24 02 2011

Google must have a bad case of the itches, for it seems like they are itching to get into anything and everything that might turn a profit. In most case, they have been successful (think Google Docs, Google Maps, Google Earth, Picasa, etc.), but when it comes to social media, they have landed with a thud (think Google Buzz and Google Wave). Overall, not bad for a company whose stock has been hovering around the $600 mark.

Streaming video is the latest thing to land on Google’s radar. When they bought YouTube for $1.65 billion in 2006, they basically allowed it to run as a video commons for the world, supported exclusively by advertising. Anyone with a video camera could become a YouTube star, and the site single-handedly ushered in the era of user generated content (UGC) now almost cliche in consumer advertising.

But Netflix, Hulu and Amazon are doing more with video than YouTube has been able to do, which is provide professional content. Google wants to raise the bar by leaving archived content behind in favor of streaming live sports events. It recently began airing live cricket matches (unlikely to gain many US eyeballs), and announced yesterday they are in negotiations with the NBA and NHL to deliver basketball and hockey games as they happen.

If Google is able to pull this off, it has huge implications for their recent Google TV venture. It means that fans can watch their fave teams on any device, from an Android or iPhone all the way up to big-screen TVs.

And for free.

Of course, it will all be advertiser-supported. In case you haven’t noticed, there has been a significant increase in the number of ads we must endure before we can view our selected video clips. Those ads keep YouTube in operation.

The only thing missing from this news is even a hint of a premium pricing model to more fully monetize hosting live sporting events. Google has dropped this hint in the past year (but with undefined parameters). I am not sure that Google could sell enough advertising in the long run to pay the major sports leagues for rights to stream games.

In other words, I see Google trying to slip its foot in the door, but I fully expect it to be a free trial period for users, followed by a subscription model. Given the sub-$10/month pricing of the other three, I doubt it will be much, despite the fact that Google’s entry with live programming is vastly different from competitors.

At the macro level, though, Google’s efforts to offer live events could open the flood gates, thereby signaling the imminent demise of cable and satellite TV providers. What if CNN, The Weather Channel, MSNBC, Fox, et al became available via YouTube? I would have little reason to keep paying Dish $100 every month. For under $25 per month I already get Netflix, Hulu Plus and Amazon streaming through all of my devices. There are only a few live stations that currently keep me from completely severing my relationship with Dish.

And as long as advertisers can reach us, regardless of the medium, they probably couldn’t care less who provides the pipe. This is a slam dunk as far as I’m concerned.

Dr “Three Points From Downtown!” Gerlich



One response

24 02 2011
Austin Jones

It’s really interesting to follow the diversification of Google. I was reading an article this morning about the latest investment by Google Ventures in “Transphorm”, a company that uses gallium nitride instead of silicon to convert electric currents from one form to another. This process is said to possibly conserve the 10% of total energy wasted in the grid… seems profitable enough..

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