Can Google's Online TV Kill Cable?
The Internet is coming for your TV.
Google is in discussions to create an online-television service, the Wall Street Journal reports. While they face roadblocks, Google and other technology companies' efforts to marry Internet with TV represent a telling shift in the Web's increasing role as the backbone of our communications networks.
The idea: Let users stream live channels and on-demand shows on their TVs -- just by connecting to the Internet. This combines the traditional TV packages of cable and satellite companies with the newer model of Netflix, Hulu and Amazon.com.
Google's rivals are also looking to leverage Internet on the TV set. Intel plans to launch a so-called over-the-top TV service before the end of the year. Apple is adding content to Apple TV and developing ad-skipping technology. Small cable company Cox Communications recently started selling a trial bundle of almost 100 channels to customers in Orange County, California who have broadband but not cable TV.
Accessing Internet on a TV is already common: About 44 percent of U.S. households have a TV set connected to the Internet, either through a video-game console, Blu-ray player or streaming device, up from 38 percent a year ago, Bloomberg News reports. (Google already offers Google TV, a software platform that lets users watch online videos on their TVs.)
And watching videos online is the biggest use of Internet traffic in North America. Netflix accounts for about one third of peak-period downstream traffic on broadband networks, according to a recent study from Sandvine Intelligent Broadband Networks. YouTube, which Google owns, accounts for 17.1 percent, up from 13.8 percent a year ago.
Just don't cancel your cable subscription yet. Google had discussions with media companies about a similar service about two years ago, without luck, and it's not clear how far along plans are today, or when it would launch. There's no guarantee Google could get the licensing deals it would need to put together a service that could compete with cable and satellite providers. Media companies might be reluctant to upset existing contracts in favor of a new online service and are generally more likely to give the best prices to providers with large numbers of subscribers.
Can Google and others compete against the Time Warners in terms of price and content? Not immediately, but news they are trying is a warning that TV providers are going to have to be more innovative about how they adapt to the Web.
This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.