Here's Why Google Really Dropped the Chromecast Netflix Promo

Well, that was fast.

Just one day after launching its new Chromecast device, Google (NASDAQ: GOOGL  ) has already pulled the promotion for three free months of Netflix  (NASDAQ: NFLX  ) streaming offered to early buyers.

The reason? Here's the statement Google gave to the L.A. Times Thursday: "Due to overwhelming demand for Chromecast devices since launch, the 3-month Netflix promotion (which was available in limited quantities) is no longer available."

Sounds simple enough. To Google's credit, there was a "While supplies last" stipulation below every mention of the deal, and the offer was good for both new and current Netflix streaming subscribers. For those of you keeping track, remember Netflix's total streaming subscriber base currently stands at a whopping 39.55 million people, so it's no surprise so many people jumped on the deal when you consider the $35 device ultimately had a real cost of around $11 when you include the free Netflix subscription. 

Here's why Google really did it
The thing is, Google's not stupid, and I think they knew exactly what they were getting into by offering -- then quickly dropping -- this deal.

As I wrote yesterday, Google had to know their cheaper device would immediately draw comparisons to Apple's (NASDAQ: AAPL  ) own $99 solution in Apple TV. In addition, as it stands, Apple TV is admittedly the more comprehensive product as it not only has access to a broader array of web-based content, but also can display content stored locally on Apple iOS-driven gadgets like the iPhone and iPad.

Meanwhile, Chromecast is currently limited to just displaying web content from Netflix, YouTube, Google Play and Chrome, and can't (currently) send your device's locally stored pictures and videos over to your TV. Of course, that also means the battery drain on your device isn't as substantial, but it still represents reduced flexibility nonetheless.

And that's exactly why Google needed to draw as much attention to Chromecast as possible in the first place. Heck, it was already cheap at $35, anyway, but throwing in the almost-ludicrous Netflix deal made it simply irresistible to millions upon millions of people.

What now?
So now that Chromecast has everybody's attention, will most of the people who missed out on the deal still buy it?

I think so, and you can bet Google does, too.

In fact, I'm sure I'm not alone in kicking myself for not purchasing Chromecast yesterday when I had the chance. Sure, missing out on those three free months of Netflix will cost everybody an extra $24 from now on, but Chromecast's price is already so low it invokes an unmistakable "What do I have to lose?" mentality, anyway.

And while Netflix is surely happy to go along for the ride, Google, for its part, has everything to gain from Chromecast, which serves to broaden consumers' exposure to three of its flagship products and services in YouTube, Google Play, and the Chrome browser.

Well played, Google. Well played.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 26, 2013, at 7:34 PM, jrogowsk wrote:

    Classic bait and switch. Remember, with Google you are the product.

  • Report this Comment On July 26, 2013, at 8:12 PM, Jeagr209 wrote:

    Google is just immoral in general, and I am slowly moving away from all of their products. At this point, I am no longer surprised...

  • Report this Comment On July 26, 2013, at 9:57 PM, ScottAtlanta wrote:

    Yeah....sleep in the arms of Apple...as they pick your pockets. lol

  • Report this Comment On July 26, 2013, at 10:10 PM, spakklal wrote:

    Google had to find a cheap way to get publicity. A line from a video at the recent WWDC: “If everyone is busy making everything, how can anyone perfect anything?”

    This is obviously directed at google more than any other company.

    Google: Tough times ahead

    Google was the most affected by the recent increase in mobile-based search queries and the consequent decline in web-based search queries. This is because web pages contain a higher number of ads when compared to mobile-targeted pages.

    A search engine update is expected soon, following the FTC’s warning to make paid ads that come on top of natural search results more prominent and distinguished. Google is way ahead of its competitors in terms of search volume, and, hence, might not seem to be too bothered about the FTC’s warning; however, there are many other issues that add up to the company’s concerns.

    Google recently acquired device maker Motorola, which has been witnessing widening losses in recent days. The company has also been witnessing a fall in its ad prices. This came as a surprise foranalysts who were expecting an increase in ad prices following the recent changes in the company’s advertising system. The changes were expected to save the industry from what could be an industry shift from web advertising to mobile based advertising in the future.

    The company is maintaining a price to earnings ratio of 26, which means that Google has a lot of homework to do or else we could see a sharp decline in its share value, which is at an all time high.

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