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Why the future of TV is now thanks to Google

Why the future of TV is now thanks to Google

By Oli Newton, Emerging Platforms, Starcom MediaVest Group.

“Unprecedented change will occur in the television industry...high speed systems for serving audio and movies on demand, virtual reality games, digital forms of daily newspapers...all media will be available in dynamic form” – Jim Clark (Founder of Netscape) 1994

Jim Clark had the early dream; Steve Jobs never got beyond ‘hobby stage’, now Google are giving it a crack. The dream of the connected TV is nothing new, to have access on demand to the wealth of video content on the internet from the comfort of your sofa is something that still captivates.

Lots of “solutions” exist (Boxee and Roku etc.) but these tend to be the preserve of the technically adventurous. The plug-and-play solution still doesn’t exist. The games industry is working hard as manufacturers bring video content to their systems, moving beyond a games device towards broader entertainment.

The shift now is that TV manufacturers are getting in on the act. The latest Samsung TV’s (and other manufacturers) are coming pre-installed with LOVEFiLM, iPlayer, YouTube etc., all controlled direct from the remote control (easy enough for even your parents to be able to access). No mess, no hassle, just internet TV magic.

By partnering with Google for the software TV manufacturers can plug in a first-class operating system (Android) whilst freeing up R&D budgets to focus on other things. As an additional cherry, TV manufacturers will get a kickback on searches made on their device through the traditional paid for links when these are introduced – a “less-than-free” model if you will.

The game is hotting up and all the major web players want a stake in it. No longer is it about who owns the content. The real battle ground will be that which defined the internet; who controls the gateway, the EPG (Electronic Program Guide)? Just as Google won the battle for the “EPG” of the internet through search, so too will the battle be around aggregating the links to the content and making money from guiding viewers through.

This is an important point; it isn’t about who develops the content, the viewer isn’t production-house loyal, they just want a simple easy to use way of discovering and uncovering content they want to watch, through a single access point.

Some bold early plays are being made for this. YouTube launching “Leanback” proposes to move you totally away from the EPG by just getting you to log on and defer all control to them by viewing what they think you will like. Sky have their tvlistings site that is focused on bridging the “at home / away from home” gap by allowing you to add things remotely to your PVR record list, again a bespoke channel approach.

So the real question becomes will the TV companies regret getting into bed and relying on Google to provide the solution? Will they and the channels wake up in a few years time to realise they’ve lost the game to Google, becoming the mobile network players of the future. Providing no greater function beyond infrastructure and separating themselves from customer value with which to develop loyalty and revenue?

We have seen the pattern before, one needs look no further than the SatNav business. Google plays a long game and whilst they may support and add value, ultimately they’re better understanding the market to prepare for when they no longer need you and suddenly your business is in jeopardy. A 30% overnight share price fall for TomTom brought that reality home when Google announced free turn-by-turn navigation on Android phones.

So what is the future that the TV industry is ceding to Google? Pure and simple it is ad revenue. With Google owning the EPG they direct the viewer to their content. They become the data centre for what people are watching and will have first dibs on targeting that user with advertising because you are already in that system.

The online video market has already allowed advertisers targeting and reporting beyond traditional TV solutions. It is still early days, and online video spend is not yet rivalling its offline counterpart, but that will change and when it does, it might be too late to wrestle control back from Google.
 
As for Steve Jobs saying internet TV was just a hobby for Apple? Rumours abound that the much maligned Apple TV will be given a new lease of life evolving from simple hobby status to a fully fledged pillar of the business.

Internet TV is no longer a future pipe dream, it is establishing itself all around and viewers, advertisers and broadcasters will need to get involved because it will change the rules more than anything before.

AJR
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