Google TV's Revenue Model -- or Lack of One

Google TV has fallen into a similar trap as other Google (Nasdaq: GOOG) products -- lack of a revenue model.

Google has met resistance from TV network providers as it attempts to gain support for its Google TV software. Most of the network owners suspect Google TV's model will encroach into their content.

Google TV allows people to search and watch cable, satellite and the web content through television or set-top boxes that incorporate its Google TV software.

The strategy to replicate its search-based revenue model on the TV platform will require Google to build strategic partnerships with TV, players and set-top box makers to support its software and would also need partnerships with TV networks to make its content more potent.

On the hardware front it has been able to rope in Logitech that will make set-top boxes for Google while Sony will make TV and Blu-ray players integrated with Google TV.

However, it faces a tough challenge from network TV broadcasters as they fear cannibalization of their content. WSJ reported that in recent weeks Google met officials of TV networks including ABC, CBS, Fox and NBC to garner support for its software. But it met resistance as broadcasters were skeptical about Google's revenue model, as the content hosted by Google will be directly competing with their content which is offered on subscription basis.

Google's strategy hinges on its ads-based revenue model. However, the success of this strategy depends on having a wider reach that can be fostered by an free content strategy, and thus the ensuing contradiction between the broadcaster revenue model and Google's.

The possible option before Google is a revenue sharing partnership with TV networks.

It's also possible that Google would be following its Android open-source strategy. Google TV is device-agnostic and can be placed on any device. Thus it is attempting to re-create the Android-based smartphone and tablet success, around its Google TV.

Also keeping its Google TV open-source can bring in a flurry of devices being manufactured around Google TV, which can create an alternative to TV, thus inducing networks to be on Google platform. Also in the process it can spawn a number of application makers who can add rich features to the product which a TV will not be able to replicate.

However, with competition from Apple TV, Netflix (Nasdaq: NFLX), and Amazon gaining strength, it's time Google figured out a way to churn revenue from Google TV.

International Business Times, The Global Business News Leader

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