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Tuning In to Google’s TV Intentions

Google (Nasdaq: GOOG) may be bringing its arsenal of Android applications to the living room. According to a Wall Street Journal report, Google will unveil Android-based TV software to developers at its Google I/O conference this month.

But what does that mean?

"My suspicion is it's something like the Intel Corp. (Nasdaq: INTC) Widget engine -- which is appearing on some TVs, but obviously based on Android -- so a TV user interface and an application store," says Colin Dixon, a senior partner and broadband media analyst at The Diffusion Group. "This is just a good thing. Having an open market for apps on the TV completes the picture. We have it for PCs and handsets and now the TV."

Google wouldn't comment on its TV plans, but details have been leaking out little by little. The Android TV operating system, reportedly named Dragonpoint, is said to allow application developers and programmers to build content, games, and software programs for set-tops and TVs, all without requiring the permission of the network operator connected to, and providing services for, those devices.

Thus far, Sony Corp. (NYSE: SNE), Intel, and Logitech Ltd. are the hardware providers partnering with Google on the initiative. (See Google Tunes In to TV.)

It is likely that Google's entrance into the TV market will also jump-start competition in TV apps, an area that's oft talked about, but that has seen little traction to date. Internet-connected TVs have become increasingly common, as have new interfaces for browsing the Web on the TV. (See Hillcrest Intros TV-Web Browser.) What's missing are the applications that enhance the TV viewing experience.

Android apps that span from social networking and customized news and weather to Internet video apps à la Hulu LLC and YouTube Inc. could make their way to the TV soon. Dixon said that a Netflix Inc. (Nasdaq: NFLX), CinemaNow , or Blockbuster Inc. app is a near certainty as well, making Google competitive with over-the-top players.

IPTV providers like AT&T Inc. (NYSE: T) and Verizon Communications Inc. (NYSE: VZ) have been working on their own options too, but their widgets have network limitations. (See Verizon Adds Twitter, Facebook to FiOS.) A name like Google could drive the apps to the mainstream. AT&T might even be interested in partnering with Google for its software, given that it lacks a TV app store, but Dixon said he expects Google TV to be an independent play at launch.

Spooked by Google's presence on the TV, new competitors are also likely to emerge. Apple Inc. (Nasdaq: AAPL) is amongst the most likely entrant into the TV app market. The company has done little to innovate its Apple TV platform, but it has been rumored to be considering a subscription TV service. (See Apple Video Play May Hurt Boxee, Roku .) Microsoft Corp. (Nasdaq: MSFT)'s Mediaroom could also make for a viable TV apps market, given that its software already powers TV services for AT&T and dozens of other carriers around the world.

Any TV or living room presence would help Google improve its ability to put the right ads in front of the right consumer at the right time. This allows it to improve the relevance of each ad it delivers, letting it charge more and making it more attractive to even more advertisers.

So, it's reasonable to assume Google will keep trying different approaches. It has been, for instance, conducting a trial of TV search with Dish Network LLC (Nasdaq: DISH), testing a search engine that spans the Web and Dish content. There is also, of course, the issue of Google's planned fiber rollout, which would give Google a more refined perspective on what consumers do when they have lots of bandwidth. (See Google Jumps Into Gigabit FTTH, Google's Pointy Stick , and My Town Wants Google 1-Gig! )

Google's knowledge of users' TV viewing habits, search queries, and their mobile habits could lead to some interesting targeted advertisements, Diffusion Group's Dixon says.

In the end, Google doesn't care about STBs, or the Nexus One and handset sales for that matter, Dixon says. It cares only about open access. "Google sees these vertically integrated systems that are closed appearing on the TV, like Apple and Netflix Inc. (Nasdaq: NFLX) and Xbox and PS3, and there’s no advertising going on there," Dixon says. When they're closed, you have to negotiate with vendors to get on the service. Google does extremely well when there's an open Internet market, so I think they're simply trying to establish an open ecosystem on the TV, because they know if it's there, they stand a good chance at doing well by selling advertising."

— Sarah Reedy, Senior Reporter, Light Reading Mobile

RosarioElliot 12/5/2012 | 4:37:21 PM
re: Tuning In to Google’s TV Intentions

Google TV is not breeaking new ground, or blazing new trails. They are responding a report that says 24% of people under 35 have dropped Cable Service in order to use free internet television to their living room TV. This has been going on for years, the content has just caught up and Google figured out a way to monitize it because of the iPhone App market. This is not rocket science, Google TV wishes to replace Cable TV, thats why they joined forces with DirectTV. When this launches, you will end up paying MORE than cable was, while the content should be greatly increased over cable. It will still be the same issue we have know, except Google customer support is not good enough to even leave you on hold properly. This is a great concept, WhiteHatt is doing something cool, open source system, no content fees, legally! Just buy the unit, hook it up to your TV and sit on the couch with the remote. Knock yourself out, Its great that Google is doing this, but we are promoting their roll online to greatly. They are not the creators, they are just one company out of 16 building the same product and racing to get to market for Christmas.


 


http://www.whitehatt.com

Pete Baldwin 12/5/2012 | 4:37:19 PM
re: Tuning In to Google’s TV Intentions

Well, yes, YouTube would play a big role in anything Google does on the TV. That's already being done by other providers.  But it still all comes down to advertising -- that's all that Google (and by extension, YouTube) really is about.

Pete Baldwin 12/5/2012 | 4:37:19 PM
re: Tuning In to Google’s TV Intentions

Ehhh... I have trouble believing Google wants to *become* your TV provider. They're just doing software, to be paired with some else's hardware, to be used with someone *else's* TV service.  So while your point about Google customer support is funny (and it truly would suck), it's really not a factor.

Cooper10 12/5/2012 | 4:37:15 PM
re: Tuning In to Google’s TV Intentions Agree - Google has no interest in being a TV service provider any more than they want to be an ISP, they want to be the OS that enables an App Store on the TV across any number of providers, incl OTT providers - establishing a toehold for search and targeted advertising on the TV.
RosarioElliot 12/5/2012 | 4:37:14 PM
re: Tuning In to Google’s TV Intentions

The point about Google Support was supposed to be funny. Take a look at the position being played by Google. They have joined forces to distribute Google TV through Direct TV, at a fee. Internet TV has 1,000 times the content than Cable TV. Essentially they are joining forces with the weaker of the two Cable vs Satellite in order to insure Cable does not survive long term. It may not be tomorrow, but the end game here is to direct the cable revenue to Google directly and secure a long term control. And do so without the need for cable companies, everything under the same umbrella. (With Google, DirctTV and Sony running it all, who could compete.) The thing is, I am not upset about it. It is what it is, the nature of business. My comment was based on the overhype of Google with regards to internet tv's creation. (*See Big Cables fight with the FCC about their equipement and regulations)


On a side note, "Google will not be a TV service provider." Think about it this way, any vertical you can think of personally, Google's engineers have already worked out. They will have App's so you can expect a surge in Android Apps and new market not unlike the iPhone App market. They will have content, virtually commercial free from all the major networks. Movie rentals, and not to mention every possible search function. Everything that happens in or around the Google TV component will cost money, users can't afford two bills and will choose the cooler more exciting, current system. That will be Google TV in this scenerio.


One last thought, Google has already purcahsed this year more than a handful of related technology companies that could pose a threat down the road, or offer some sort of added bonus to android. Or that they last week added a handful of new investment staff in order to ramp up their purchasing of companies and technologies in this sector. It would be nieve to think that Google was not shooting to replace cable and get a piece of that $89.9 Billion dollars. Even if Google is thinking low hoping to capture as much as 10% of Cable over the next 36-48 months, that alone will be enough. People will jump ship once they understand it and realize the grand advantages. Of course I could be wrong, but thats not usually the case. : )


R. Elliot -


Internet TV Researcher/Author


WhiteHatt


 

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