, did I just reveal the nefarious master plan? You bet I did.

Comments

Google TV

Great analysis (too bad i'm too cheap to pay for the full report on Forrester's site). My gut has been telling me that sooner or later the TV / PC merger would take place, and I continued to be annoyed that the Comcasts et al seemed to be succeeding in keeping a lid on any real movement away from their traditional model. Looks like the Google / Sony match-up just might do it.

Google's TV product is pretty

Google's TV product is pretty mediocre as it has been currently demoed. It's basically just another search interface that sits on top of the existing interfaces to your other devices, with some very basic integration using IR emitters (!) to control most of them (which is not too different from the capabilities of a Tivo box and a number of other devices which can also stream content over broadband). And the user experience is really bad. No amount of partnering will save such a mediocre product.

there's more to it than you've seen

While Logitech's version uses IR blasters, Sony's does not (though it may offer that option, we have yet to see), and DISH's does not. I agree IR blasters is not the right solution, but it isn't critical to Google TV's penetration or success, either.

Nonsense

Your are blind to its value. For one it runs Android - they showed a demo how an Android app could access the closed captions, run them through google translate and then put them back on the TV - real time translation.
And that's just the first of many, millions of apps on the way.

Google does not fail. If any

Google does not fail. If any company will be the one to drive the merge of PC and TV, Google will be at the helm. The only reason this won't work is if Google decides to abandon it. As Facebook gains strength to try to take over the web this move by Google will secure it as the information/advertising titan. In a way it's almost scary. Just imagine logging in to your television. What pops up? Personalized advertisements line individual health insurance based on recent watching activity, interactive advertisements that at a moments notice and the click of a button will connect you to Amazon if you decide to purchase what is being advertised. The connection of entertainment and information will revolutionize the way we live. Web conferences from home via Skype and other video chat programs will allow more and more people to work from home. This will all be supported by Google.
Carly S.

What about cable cos

They have a cosy arrangement to bundle programming and the networks do not want to rock the boat. The subscription fees are too lucrative (I pay $180 per month!). The cable cos have no incentive to play nicely with Google -- and they have a lock on lots of good programming. I can't dump cable because I'd lose HBO, Showtime, lots of other channels, shows and events. We are still far from the tipping point.

How will Google TV persuade Comcast, Time Warner, Verizon etc to kill their own cash cows?

Don't count on Hulu working on this box for free

You are correct that Google TV is different than the others who have been working in this spae for years in that they integrate with the cable/sat box. But it's a clumsy integration still dependent on IR blasters.

Full integration requires partnership with the MSOs and that is highly tricky. Not impossible, but not a slam dunk either.

Also, even just plain old web browing on a TV (which is a bad idea, mouse and keyboard do not belong on a sofa) will not necessarily be allowed. Hulu has blocked its site already from the PS/3 browser, Boxee, and other products that attempted to bring Hulu to the TV.

I would expect to see more search capability and some ad targeting, but nothing that allows a consumer to cut the cord without paying at least as much in other subscriptions to satisfy a typical TV habit.

Read more at http://www.thehollywoodgeek.com

Not predicting this cuts the cable cord

Thanks for raising the cable cord cutting issue because I'm not actually suggesting Google TV will lead to that. It doesn't have to to make all the difference, in fact, Google would be happy for you to keep getting cable content from the cable company, and then will siphon ad dollars away from them by riding outside the cable infrastructure. Cable doesn't have to like it, but they can't stop it, and Google doesn't need you to change your relationship with cable to make it work.

But how?

If Google wraps cable content with additional ads, then it is a doubly bad experience for consumers. Also, Google can only search cable co programming guides if they allow it.

Example: I spent 3 or 4 minutes searching my stupid cable box interface for HBO On Demand the other night -- Time Warner NYC changed the channel number to 600 and I had to manually scroll through 1000 channels to find it. Absolutely infuriating, but Google also yielded zero usable results for "TWCNYC channel HBO".

The cable cos have formidable roadblock power, and I don't see that Google yet has the leverage to bust it.

the problem you had was with your cable box

I sympathize with your terrible experience, but you need to understand that was Time Warner's fault for choosing not to invest in its cable box/middleware, not any scarcity of good data. And you didn't get better info from Google yet because Google's search engine doesn't currently index TV program guides -- but Google TV will (and just so you know, they need no permission from cable companies to search their program guides, that information is all aggregated by two companies, Rovi and Tribune Media, and many companies get access to it).

But...

I don't know the law per se (I work for Disney, FYI, but not ABC or Hulu and am speaking here as an individual) but I'd suspect that if Google "wrapped" existing broadcasting content with their own ads they'd be inviting trouble.

Imagine if Tivo sold video advertising and blacked out broadcast ads and inserted their own. Technically it's possible, but they'd get slapped back into oblivion. (Or as I have commented on my own blog post, I’d expect a cease and disist faster than a potato shot out of a tube sliced into fries and boiled in Chrome.)

Simple display ads are untested and unknown on a 10' TV experience. Where do the ads lead? To video content or to a website? Websites on a TV are a bad idea, or at least very limted and not as lucrative as video ads.

And if this is happening during live linear tv, is the video paused beneath while you experience the display ads? Is that reliable or a good experience?

"Cable doesn't have to like it, but they can't stop it..." Remember that it's also the networks that would have their ad dollars siphoned off, and Google will need the networks on board for deeper content apps to make the platform valuable (like a Hulu app, or to not have Hulu blocked in the browser like it is on the other systems).

They also need cable/sat on board to integrate further into their boxes and get rid of (slow) IR blasters. Dish is on board, but will the other MSOs follow and improve their experience if Google is siphoning off their business?

I think their are win-win scenarios in Internet connected TV, but wrapping/siphoning ad business is likely not one of them.

http://thehollywoodgeek.com/2010/05/28/will-google-tv-destroy-tv/

Google TV! Google and it's

Google TV!

Google and it's foolish gaggle of pathetic, fail prone, hangers on will rush in where, for very good reasons, even S Jobs fear to tread.

Adding a second, serially connected, set-top box to your cable/satellite set-top box just to super-impose some web search and web base video content onto your TV screen is just a silly, stopgap, dead end. It is just unnecessary extra cost and adds too much complexity for the average TV watcher.

The GoogleTV box has to act as a pass through for the primary Cable/Satellite box and it has to be programed to send control signals from it's search based menu back to the primary cable box so as to select the chanel to be decoded by the cable box, only then can the GoogleTV box act as a pass through for your cable based TV programming. Sure the cable guys could build the Google TV box functions into your cable box but that leaves you back under the control of the cable good old boys.

Apple is heading to where the puck is going not to where the puck once was!

The future, once the poor US internet bandwidth issue is resolved, is for all content producers to sell directly to content consumers, no Google set-top box/cable monopoly middlemen necessary, just a quality internet based digital delivery system like iTunes or similar service over the web along with all other web content, no complications like two serially connected set-top boxes needed. Oh, and building the second Google TV set-top box into the TV is really some kind of intelligence test for the consumer.
POOR SONY
THEY SHOULD GET A DARWIN AWARD FOR THIS ONE!

Google and partners are in over their head, they are lost, they really lack integrative vision on how to deliver customer centered hardware/software solutions.

Apple is in a holding pattern regarding Apple TV because they recognize the futility of moving forward until the content producers feel safe enough to jettison their present end user, revenue collecting straw bosses, namely, the cable/satellite good old boys. Once the web bandwidth can guaranty their safe escape from these old frenemies, simple web connected boxes like Apple TV and many other branded boxes will quickly take over.

Quite right

It's funny how so many people are so naive. The cable guys and content guys are locked in a mostly loveless marriage, but with lots and lots of messy shared property and interests. To think that the content guys will simply walk away, all consequences be damned, to start dating this Google chick, is absurd.

Nope, not naive

In fact, the cable guys are going to one day put their own TV Everywhere apps on Google TV (after putting them on Android phones first), as well as the iPad, and even the Xbox. DISH is already on board with Google TV, btw, putting it into their set tops, which I didn't have time to bring up here. Though you accurately describe the loveless marriage, you don't adequately capture how the partners in that marriage are already cheating on each other (Disney's future subscription plan, licensing content to Netflix, HBO Go, I could go on). It's only going to get more adulterous. Plus, Google doesn't need to even date either of them, all it has to do is get into the TV operating system and let the courtship flow the other way.

A long time until the divorce

To be clear, I support Google TV and would love to cut the cord in favor of a Web-driven solution.

But... no matter how much cheating is already going on between content/cable (and I agree with you, it is), I cannot cut the cord until their marriage is dissolved.

While so much good content is still forcibly bundled together with access, Google TV does not help me much. Sure, the interface is nicer, but I'm still stuck paying $180 to Time Warner, PLUS any additional costs related to Google TV.

And while the marriage is still ongoing, most of the $70bn is inaccessible to Google. It can only tap into the unbundled content and offer a more effective solution, together with content makers, for the direct-to-consumer market.

PS an interesting side note: as a CMO I have run broadcast campaigns on Google AdWords with their TV option. The cost is ultracheap -- and while big brand advertisers are still getting royally ripped off (the upfronts etc), the content/cable married couple have another incentive to save the marriage -- rather than lowering their rates and submitting to the Google auction system, which will open them up to much more accountability. Happy to discuss offline.

Google TV will change politics

Check out my video of an ARM Powered Android set-top-box to be manufactured for $50 that was shown at Computex last week: http://armdevices.net/2010/06/02/50-android-set-top-box-by-webia-technol...

It may not add much more cost to this basic Android media player for it to include the fastest ARM Cortex A9, HDMI pass-through input/output (for managing all the overlays on any TV contents) and the IR blaster. I think we will see $100 ARM Powered Google TV solutions soon after the initial launch of the project to the market.

The awesomeness of Google TV is that it works for both existing TV (with any existing cable/satellite/dvb sources) and it also brings the future of on-demand web based TV to the living room such as its support for full laid back version of Youtube on the HDTV.

I see it as both a huge opportunity for current TV corporations to use Google TV to make more money on opting-in with Google to display targetted advertising instead of the current random TV advertising. This may overnight increase TV advertising revenues 3x (a share of which Google will take). On the other hand, I also think of Google TV as a sort of Trojan horse, it is basically bringing Youtube and other VOD contents from the Web into the HDTV in the living room, those which could rapidly replace traditional TV channels for the largest part of consumers daily 5 hours of TV watching. This leads to the decentralization of TV broadcasting, as anyone with a camera can potentially reach millions of viewers. This also means better democracy, better political debates, less influence by monopolistic and sometimes probably corrupt centralized media channels. This democratic aspect of Google TV could change the way of all future elections permanently.

For all this to happen Google needs to convince on these aspects:

- Google TV needs to convince with extremely good recommendations algorithms either built-in with their official Youtube laid back application, or smoothly available as a plugin developed by any external Android developer. The recommendations aspect for "what users should watch next to have a better TV watching experience", that is the whole key of proving that Google TV will revolutionize the TV experience.

- The set-top-box needs to be manufactured by all manufacturers, Google TV source code needs to be open and free as soon as possible, it needs to include support for ARM as quickly as possible, allow for sub-$100 Google TV boxes (unsubsidized) fully featured compatible with any HDTV and compatible with any existing TV sources through HDMI/component/composite pass-through overlay features and IR blaster.

- Youtube HD on the TV needs to be free and open, Google needs to announce that any device maker may include Youtube HD on any device that connects to any HDTV.

- Eventually, any Google TV box shall also be usable for HD video-conferencing but also for any user to become a broadcaster of HD video contents. Basically, include a USB host port, possibility for built-in or cloud storage, connecting of camera or uploading of recorded video contents. Even built-in cloud assisted basic video editing, that also includes tools for live video editing and live and on-demand video editing collaboration.

I know, but don't care

GoogleTV is like putting an engine on a horse buggy.

When I want to watch something, I search Netflix on my iPad or iPhone. If they don't have it, I search iTunes. I can't remember the last time I was disappointed. Playing either of those on a large screen is easy. They cost much less than cable and I always watch on demand.

You couldn't pay me to have cable or broadcast TV or do Google searches on a set-top box. I'm getting sleepy just thinking about it.

Hulu has a contractual

Hulu has a contractual limitation against appearing on TV screens as opposed to computer screens. This is the fail point for google tv and why apple has pushed further. Cable cos have vested interest to protect.

Yep, that's why Hulu Plus will charge for content

Hulu is very interested in getting to the TV, but on a pay basis (probably with a watered-down, heavily ad-burdened free version as a teaser). So this is not the end of this story.

Hulu's problem is they are

Hulu's problem is they are signatory. The scale and size of their upfront contractual obligations to payroll and inability to do profit share forces a paywall. But the non paywall content if it can get to their quality ...will win.

one thing you get wrong...it

one thing you get wrong...it will be the architects of a new kind of cubic content from non-signatory independents that will end up winning...because they will ("easily" and easily/flexibly is important here) control the interface of integrated advertising, retail, and marketing in the architecture of the story/experience interface. Just like the networks learned when TV started...it is about content production...because a contract with content placement (and now internally) trumps any delivery.

It's All About the Apps

You can (mistakenly) argue that Google TV is just another STB retread, but that's completely ignoring the new ecosystem for apps.

Don't think Twitter, eBay, Facebook, et al. because those apps don't make sense in the Living Room.

At Are You Watching This?! we've been waiting years for a technology as robust and open as this. I'm sure we're not the oly one.

Shared TVs are a horrid place for things like search

In our household, we all still gather around a tv in the family room and watch together ( gasp). In a shared setting like this, we often can not even agree if the CC should be on or off. There is no way having a shared viewing TV and having on screen search, etc.. will work.

Even when I am watching alone, I want the show on one screen and my lookups on another ( netbooks/ipad equiv, latop, etc..). What is the draw for having it all on the same screen? if it is social chat about the show... this is private and not something I want displayed on the TV for anyone who might walk by...

We have Roku and love it. That is enough, really... I do not need more info on my TV. maybe I am a tv tech luddite.

Magic mix of resources

I think Google TV has a major shot at breaking through the barrier other efforts could not. The partnering is key:
- they are letting the HW companies do the hardware part (Intel, Sony, Logitech)
- they got a top 5 retail distributor for TV systems on board (Best Buy)
- they timed it in a manner that should allow for leveraging the 2010 holiday season
- they have plenty of content to fill it with
and
- they can ride the wave of "everything in my hand" attitude (i.e. TV remote control) that the iPhone and Android mobile systems have created.

They blended it all so that each party has a key vested interest in the success - seems like a lot of things done right....

Social tv: more social or more tv?

I must admit Google has strong keys to go further than anybody else, on the "webitization" of tv. But it supposes that tv "has" to be "webitized". So far, no more tech has to be added, but new user's experience must tumble us to wake the envy of consuming tv again (eg audiences left for web screens since two years now...and traditional tv has to find new ways of growth. And they know web is probably a solution to add revenues and keep audience on the "tv screen". More than ten years ago, I worked on what we called "interactive tv" (downlink with dish, but uplink with modem, whil DSL was not really spread...). Yes it was probably a path to new services, but consumer was hesitant, and tv apps were not really user friendly yet.
Now it's surely more mature and tech relevant, but are we ready to do some "social tv", on the living room tv screen, with the whole family...?
I wrote something that shows, to my opinion, the present limits of social tv. webitize, why not, but not all the web...I mean.
see: http://evidencesx.wordpress.com/2010/04/06/social-tv-more-tv-or-more-social

Thanks for this bright paper.

WebTV

Does anyone remember WebTV? Google is on dangerous ground. The user experience has to be dead simple,
plug it in and go. The tecent fiasco with Nexus One custome support does not inspire confidence.

Easy User Interface

Have you ever played with a Comcast remote ??? I've been in the software design business for 30 yrs and that interface (remote & TV display in combination) is a Joke in my book. I can't believe consumers even put up with it. Yes it works, yes you can get a channel to come up but I remember when a 60 yr old friend asked me to teach him one eve - after about 1 hr I just said. Forget using it - get a different service.

If Google and the data world can't come up with a more simplistic / intuitive UI than what the cable guys have today - well then they deserve to fail. But it shouldn't take much to get it better than what exists.

Integration

If an easy to use interface with lots of good content is available on demand, why do you need to subscribe to HBO? We get STARZ at home with DirecTV and half the movies I don't care for. I watch a good bit of content online already through hulu, amazon, netflix, etc.

No one is talking about the expensive infrastructure that the cable/sat TV companies have.... that must be a huge factor in the reason they haven't done this already.

First, I want to say that you

First, I want to say that you make some excellent points and that I totally agree. However, I do have some criticisms about your second paragraph:
1. Google doesn't make it's money from its search engine. Google isn't even a search company. It's an advertising company, and it makes its money through selling advertisements. Yes, it sells them on its search engine, but also on YouTube, Gmail, etc., etc., etc.
2. Google's "side projects" certainly *do* have hope for contributing meaningfully to Google's business. As i just mentioned, Google makes money selling ads through them. Additionally, it's not all about how Google can make money now. First, Google is truly devoted to making the web better. Second, the more people that use the web, because it's better, the more people Google can sell ads to.
3. Google is much more than just its search engine. First, refer to points 1 and 2. Second, YouTube!! Third, Gmail!! Fourth, Google Docs!! etc.
4. Microsoft is no more *just* Windows 7 than Google is just its search engine. Microsoft Office comes to mind, which is an important piece of software on many Macs. Additionally, Microsoft has as many "side projects" (read: important areas of business apart from the "core" business) as Google.

Googl TV

My blog of May 19 explores almost exactly the same angle. You may want to read it, James, if you haven't already: http://bostonbroadband.com/?p=6

Google TV needs to get Hulu

Google TV needs to get Hulu. most of the stuff I watch is on there. Right now, I use a nettop box running the iVox.tv app http://www.ivox.tv Let's me watch Hulu and anything else that is out there. So I don't to have both connected to my TV