Wednesday, August 18, 2010, 6:35 PM ET|Posted by Will RichmondReading this morning's WSJ story, "Google TV Is a Tough Sell Among Would-Be Partners," you get the impression that broadcast TV networks are viewing Google TV as a potential disruptor of their business models. While the networks should take time to fully understand Google's new product, plus assess additional work being asked of them (e.g. enhanced metadata) and how their programs will be incorporated in Google TV's UI, on the whole, broadcast TV networks should view Google TV as beneficial, not disruptive, to their digital distribution efforts.
Broadcast networks are right to be concerned about what effect viewing on any new digital device will have on their on-air business models. I've written often about my concern that the networks' web sites and Hulu's "ad-lite" approach was threatening to their on-air economics. However, more recently the networks (and likely Hulu) have been increasing their digital ad loads. ABC for one has said that digital delivery profitability is already on a par with "DVR economics" (accounting for ad-skipping by DVR households), and more ads will only further enhance digital's ROI. Certainly ABC's decision to make its programs available on the iPad is evidence that proper monetization, along with a coherent windowing approach, can yield incremental views and profits from distribution to new devices.
Google TV should be considered in the same light - a retail device that aims to enhance the viewing experience and create additional views, engagement and revenue for content that is optimized for it. Free, ad-based content relies on reaching the widest possible audiences to succeed. Once a network has decided to make its programs freely available online, it shouldn't create artificial barriers to access, as Hulu has done with boxee and Kylo (though in those cases Hulu was saving on-TV viewing only for future paying Hulu Plus subscribers). While the WSJ reports that some networks are considering blocking Google TV access, it's hard to imagine how that would be productive to their digital goals.
For better or worse, broadcast networks are free of cable's concerns about possible cord-cutting. Rather, they should be mindful that if they rebuff Google TV and others, they run the risk of Google putting its considerable marketing muscle behind upstart independent producers looking for a toe-hold on TV, thereby further increasing audience fragmentation. A savvier approach would be to take a cue from Cox, the 3rd-largest cable operator, which announced a deal with TiVo last week, creatively capturing value from online video offerings alongside its own VOD lineup.
Bottom line: broadcast networks should be looking for ways to embrace Google TV, not to rebuff it.
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