by Josh Bernoff
Nearly all the coverage of Google's proposed $12.5 billion acquisition of Motorola Mobility concentrates on two things: the patents Google is acquiring and Google's taking over a major mobile phone maker. But this is a multi-device play, as Charlie Golvin points out. Don't ignore Motorola Mobility's second huge business -- it's one of the largest suppliers of set-top boxes for the cable industry.
The Internet is on a majority of the mobile phones now shipping. Why isn't it on all our TVs already? As Wired points out, Steve Jobs is on point here when he talks about why Apple TV didn't catch fire:
The problem with innovation in the television industry is the go-to-market strategy. The television industry has a subsidized model that gives everyone a set-top box for free, or for $10 per month. That pretty much squashes any opportunity for innovation, because nobody’s willing to buy a set top box. Ask TiVo, ask Roku, ask us [Apple]. Ask Google in a few months.
The only way that’s ever going to change is if you can really go back to square one, tear up the set top box, redesign it from scratch with a consistent UI across all these different functions, and get it to consumers in a way that they’re willing to pay for it. And right now there’s no way to do that.
So how do you get the Net onto your TV? How about through one of the world's biggest suppliers of set-top boxes, Motorola Mobility?
Assume this merger gets approved. Here are some things that could happen:
- Comcast becomes Google's largest customer. They work together on a TV gateway device/software that includes broadcast, interactive TV, on-demand content, and of-course, streamed Internet content. Google's search competency and other assets (ad sales, YouTube, ...) are at the center of this deal.
- The program guide on your set top box becomes a guide to any video, anywhere. And it generates revenue for the operators as well as Google -- every click generates a payment from the content owner.
- Television networks' deals with the cable and telcos become deals for broadcast, VOD, streaming from cable servers, streaming from Hulu, streaming from their own servers -- basically, universal content distribution deals. Television networks transition to their future role as bankers, promoters, and aggregators of video content, not so much broadcasters.
- Google becomes the brand name for your program guide to entertainment, regardless of whether that guide is on your TV or on your PC.
- Google Plus gets built into your TV experience. You can +1 a TV program. Isn't that what Spark is supposed to be?
Basically, Google could make more money from Motorola as an entree into the television world -- ongoing revenues and advertising -- than it can from continuing to push Moto set top boxes. And this new source of ad revenues and retention of viewers could make this attractive to many of the cable operators.
Some people who know the cable and television industry think this is a long shot. The set top boxes that could do this may cost too much, the cable operators may be afraid of Google, or there may not be enough money to be made from the ads. Fair enough. But watch this space. The TV set is too big a screen for Google to ignore, and it just found its entree into your living room.