New Players Topple Walls between Web and TV

What you should know about Google as a cable operator, Hulu’s move to original programming, the Huffington Post’s web streaming, and Amazon as a content creator

Debates about television’s future often highlight two very polarized views: The “death of television” versus numbers that show that  number of hours spent in front of the TV are still dominating although TV transmission modes are shifting to enable TV viewing on connected devices.

The truth, it seems, may be  more complex than just “TV death vs.TV alive”.  As Kevin Reilly, president of Entertainment for Fox Broadcasting, puts it:

“The future isn’t either traditional (TV) or digital (internet); it’s a feedback loop between the two.”

With that in mind, we’ll examine four recent stories from the perspective of the “new players” in content production and distribution. We’ll also try to show the potential role these groups may play in revamping the television model.

Google enters cable business with new Google Fiber service

Web giant Google said July 26 that it’s moving into television and internet distribution with Google Fiber. It will be available first to Kansas City then expanded to other US cities. A 1 Gbps package – 50 times faster than the average high-speed connection in the US – is being offered for $70 a month. A $300 installation fee is waived for subscribers signing up for one year or more.

The main competition is much less attractive. Verizon’s fastest speed is 305 Mbps and costs $200 a month. Xfinity, with the same bandwidth speed as Verizon, charges $300. And Comcast’s best is 20 Mbps at $70 a month – the same price as Google except one-fiftieth the speed.

A television/internet combo package is also available from Google for $120 a month. TV subscribers receive a free Nexus 7 tablet as a remote along with 2 TB of PVR storage. (Television stations will also be available on iPads and Android tablets via the Google Fiber TV application.)

For households that can’t afford internet service at standard rates Google is offering free internet to subscribers “en route” to fiber-optics. Download and upload speeds, though, are just 5 Mbps and 1 Mbps respectively. Also, the $300 installation fee still applies. It can be paid back on a monthly basis. Google Fiber also offers free access for schools, community centres, government buildings, and libraries that request it.

Why it matters: Google has massive financial resources (according to its CFO Patrick Pichette, who spoke recently at C2MTL, the company has liquidity reserves of some US$25 billion). That means, after gaining a significant presence across the US, it will most certainly change cable market competition practices, especially with ultra-high-speed bandwidth at the price of regular speed service.

Also, Google’s free internet initiative for low-income households may allow it, over the medium to long term, to “connect” the entire US – and perhaps other territories along with it (Canada?). That could bring its many services into homes that until now have had no internet.

Another factor is YouTube’s recent announcement that it’s investing another $200 million to promote its own original content channels. That would give Google major advantages with a unified technological infrastructure, considerable financial means and proprietary content.


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