Had to respond to a Dan Frommer posting, run on CNN.com a week ago.
Normally Frommer is a sharp analyst, but here I think he’s missed an obvious point. After reporting Google TV anemic sales numbers, he says Google needs to adopt an Android-like strategy: seed the OS on zillions of consumer TV devices. His wrap-up:
“Google TV: It could either become the de facto operating system for consumer electronics and succeed as the Android for TVs and set-top boxes, or it could crash and burn.”
Really? Just those two possibilities?
My take: Google hasn’t a clue how to market (i.e., build demand) for Google TV. “Shiny/new” and “expensive” aren’t compelling value propositions for general TV shoppers by themselves. Similarly, the TV manufacturers don’t know what marketing buttons to push to light a fire under “Internet TV” sales except Netflix, YouTube, and “not much more expensive than a regular TV.” Buyers jumped on “flat screen”, they jumped on “HD” and “1080p”, they’re kinda running fast towards “LED” and they’re dawdling along towards “3D”. Nothing about Google TV has the same pull as “HD” did. Buyers saw HD, they had to have it.
Problem is, Google isn’t a marketing-oriented company. They actually need partners to make Google TV into something that’s in the “gotta have it” category. They have a boatload of money to invest, should someone have a good PowerPoint deck with a reasonable concept. Google’s been successful fostering a healthy developer ecology for Android smartphones.
But… but TV isn’t like smartphones at all: smartphones are an incredible versatile platform for a wide range of activities, and Android is the lower levels of the stack needed to open up innovation possibilities at the higher levels–the more apps, the better. Ad-driven Internet TV is a single-purpose platform. TV users don’t want 20, 50, or 100 apps on a lean-back TV: they want to access hundreds or thousands of pieces of relevant content. The two important words here are “content” (with hundreds of content owners, none of whom have any expertise in Internet TV), and “relevant” (the well-known problems of what do I want to watch, how do I find what I want to watch, is anyone I know watching the same thing I am?)
These are the two areas of focus to create demand for Internet TVs. Google itself doesn’t have the DNA suited to either, but it’s so big and threatening it will have a tough time partnering with those whom it needs to have a hope of making Google TV successful. And it will have little success recruiting lean-back TV device manufacturers to adopt GTV as a connected TV OS and creating the same kind of developer ecology that mushroomed up for smartphones. Google will have to spend money to buy a lot of expertise it doesn’t have.
What do you think?
Google and partners Sony, Intel, and Logitech are readying the Next Big Thing in online TV, with Google TV scheduled to first appear commercially at Best Buy in September 2010.
Synopsis: Google TV is a software platform that brings web content to the living room TV. Unlike Web TV of the 1990s, there’s now plenty of interesting, “lean-back” content that looks and sounds enough like traditional TV to avoid repeating the disappointing Web TV experience. So far, Google has been downplaying Google TV in the mass market: no TV ads, no billboards, nothing on any Google sites. The industry press and analysts are going nuts, of course, and the big splash announcement took place at the Google I/O developers conference in May 2010, where a small but important audience of Android developers were ready to get their hands on developer kits. But eventually the mass market is going to want to know more and then decide if they want to add this box to their living room setup.
Based on what’s known so far, here are six important questions to consider when thinking about how well Google TV will get off the ground.
What’s the right user interface device? For a lean-back experience, it might not be optimal to make the user fiddle with a wireless keyboard for entering URLs, search terms, and other text needed to navigate the online media world. Would a hefty remote control be better? Or how about a touchscreen interface appearing on a linked Android phone? Sony and Logitech, and the Android app makers, need to get this right on the first go.
What content partnerships are in the pipeline? Or is the model going to be to only pull content from search and only create pre-built channels for the most popular content sources, without formal partnering? Somehow this seems like a golden opportunity to establish distribution-like partnerships, but this is also a risky, complex ecosystem Google has little experience navigating.
Finding content: satisfying or frustrating? Google mentions partnering with Rovi who’ll roll out a guide app for Google TV. They’ve also tagged Jinni.com’s semantic search solutions to let viewers zero in on content that’s hard to pin down with standard search technologies. The key feature most mass market consumers will focus on when deciding to jump into GTV is likely to be browsing and finding content in a 10,000-channel world without getting overwhelmed.
Pay TV options for Google TV services? Does the model include eventual creation of subscription services, modeled in part on examples like Hulu Plus? Are viewers going to take on another monthly fee for some form of Google-delivered premium content?
Multiple boxes, how’s that work? Speaking of monthly fees, will Google TV integrate smoothly with a viewer’s existing cable box? Or will viewers instead start to seriously consider dropping their cable TV subscription because Google TV delivers most of what they want to watch? How about the folks with a Roku box, or a Wii or Sony Playstation? How will those boxes physically co-exist with the Google TV platform?
What happens to in-place ads? The big question: does Google envision monkeying with the advertising model that applies to the sites and services appearing on the Google TV screen? Do those pre-roll ads on the Hulu site stay in place? Will Google figure out how to place more ads just for GTV viewers? Logic suggests Google will make some attempt to enhance ad delivery capabilities within the GTV platform without doing anything to disrupt ads already in place. This could be tricky, but Google’s solved this in the browser and mobile search environment.
Hey, people are reading my blog. And not understanding it… oh great. One reader asked if I could explain the MIT Enterprise Forum discussion in plain English.
Sure… at least I can try. A lot of television content is going to be available on the internet (a lot already is). Companies that make money today by showing TV programs are predicting they won’t be able to keep making money when that happens. So every company that makes TV content, or that shows TV content, is trying to figure out what to do to save their business. At the same time, new companies (like Google) that don’t have traditional TV businesses are also trying to figure out how to make money showing TV content to people on the internet. And finally, viewers are starting to realize they don’t have to rely on broadcast TV or cable or satellite TV to see their favorite shows. The loss of viewers for traditional TV is reducing cable/satellite TV subscriber revenue, and is also causing advertisers to spend less on TV ads, and they aren’t shifting that money to internet sites showing TV programs. So the session was designed to highlight new ways companies can make money on internet TV.
And those new ways boil down to three basic strategies: 1) keep subscriber revenue coming in by allowing cable/satellite subscribers (and no one else) to also see programs on demand on a website; 2) create the same size audience for each program that used to watch it when it was broadcast or shown on cable, by making it available on lots of websites and charging advertisers for all the viewers no matter where/when they saw it; and 3) making it possible for anyone to pay directly for each show they want to watch. The future of TV will be a combination or coexistence of all three strategies.
And no one knows which of today’s companies will make the transition successfully to this new TV land. They’re all trying to navigate a treacherous path.
An insightful article from Keith Richman of Business Insider pointing out that video/entertainment content producers have new obligations to take on in ensuring their content is most effectively distributed to its intended audience. No longer enough to hand over both physical distribution AND building of the audience to a distribution partner.
Keith didn’t include examples, so it will take some work to uncover some best practices in this regard.
He mentioned many distribution companies are producing their own content. I’ve heard that the opposite is also true: low cost of “distribution” to certain audiences is leading content companies to do their own distribution in ways they’d never have dreamed even just three years ago. We’ve passed some kind of inflection point for non-traditional distribution of entertainment.
Also, the jargon in the digital media space is getting confusing to me. The web of interconnections between companies in this ecosystem is generally blurring what categories a particular company does business in. So it’s hard now to mention categories like “distribution” and know just who the heck you’re talking about.
UPDATE: And here’s an interesting tidbit from RampRate analyst Steve Lerner on MGM Studio’s impending bankruptcy. According to Steve, “distribution” was the ball game for MGM, because starting in 2000 it erroneously built business plans based on robust DVD sales projections that shouldn’t have been believed.
Remember that post from a couple of weeks ago, where I said NBC might be the first traditional U.S. TV network to decommission itself? When I wrote that I didn’t expect additional evidence to arrive so quickly. But the online razzing that’s being given NBC for their bone-headed scheduling of tape-delayed major Olympic events sure seems to add weight to my case.
If you haven’t seen the flaming blog posts and tweets, the story boils down to every clued-in U.S. fan of the Olympics slamming NBC for avoiding live daytime broadcast of major events (downhill skiing, snowboarding, and other fan favs are most often mentioned so far, I’m sure there will be others in the next 10 days). Instead, NBC goes to extraordinary lengths to hype its prime-time delayed replay of these events, despite the glaringly obvious fact that anyone with an internet connection or a radio knows the results. NBC even avoids revealing results on its own Olympics website for fear of diluting the prime-time audience.
NBC’s digital dumbness is in treating the U.S. audience of 2010 is just like the 1984 audience that couldn’t easily find out the results of events in Sarajevo before U.S. prime time.
Exasperated fans with a little techie skill can set up a VPN account with an off-shore VPN provider and then log in to the Canadian Olympic website that features multiple live videostreams of most of the Vancouver events. BusinessInsider has step-by-step instructions for you (you’ll need to appear as if you’re outside the U.S. because our ISPs are blocking traffic to that Canadian site to protect NBC’s exclusivity in the U.S.).
So as NBC fends off criticism that it’s “the network that’s not showing you the Olympics“, local affiliates are reaping the lower lead-in audiences that don’t include the ticked-off Olympics fans who are avoiding the packaged prime-time show. You’d think that CNBC and MSNBC could serve up daily live events and the main network could still repackage them for prime time, and the combined audiences would keep advertisers and affiliates happy. Doesn’t it make more sense in an era when the most committed viewers are seeking out live coverage? They’ll go get it somewhere else if NBC isn’t bringing it to them — and that’ll get even easier next Olympics.
The news of the deal struck between Comcast and GE to sell 51% interest in NBC/Universal to Comcast leads me to think the NBC television network may be the first of the national broadcast networks to decommission itself.
Of course, this is speculation on my part–I don’t have inside knowledge. Logic tells me, faced with broadcast advertising revenue shrinkage continuing at its current precipitous pace, it will not take long for the Comcast quant guys’ internal five-year forecasts for national ad revenue from the broadcast network and local ad revenue from the owned-and-operated stations to be so far underwater that there will no longer be a business there.
There is certainly no shame in operating as a cable/online service. ESPN, CNN, and dozens of other national cable services operate as profitable businesses. There’s no reason to think NBC could not do the same. The broadcast network might morph into multiple cable services (with guaranteed carriage on the Comcast systems and likely carriage on other MSO systems too). It would be interesting to consider what that service lineup might look like in a year or two.
However, at some point all the cable services will be faced with yet another transitioning to a hybrid distribution model where online delivery supports the majority of the service’s viewers. Before that time, Comcast will need to have figured out how to continue extracting user subscription dollars or replace subscriptions with other direct payment solutions from the folks who don’t have a Comcast cable box. Comcast’s win in buying control of NBCU is that it will have to spend less of its subscriber revenue in content acquisition (getting Bravo content wholesale instead of retail, as an example). That will be a boost to bottom-line results for a time. But the time is coming when viewers equipped with high-speed Internet service and more capable devices for finding and playing video content will be reluctant to continue their cable TV service. Comcast had better know how to retain those TV sub revenues through another compelling value proposition.
Yes, Virginia, there is a Santa Claus, but he probably won’t be lugging a great big flat-screen TV with built-in Internet connectivity in his sleigh this year. Oh, you might get that nice 32″ Sony you’ve been eyeing at Best Buy, but if you want to stream Netflix movies on it, you’ll still need some other device. Not that there aren’t any Internet-enabled TVs on the market yet, it’s just that we’re still way in the early part of the growth curve for them. Why? Well, James McQuivey of Forrester Research had it right on NPR’s Morning Edition yesterday: Not a lot of features yet. Too expensive. The interface isn’t there yet. These early Internet-ready TVs are placeholders for the vendors while they figure out what features will drive sales, what price points will drive sales, and how to create interfaces that create a “lean-back” web surfing experience using a TV remote. Stay tuned. Maybe by Christmas 2010.