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Google TV Gets Snubbed

By Rick Munarriz - Updated Apr 6, 2017 at 12:06PM

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Television networks aren't exactly warming up to Google TV.

What if Google (Nasdaq: GOOG) threw a media party and nobody came?

This morning's Wall Street Journal details how the world's leading search engine is bumping up against some serious resistance from media giants in its plan to converge television with online video. It's a serious problem that can kill Google TV before it even has a chance to get off the ground.

Google had no problem lining up A-list partners on the hardware end. Intel (Nasdaq: INTC) is making the chips that will power Google's interactive interface. Sony (NYSE: SNE) is cranking out high-def TVs with the Web-savvy software pre-installed. Logitech (Nasdaq: LOGI) is making set-top boxes for those who don't want to pay up for a new Sony television. Consumer electronics giant Best Buy (NYSE: BBY) has agreed to stock the enhanced TVs and Logitech's boxes.

However, this amounts to merely party hats, a pretty banner, and potently spiked punch that will go unconsumed if Google can't get the major networks to RSVP to the convergence bash.

At its core, Google TV aims to revolutionize the way we vegetate on the sofa. Instead of merely waiting for a favorite show to come on, the platform can scour the Web to find previous episodes, clips, and related content that is available to stream right away. It's a lot like TiVo (Nasdaq: TIVO), only cooler, more fluid, and without the need for any kind of prep work to load up a hard drive with content before ripping open the potato chip bag.

Google has been meeting with all of the leading networks in recent weeks to get them to play along. They're the legal content owners, and their websites are the obvious places to look for past episodes. If they don't like Google TV, they can simply block the devices from accessing their streams. In short, Google needs everybody -- or at least nearly everybody -- to make this work.

Unfortunately, there are many reasons why the leading broadcasters may want to booby trap the boob tube for Google's purposes.

  • Networks offer streams as a convenience for those who missed a show the first time around. Monetization is minimal, and networks have to foot the bandwidth if the feeds originate from their sites. Google TV would pit those streams against live programming complete with a full slate of advertisers. Why trade down the monetization ladder?

  • Local affiliates are already bellyaching over streaming through network websites. Those cries will only get louder as Google encourages viewers to surf away from live broadcasts.

  • Google owns YouTube, the world's largest video-sharing site. As the only content partner that Google can truly count on, networks can't be happy that more clips will be playing in home theaters instead of studio programming.

In short, networks are used to being the traffic cops of televised entertainment. Google TV hands the whistle, gloves, and flow sign to the viewer -- with Google dredging out new roadways to explore on the fly.

Why did Google think that the networks would sheepishly play along? Clearly, concessions will have to be made. Thankfully, Big G is a master of monetization. Google is also cash-rich, with more than $30 billion in the bank, but it's not going to crack open the vault for a product that may flop.

If Google TV is going to be everything that it can be, a lot of handshaking needs to be going on.

Will Google TV be a hit or a dud? Share your thoughts in the comments box below.

Google and Intel are Motley Fool Inside Value recommendations. Google is a Motley Fool Rule Breakers pick. Apple and are Motley Fool Stock Advisor selections. Logitech International SA is a Motley Fool Hidden Gems choice. The Fool owns shares of and has written puts on Intel. Motley Fool Options has recommended buying calls on Intel. Motley Fool Options has recommended writing covered calls on Logitech International SA. The Fool owns shares of Google and Logitech International SA. Try any of our Foolish newsletters today, free for 30 days

Longtime Fool contributor Rick Munarriz is considering a Google TV set-top purchase, but only if it truly changes everything. He does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy, and it knows that roaming charges weren't billed in one day.

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Stocks Mentioned

Alphabet Inc. Stock Quote
Alphabet Inc.
$121.68 (2.39%) $2.84
Best Buy Co., Inc. Stock Quote
Best Buy Co., Inc.
$80.30 (-0.15%) $0.12
Intel Corporation Stock Quote
Intel Corporation
$36.11 (1.46%) $0.52
Sony Corporation Stock Quote
Sony Corporation
$86.80 (1.14%) $0.98
TiVo Corporation Stock Quote
TiVo Corporation
Logitech International SA Stock Quote
Logitech International SA
$59.13 (1.97%) $1.14

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