Google TV the beginning of the end for satellite and cable operators?

As you might have seen Google announced their new Google TV product yesterday which makes the full web available on your TV through software that will either be directly built into the TV or via a set top box (if you want it on your existing TV you will have to go the set top box route).  All you need is a wifi connection.  Note that this is an alternative to connecting your TV up to your laptop and using it as a big screen, and they have made some UI innovations to reflect that – e.g. search is more video focused.

There is a good summary of what it is and what it isn’t on Search Engine Land.  For me the real kicker comes about half way down their post:

Will it replace cable TV?

This is an interesting question to consider and one that will take time to answer. Users won’t need a cable TV subscription (though they will need WiFi in the home) to access Google TV. So it’s at least possible that the web content and video, Netflix and Hulu that GTV offers via the internet could well substitute for a cable subscription.

For me this is one of the biggest questions facing the internet and TV worlds over the next couple of years.  If we see an unbundling of access and content subscriptions there will be massive implications for companies like Sky and Virgin in the UK and Comcast in the US.  And I think we will – because the consumer proposition is much better. 

The video below from Google does a good job at explaining some of the reasons why open web on the TV will be better – their main points are better interface (full search, faster access to your favourite shows) and more convenience (on demand is better than scheduled).  These are two great points, and ones that traditional pay TV companies will struggle to compete on – their businesses are built around channels and scheduled TV, and the UIs on their set top boxes are notoriously inflexible and hard to update (just think about how little innovation we’ve seen in this area – e.g. there is still no search).

Beyond the UI price could be an important driver, in theory at least. An unbundled model could (should?) turn out to be much more compelling from a price point of view.  Currently most of us take expensive bundles of content because it is the only way to get the one or two things we want – e.g. I pay for access to all of Sky Football just so I can get Chelsea – if that is unbundled and the middle man (pay TV company) is bypassed I could pay less and a greater amount could go to Chelsea.  That would be better for everyone in the value chain except the cable companies. 

Whether this pans out in practice, and how quickly depends on the appetite of rights holders to try and break free and the size of audience available on open platforms, as well as the effectiveness of the pay TV companies in fighting a rearguard action to preserve the status quo.  Tellingly with reference to this last point Google has so far refused to comment on pricing.

To close, it is worth remembering that a truly open web TV model doesn’t need anybody’s software running in the TV or set top box.  The logic above works just as well if the TV is operating as a monitor to a web connected PC (embedded or not).  It is better for Google if they can stick themselves in the middle, but maybe not better for everyone else. 

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