It looks like Google is making moves towards TV. According to the Wall Street Journal, the search magnate has approached media companies with regards to licensing content for a service that would not only stream programming but also integrate on-demand applications as well as search.
If successfully launched, this has huge implications for traditional TV as we know it and might, ultimately, create more robust competition for a segment already undergoing rapid change in the wake of new technology and diversified consumption.
Among Google’s competitors are Intel, Apple and Sony, all of whom are working on products with similar offerings. Reuters reports that Intel has allocated an estimated $2B to TV programming licensing deals but has failed to officially sign any major content companies despite offering to pay as much as 75% more than traditional industry-rates. Insiders emphasize that the $2B budget would span multiple years and is not “an upfront or ‘year one’ spend on content.”
To quote Tim Carmody of The Verge, “Internet TV is hard in ways that have little to do with technology. Striking deals with content partners is very hard. Bringing a product to market that’s comparable with what cable and satellite providers can offer, let alone more compelling, is extremely hard. It’s hard if this is what you do every day in your core business. It’s unbelievably hard if you’ve never done this before. Very few people would be surprised if Intel, like Google, couldn’t pull this off.”
Generally speaking, media companies are reluctant to rock the boat and undermine existing arrangements with distributors. While they’re open to licensing content, the best prices typically go to the biggest distributors. For Google and other would-be Internet TV companies to procure favorable rates, they would almost certainly have to accept standard programming bundles which would likely eliminate an à la carte channel offering.
That said, I can’t imagine a mass exodus from Comcast or Direct TV unless one or two things happen. The first scenario would be that Google acquires licensing rights and stacks the service with Fiber. The second, and I think this is a long shot, would be if Google offered a radically different on-demand service where content was made available as soon as it premiered, setting Google TV up with massive programming library. This would cost the company a fortune, but it would be a compelling reason to make the jump no less.
I, personally, think that application integration is a total wash seeing that TVs already come with Netflix, YouTube and Hulu installed on them. If they didn’t, I’d probably use my console. But if I didn’t have that, I could use an HDMI cable from my laptop to my TV. The point being that there’s no shortage of options here.
When it comes to the arms race for TV, the future is pretty obvious. Viewers want to watch what they want, when you want, however they want. While that might be on a tablet during your commute to work, at the gym or in the comfort of your living room, each and everyone’s preference is different. I can foresee how the first distributor who irons out all these nuances at a competitive price point might ultimately prevail in a winner take all situation.
I kind of hope it comes with super fast Internet.