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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, {complink 2294|Google}.

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.

13 comments on “Axis of Distrust: Internet, Google & TV, Part 1

  1. prabhakar_deosthali
    August 29, 2011

    The biggest push the internet TV will get over conventional TV is that it will be interactive. For reality shows this interactive medium will bring in more at home participants and increase the ratings of such shows to such an extent that the regular soaps will bite the dust. And with 3D TV technology combined with Internet TV content the things are going to be more exciting.

  2. Tim Votapka
    August 29, 2011

    Viewer controlled content is a fascinating concept. I certainly hope it leads to higher quality standards and not simply mediocrity replicated.

  3. Anna Young
    August 29, 2011

    @ Prabhakar, sounds exciting. Google TV to integrate applications and internet browsing directly into your Television set is certainly another step further in innovation.

    However, will it increase ratings for reality shows? Maybe, as it gives viewers control at a single click of the button. Will it decrease the number of viewers on conventional TV programme? This is one of the concerns raised by broadcasters in the UK. We just have to wait and see I think.

  4. Himanshugupta
    August 29, 2011

    Anna, do u know what will be the business model that google will use and how will it fair against the current pay and view model. We all hate long advertisement/commercial breaks during our favorite shows. Will there be any other revenue stream or all the content will be paid content? 

    I know that companies are working on hardware/softwares to integrate the capabilities of internet into TV. Is google working on any hardware company?

  5. JADEN
    August 29, 2011

    I have seen the Google TV, it is all about giving users the ability to find the content they want across a wide variety of mediums including broadcast TV, Youtube and anywhere on the Internet. With a built-in web browser, also pushing the concept of web browsing on the television, that would enable viewers to quickly pull up Web content on TV, including photos, video and music, using an on-screen search box like the one on its website.  Its really shows the power of technology.

  6. Anna Young
    August 29, 2011

    @Himanshugupta, Google intends to introduce a different revenue model for Internet TV. Eric Schmidt, the chairman, said the company is not advocating free TV because this will hurt broadcasters. Of course, Google has to take this approach because major networks in the United States did not embrace Google TV, which hurt the service. I assume Google has to take baby steps in the UK first and then transition to a mass-market model once it gets broadcasters onboard.

  7. Daniel
    August 30, 2011

    Ann, I think Google is diversifying their business model. Starting with search engine and local host services, they had diversified to different Google apps, labs, maps, street view etc. Then internet browser, chrome and android OS, recently they stepped in to mobile business by acquiring Mortolla. Some time back, they had a plan for Google mobile also, but dropped. Now they have a plan for entering to TV broadcasting area too. Really they are doing a good business.

  8. Mr. Roques
    August 30, 2011

    Hello, I have a question… they are not going into the production of any content or are they? Are they simply looking forward to create the platform for TV channels to broadcast their own content? … TV has always seemed a good choice for Google since they are in the Ad business and what's bigger than TV? (only the internet and that's only after they took over it).

  9. electronics862
    August 30, 2011

    I think with the internet TV the users can share their ideas in no time and can exchange their thoughts. In these days the number of people who uses the conventional TVs are going down due to interent if we combine them together its a huge transition that we bring.

  10. Anna Young
    August 30, 2011

    @ Mr. Roques, Google's aim is to provide the software platform. While its partners such as Napster, Vevo and Pandora will hopefully provide large amount of content. As you may be aware, Internet connected applications form a central part of Google TV.

  11. Ms. Daisy
    August 30, 2011

    @Jacob, It is good to hear all these technological expansion and diversification that Google has embarked on. Do you feel this is part of a strategic plan in their acquicision of Motoral Mobile?

  12. Himanshugupta
    August 31, 2011

    @Anna, sometime back i read a business model where viewers either had to pay for ad free content or had to embrace ad during the content. The common practice right now is to have a minimum subscription per month for viewer and then the rest of the revenue is generated through ads. I hope Google could come up with a smarter and ad-free content viewing.

  13. Mr. Roques
    September 30, 2011

    Well, yes, I think YouTube is their biggest asset for their TV business. They create the TV but I doubt they get in it only for the hardware sales, they want to take over the TV ads as well (or even more so). How? Still not sure.

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