There are all these buckets we try to sort video consumption into that don’t make any sense anymore. Forward-looking financial projections are practically meaningless given the jarring speed by which new electronic devices are flooding the consumer marketplace. Partnerships, formed to target television, seem to be forged overnight. For instance Google, putting its hooks inside the manufacturing arm of Sony, today has a strong partner helping get Google Chrome into the living room.
I have to scratch my head as I sit in front of my 27″ iMac when I hear industry analysts say consumers don’t want to use the Internet on TV. My iMac, for all practical purposes, is a TV! One report stated that consumers don’t find value in having their televisions connected to the Internet. This might be true today, but devices first need to get sold and installed prior to consumers getting hooked on an application market. Google, in my opinion, is going to invest heavily in getting the Chrome browser onto nearly every television set, even without the cooperation of the broadcast networks.
Typically, when the topic of Internet disruption comes up, there is a lot of doom and gloom around the notion that local broadcasters are going to fall first. There is no denying that the future will be a device- and screen-centric world all pulling data from a cloud. But the definition of a cloud, to me, could be anything — it isn’t limited to the Internet. It could be a cable company’s data center, Internet provider, spectrum, or a DBS satellite downlink. Let’s not fool ourselves, consumers are sophisticated enough now that they will seek out devices for specific purposes tied to any appropriate cloud.
Google TV’s roadblock by ABC, CBS, and NBC (who all encrypted their content) makes for great gamesmanship. We all know that devices, including Google TV, are here to support some level of cloud viewership. Those in doubt should visit Best Buy and walk the rows of Internet-enabled devices. The big battles around content ownership across all platforms finally seem to be upon us. For many of the interactive television providers this might be an important catalyst to ignite a long-simmering market.
As a byproduct of cloud computing, the long-term value, and purpose, of software has changed dramatically these past couple of years. Today you can get many programs for free or at low cost on the Internet. Consumers are able to bookmark into their browser bar (like Google Chrome) all sorts of free programs — from Mint.com, Google Apps, Xfinity, Netflix, RunKeeper, to Linked In. These programs, many replacing Microsoft products, have become little silos of information in themselves, with the user’s attention focused on a very narrow output per application.
I imagine the financial strength of Google AdWords will be weakened by all this cloud-based software over time. These applications probably find little financial reward from adding text ads into their user interfaces. As the application market continues to splinter this can’t be good for Google’s bread and butter search business. This is why I think Google TV is so important, as it provides Google with access to an untapped major revenue source. No surprise, then, that Nielsen Media Research plans to bring GRPs to Internet measurement.
When I think about the biggest challenge facing the TV industry I think about a scene from “Raiders of the Lost Ark.” It’s where Harrison Ford tries to steal the Golden Idol by swapping it with that bag of sand on that booby-trapped pillar. It’s as if that bag of sand represents the technical process of upgrading the “cash registers” (inside the broadcast origination centers) that keep commercial insertions happening and advertiser invoices humming along.
The entrenched positions of these billing systems — which should be upgraded for interactive (lean- forward) technologies — for me are at the crux of why the industry has so much apprehension moving beyond pure audience ratings. With billings rising across the board for television, “if ain’t broke, don’t fix it” might be the logical response to delaying critical innovation during this lucrative election season.
Google TV, however, needs television content for its future more than TV needs Google. This idea that there is some difference between Internet and multichannel providers is dated. The flare-up among Google and the major three networks proves the battle for content just got real. Everything is up for grabs. May the best user interface win. Those broadcasters (and cablers) that swallow the bitter pill, while times are good, and figure out how to upgrade their billing systems, will be positioned correctly as TV turns toward a “lean forward” mode.
Michael Kokernak is the CEO and President of Across Platforms, Inc. Across Platforms, Inc. is a multiscreen technologies consulting firm. Kokernak has written about mobile DTV and the competitive landscape of broadcast TV. Michael is also the founder, and past CEO, of Backchannelmedia. He can be reached at [email protected]