Sunday, May 23, 2010

What the Fuss

In one of my favorite movies - 'High Fidelity' - there is a scene where the protagonist, Rob Gordon, asks his long time college girlfriend if she has any kids, to which she replies 'Oh no. I'm too young. Too single. Kids are too time-consuming, I guess, is the expression I'm looking for'. Rob then turns as if talking to the viewers, saying - 'I'm not making this up. This is how she talks... as if nobody ever had... a conversation about having kids in the entire history of the world'.

This is kind of how I felt about this week's announcement from Google about GoogleTV. (chuckle) excuse me Google, but, hmm... bringing web to the tv? That sounds all too well familiar, doesn't it? i mean.. can somebody tell me what is so uniquely different in that specific product?

Showing web content on the tv screen? Didn't Microsoft try that about at least 10 years ago? (and failed). Mixing cable tv content with web content? Right. But wait a minute - that has been part of Tivo 3 series at least 3 years old. A feed of OTT selected content on the tv screen maybe? But that is what Boxee does, isn't it? The fact this is Google? Yes. That is new, alright.

Has somebody ever thought how come that with all these Over The Top (OTT) on TV initiatives, at the end of the day, it always goes back to having YouTube and Pandora on your big TV screen? That might be nice or cool to some people (most of them already know how to connect their PC to the TV set) but we all believe that the real potential of OTT is with premium content. Don't we?

Well, yes, if by 'we' you mean the technology vendors and the VC industry that backs it up. Not so much though for the actual tv networks and content provides that see over 30Bn of annual affiliate fees paid by the TV operators. This is 30 billion good reasons not to bite that hand that feeds them. It's one thing to innovate with some new business models on your PC screen hoping to see some online advertising revenues. It's a different thing altogether to declare a direct assault on the operators at the living room battle field. Now you know why Hulu almost sued Boxee of allowing to access their content on the TV screen.

Don't get me wrong. I'm not saying Google is doomed to fail. Certainly, they have the skills, daring and deep pockets to solve some of the Internet tv today's impediments such as content discovery, user experience and ease of use. They could certainly compete with Operators by paying their own fees to secure content rights. But that last point is really the key one. OTT or not, the fundamentals don't change. It's all about content, content, content.

Broadband has merits as an alternative delivery vehicle. OTT certainly has some potential to (somewhat) disrupt the existing value chain. But only those companies that can secure the distribution of premium content could stand a chance to play in this game. So far, only two companies had some success in that - Netflix with their DVD and Instant Streaming distribution and Apple with iTunes. They are the ones who could and are posing a real threat to the incumbents of the living room.

If Google wants to be the third player it will have to try a little harder. So far, I haven't seen any evidence that this is the case.

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