Why Google TV Isn’t the Answer

By 05/25/2010
Why Google TV Isn’t the Answer

Google TV

Last Thursday Google launched its eponymous TV platform on stage at Google I/O. As is typical for announcements coming out of Mountain View these days, the coverage has been fast and furious. Based on its mobile device operating system, Android, and its standards based web browser, Chrome, Google’s television platform is a lot more than just an IP-enabled home entertainment system for your television — it’s Google’s foray into the $70+ billion (that’s billion with a B) television advertising market.

When you’re a company that already controls 69% of its primary market (online advertising), in order to expand, you must grow horizontally. And unless you’re an oil company, horizontal expansion often requires employing tactics that will ultimately lead to market shrinkage.

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Now, market shrinkage isn’t bad if you’re the one doing the shrinking — if you do it well (like Microsoft did in the encyclopedia business with Encarta in the early 90’s) you’ll walk away with a major piece of market-share. If executed poorly, you’re likely to burn through a lot of cash.

The Economy of Scarcity

Television is an economy of scarcity. Not so the internet.

It’s no secret that Google has done a phenomenal job of commoditizing online advertising inventory over the past decade (they’ve generated nearly an endless supply of it). This has had the net effect of driving down CPMs, CPCs, and CPAs across the board.

Back in 2008, when Google made its first foray into television advertising with Google AdSense for TV, the writing was on the wall: They were prepping for a full-scale attack on our living rooms. But they ran into a snag. AdSense for TV hasn’t been the run-away success they had hoped for.

Fast-forward two years — Google, in collaboration with electronics manufacturers like Sony, Intel, and Logitech, is reducing the friction by cutting out the the middle man (read ‘television networks’). Instead of selling advertising inventory on television, they’re planning to become the television. And in the process, they’ll once again be creating a nearly unlimited supply of inventory, driving down television advertising rates and flipping the economics of deficit financed television content upside down.

Battleground TV

The appeal of turning the 2.24 television sets per U.S. household (that’s 327 million televisions in the US alone!), and the nearly 4 billion television viewers worldwide, into a giant advertising network is hard to ignore. Pairing that will the possibility of carrying a transactional platform (Android Marketplace) onto those screens, and you appear to have an unbeatable combination.

But, Google TV’s major strength (and weakness) will be Google’s own addiction to methodology based content curation. If Google TV reigns supreme, television, much like the internet, will transform into a battleground of black and white hat SEO, duking it out over PageRank, trying to secure that coveted first page Google TV search result.

That’s a result that will inherently diminish the value of quality content. The combination of increased competition for eyeballs and advertising revenue spread out over a larger universe of content, all controlled by one company, will threaten the livelihood of professional content creators. For all of Google’s criticism of Apple’s closed iPhone platform, that’s precisely what they’re hoping to replicate on the television set.

That’s a future of entertainment I could live without. Luckily, in a world of endless choice, I can vote with my mouse. I’ll continue watching my television on the open web, where no single platform (browser, operating system, or company) will control access to the content I care most about watching.

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