Google TV Will Have to Use Ads to Subsidize Cost
Posted on 08. Apr, 2010 by Daniel Cawrey in Features
It seemed a bit surprising to hear that Google would team up with Intel to release a set-top box, in a project that is being dubbed as Google TV. The reason being is that using Intel chips in a box for television is going to be costly, despite the fact that the operating system running the box (Android or Chrome OS) would be free in terms of licensing costs.
Panasonic, which had announced in 2008 that they would partner with Google to integrate their solution into their TVs right out of the box, has decided that such a solution would indeed prove too costly. Samsung is another company declining any such partnership, instead making the choice to develop an alternative internet TV solution in-house.
It makes one start to wonder how much this set-top box is going to cost. Sure, Sony is game, but they are known to have the highest-end televisions on the market – and they plan on putting the Google platform inside of their TVs. For them, there is little for them to lose if they get involved in the partnership. Plus, they would benefit by having some of their products with Google TV built in as opposed to the set top box model.
The only service provider that has come forward with support for Google TV is DISH Network. There’s relatively little surprise to that move, since DISH plays the role of the underdog, a la T-Mobile for wireless, in the TV market. Problem is, with competition high in this space, it’s going to be a tough sell to get Google set-top boxes in people’s homes without taking a loss on doing so because of the expected price.
So look for Google to make a deal with DISH akin to what it has done for wireless carriers: give up a cut of advertising revenue. Google heading down the path of allowing anyone who wants the capability to put TV ads on a variety of channels, and this combined with search advertising could bring a windfall of profits to both Google and cable/satellite companies. If the only challenge is to get expensive devices into homes that allow this, I don’t see Google or the service providers balking at the cost as long as there are solid revenue expectations down the line.
Just as long as it improves the user experience, overall it will be good to have Google in the television market.
