Google TV's timing could be terrible

Still a mostly amorphous product, it will face long odds trying to break through a bunch of well-entrenched players.

By Jonathan Berr Jul 18, 2013 8:15AM
The Google logo is seen on a podium and projected on a screen at Google headquarters in Mountain View, Calif. (Paul Sakuma/AP) Google (GOOG) CEO Larry Page should be proud of his public relations department for getting The Wall Street Journal to write a story about the search engine's interest in launching a new pay-TV service without really explaining much about it.

Indeed, the story says "Google has recently approached media companies about licensing their content" without saying whether or not the kings of content had any interest in playing ball with the Mountain View, Calif., search giant. "Recently" in this case means "in recent months," which in today's fast-moving media environment might as well have been a billion years ago. That's a problem for Google.

Apple (AAPL), Intel (INTC) and Sony (SNE) are in various stages of developing their own pay-TV service and have met varying degrees of resistance from established media companies.

That reluctance is understandable because those companies would rather deal with the devil they know (established TV networks and Netflix (NFLX)) than the devil they don't. Moreover, the timing of The Journal story is strange.

Last week, Disney (DIS), Comcast's (CMCSA) NBCUniversal and 21st Century Fox (FOXA) called off a planned sale of streaming-TV service Hulu and decided to invest $750 million in the business. Given this decision, it seems likely these companies would be more interesting in bolstering Hulu rather than cutting any breaks for Google or any other new entrant.

Then there are the practical considerations. As The Journal noted, Google would probably have to accept bundles combining both popular and less popular channels to get decent rates, which would make differentiating its service from cable and satellite companies more difficult. 

Plus, Google has been trying to develop this type of service for years. It hasn't gotten very far, and odds are slim that its luck has changed.

For one thing, the incumbent players already have huge advantages because of their size that would present formidable challenges to any newcomer, even Google. For instance, Comcast, the largest cable company, had 21.9 million video customers as of the last quarter. A potential merger of DirecTV (DTV) and Dish Network (DISH) being pushed by Liberty Media's John Malone would create a satellite TV colossus with 34 million customers. And Netflix reported about 28 million domestic subscribers for its domestic streaming service as of the first quarter.

Google's pay-TV service may be like its driverless car: nice in theory but something investors shouldn't believe in until they actually see it.

Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.


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