Axis of Distrust: Internet, Google & TV, Part 1

The Internet isn't making change faster; it has become an engine of change. It has recast the way we communicate. It has transformed the way we learn and share knowledge. It's empowering people everywhere, making the world more open, fairer, and more prosperous. — Eric Schmidt, Chairman, Google (Nasdaq: GOOG).

The UK is abuzz over the intentions of another American powerhouse. Google, after dominating the world of search engines, is now aiming its guns at a British crown jewel: TV. Please don't think this has nothing to do with the electronics industry, because your company is probably involved. Electronics OEMs and their suppliers, contractors, and third-party services vendors are making the components, assembling the products, designing the software, or shipping the devices that Google and its rivals will use to wrap their tentacles around TV-over-Internet.

That's the view from over here in the UK, and after watching Google chairman Eric Schmidt give the keynote MacTaggart Lecture at the 2011 Edinburgh TV Festival, many in the local press and in the broadcasting world, from BBC to SkyTV, were wondering how they will fare in the future when matched against the world's biggest Internet search provider. Google is launching its Google TV service next year in the UK to provide "an open platform for the next generation of TV," according to Schmidt. (Click here for the full text of his speech.)

Rather than focus on the angst of UK's broadcasters, whose knees are knocking together in trepidation at the prospect of increased competition for viewers' eyeballs and wallets, I prefer -- for the purpose of EBN readers -- to focus instead on certain critical issues highlighted by Schmidt. These include his expectations for how the Internet will dramatically alter the TV landscape, the role of technology in that evolution, and how companies like Google and Apple are providing the spark behind that change. The electronics industry, I should point out, is fostering that change, benefiting from it, and being disrupted by it.

Before expounding further, I should note the great distrust Google itself is facing from broadcasters that seem to believe it's making a foray into TV to better mine customers data, weave TV usage with Internet search, disrupt/destroy current business models, and -- as it did in the advertising world -- rake off the cream of profits enjoyed by the industry. Meanwhile, Google, according to Schmidt, does not want to destroy the TV industry but aims to bring it to the next century.

I will expand on how Schmidt sees TV benefiting from the growth of the Internet in the second part of this blog, but the points he emphasized, including interactivity, customer segmentation, and the potentials for higher sales based on personalization are all areas of interest and trepidation for the industry. TV viewership, Schmidt said, is going online, and the entire industry should embrace this and seek ways to both accelerate and benefit from the trend. Here's how Schmidt puts it:

Technologically, the Internet is a platform for things that traditional TV cannot support. It makes TV more personal, more participative, more pertinent. People are clamouring for it, nowhere more so than in the UK...

But more choice is just the beginning, and can backfire if you're not careful. Just remember how it felt in the old days of renting videos. Face-to-face with thousands of movies, picking just one to take home was always a struggle.

That's why a system for recommending content is so vital...

But traditional scheduling is one size fits all. Sometimes their recommendations suit me, but just as often not...

Online -- for those who wish it and grant permission -- things could be vastly different. Online, through a combination of algorithms and editorial nudges, suggestions could be individually crafted to suit your interests and needs. The more you watch and share, the more chances the system has to learn, and the better its predictions get.

In my next blog, I will highlight the advantages and challenges Schmidt sees as TV content becomes available over the Web and as viewers contribute to the creation and development of content.