GoogleTV generated buzz at CES this year, which should not be surprising given the market clout of Google and the rework needed to the tarnished image of GoogleTV. Most of us will agree that GoogleTV has failed to perform. Personally, with GoogleTV2.0 upgrades to my Logitech Revue, all of the personal and system settings were erased during the upgrade. How can something like that not be addressed in a system upgrade, especially given the black eye GoogleTV already has? Despite some major brands announcing GoogleTV initiatives (see footnotes at the end of the article), skepticism prevails on multiple fronts about GoogleTV’s ability to make its mark , rosy predictions from Google notwithstanding.
However, another scenario could play out to turn the tide on GoogleTV. This scenario has more to do with what Apple, its arch rival in some market segments, does than what Google does.
The Connected TV market is highly fragmented. Most TV manufacturers have built their own Connected TV platform and storefronts. This is to everyone’s detriment, and some have even proposed an idealistic but impractical approach for the television manufacturers to create a standard for Connected TVs. In other words, there is no unifying factor to this fragmentation of Connected TV platforms. While some of the major television manufacturers have announced plans to support GoogleTV, these television manufacturers are also pursuing their own Connected TV and applications platforms, in some cases based on Android, thereby making Google TV seem more of a hedge than a committed strategy for them.
Ironically, Apple’s next move in the television space may turn GoogleTV into the unifying force for Connected TVs, if indeed Apple does something as disruptive for televisions as it did for smart phones. The smart phone market went from a few competing platforms to an outright platform war. In such platform wars, there is typically room for only two to battle it out. What’s happening with PalmOS (RIP), Blackberry, or Symbian (RIP) in the context of iPhone and Android is evidence of this.
Should Apple create an AppleTV to the exclusion of traditional television set manufacturers (as it did for the smart phone), the best recourse for existing television manufacturers would be to rally behind GoogleTV as the logical contender to Apple’s forced disruption of the television market. However, if AppleTV includes the traditional television set manufacturers, this will most certainly be the final nail in the coffin of GoogleTV.
Steve Jobs is claimed to have said that the television set market was not attractive because of the slow upgrade cycles relative to mobile phones, for example. Could it be that his ‘cracking’ the television market had partly to do with a change in Apple’s philosophy of creating a licensable software platform rather than a device? With $160 billion at stake just in the US for television services without counting Internet advertising and services revenue, the business of television is far more lucrative on the services (and advertising) side than the device side. Should Apple pursue this prong – and thereby enable Apple services on third party devices, while letting the device manufacturers create the presence of AppleTV devices it will certainly eliminate GoogleTV from the equation. Apple’s ability to disrupt the market while also creating new opportunities for Connected TV devices through the strength of its brand and its services ecosystem would be ignored by television manufacturers at their own peril. However, should Apple decide to build a closed platform as it is historically inclined to do, it will give GoogleTV a shot in the arm.
This may be yet another reason to tingle with anticipation on what Apple has in store with the next version of Apple TV.
From the Las Vegas Strip to your living room: Google TV partners at CES
Google TV Rebounds with New Chipset Partners and Devices
Online Video Industry Fragmentation – Creating Opportunities Within the Industry
Online video has experienced the Big-Bang, and as this universe expands, fragmentation ensues. The fragmentation of the online video ecosystem was prominently discussed recently at OTTCON in Santa Clara. We have lived through the somewhat recent Apple vs. Flash fracas as consumers, but if one is a programmer or content service provider, the permutations of options to cater to – across formats, containers, DRMs, devices, protocols, and operating systems is mind boggling. Addressing this fragmentation is, therefore, becoming a business in itself. Nowhere is this fragmentation more obvious than on the device front. Netflix by some measures currently supports a growing ecosystem of more than 400 devices. Brightcove presented a promo video that touts solutions to device fragmentation as a selling point.
While standards may seem a holy grail to address such fragmentation – and many such articles have crossed my desktop over the past couple of years, particularly in the context of emerging SmartTVs – a look at HTML 5 is a good reality check. While HTML 5 allows native browser play back of video, multiple video format options currently exist within HTML5, thereby requiring support for different formats by programmers. Similarly, in the Android ecosystem, more than 300 different devices need to be supported across different versions of Android.
While for some, like Brightcove, this has created new business opportunities, for some other core, essential technology segments of our industry, this has caused a business revival. I have spent a part of my career dealing with the nuts and bolts of the video business, such as codecs, encoding, and formats. These are essential parts of the value chain that are technology intensive, tough businesses. A few examples to illustrate how some of these segments are benefiting:
A couple years ago, an encoder company was weighing its options about continuing to run on fumes or shutter the business. Historically, the encoder business had not been one to stand on its own. In the early days of online media, Microsoft gave its encoders away and Real Networks could barely charge for theirs. I suggested to this encoder company to continue as the aura of the golden age of video that we’re in was about to reach new industry segments. Business grew and this company was recently acquired by a vertically integrated player, providing a good exit for a company that did not seem viable a few years earlier.
This outcome was driven by the urgency of publishers to address fragmentation creating a requirement for fast, efficient, cost effective, and flexible encoding solutions. There are at least two or three similar examples within the encoder market itself.
The folks from another rising star in the encoding segment told me that they are at revenue of $25 million after 3-4 years in business. While this does not seem much in comparison to the revenues of Internet services companies and startups in other segments, it dwarfs the revenues of what was once among the most pioneering and well known codec and encoder company, and my former employer, On2 Technologies. After 15 years of gravity bound and rather unpredictable revenues during which the company never achieved profitability, On2 sold to Google in early 2010 in what I think was a misstep at a time when the fragmentation within the industry would have been very kind to them.
A few other companies that I have spoken to in the codec and encoder space consider this fragmentation the biggest boon they could expect. This is creating a pressing market demand or pull in what is otherwise a segment where technologies are generally pushed out and take a while to gain adoption.
Given that many such segments toil in the dark but are yet the critical life blood of the industry, the challenges of the expanding fragmented universe of our industry are creating well deserved opportunities.