How Big a Deal is Google TV?

Google TV, the company's initiative to ease viewing of Internet-delivered video on standard TVs, might bring to mind Apple TV, which Apple itself has described as 'a hobby,' which is to say, it has not enjoyed the success of other Apple products.

 

But Forrester Research (News - Alert) analyst James L. McQuivey, thinks it could be important. 'We believe that Google TV matters in a way that prior (failed) attempts to merge computing and TV viewing didn't,' he said. 

 

Some have asked why Google, which takes nearly $7 billion from search, cares about linear TV. The answwer is $70 billion in annual ad revenue. 

 

Plus, viewers spend as many as 4.5 hours a day with TV.1 If you're Google and you want to know where the next advertising dollars you'll appropriate are, you need look no further than the TV, McQuirvey said. 

 

'What matters here is the way these things will work together to create new TV experiences that consumers are likely to understand,' he said. For starters, Google TV assembles three pieces of a  previously incomplete puzzle, creating an ecosystem including display manufacturers, developers and a sizable customer base.

 

The new initiative also comes at a time when there might be a critical mass of potential users for the first time. Broadband now is between 66 percent and 70 percent, while in-home distribution networks might be in place at 33 percent of U.S. homes.

 

Plus, there's enough content online between Hulu, Netflix, and YouTube (News - Alert) to make it worth the bother of connecting the TV with a browser that can access all three services. The other elements now is a multi-vendor base of TV set providers that move beyond the brand-specific limitations of the past. 

 

HP's MediaSmart TVs, the Apple TV, and even TiVo (News - Alert) boxes of every flavor all depended on consumers choosing to adopt not only a new behavior but also a brand-specific relationship. That rarely works in consumer electronics. 

 

Google TV has demonstrated a clear commitment to an open, multimanufacturer platform, starting with Sony and Logitech (News - Alert); one can even consider DISH Network a manufacturer in this case, as it aims to put Google-TV-capable devices in people's homes, McQuirvey said. That could lead to a much-bigger installed base of compatible displays. 

 

Precisely because Google TV will be available through multiple manufacturers--in the case of Sony, one that sells millions of TVs each year--Google TV has a shot at reaching a million homes in year one and dramatically more than that in year two. 

 

Developers arguably are actually the most important ingredient. Once Google TV is in more than a million

homes, it will start to compete with other platforms for developer attention. 

 

Google TV can be added to any video device. TVs and Blu-ray players are the obvious places to start, but set-top boxes of any kind also could be adapted for Google TV. Game consoles like the PlayStation3 and the Wii might include Google TV features by summer 2011.

 

Android (News - Alert)-based mobile phones become obvious remote controls for Google TV as well. The future of TV

remote control is mobile-phone-based, and Google TV helps the entire industry take one giant

leap forward, he said.

 

A content-aware interactivity layer also is fundamental. One of the serious flaws with most connected-TV solutions is that they are completely oblivious to what you're watching on TV, whether that's over

the air, via satellite, or from your cable provider.

 

That means many of the most interesting interactive experiences you might want - IMDB results for the actress currently on the screen or more information about the Target ad you just saw - require you to fire up an app, type in your query, and wait for responses. Google TV could eliminate most of those chores. 

 

For Google TV, content awareness is achieved in one of two ways. In the case of DISH Network,

Google TV is built into the set-top box, which also controls the tuner and can communicate

programming information to Google's software. 

 

In the case of Logitech, the company's boxes circumvent the need for such tight technology integration by simply using its Harmony universal remote control technology to control the cable box, McQuirvey said. 

 

Either way, Google TV will 'know' what the user actually is watching at the moment, allowing for more contextual advertising, at the very least. 

 

But there still are key challenges. 'It's only natural that Internet-centric Google would mistakenly think that telling people they can now have the Web on their TVs is appealing,' McQuirvey said. But most people still are going to rely on linear TV shows and movies for the great bulk of their video consumption, and that's what Google TV needs to sell to the public to make this work.

 

Adding web content to traditional TV, not some 'merger of equals' is the stronger value proposition, he said. 

 

Most of all, Google TV is a play for a share of linear TV advertising, a business an order of magnitude bigger than Google's current business. Cable operators have been promising targeted advertising for a decade or more. Google TV has a shot at delivering. So Google TV isn't about 'TV' per se. It's about advertising.