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Google Android for Consumer Device Market – Using Android for TV

Published on November 26, 2011

Android on Consumer Devices – Google’s Take

Having understood the business logic behind the Google Android venture you would be able to appreciate why Google jumped into the tablet foray as well. Bigger screen + More Power + Popularity equal more browsing, more time on the net and more revenue. So Google moved into the Tablet space. We would leave mobile and tablet discussions here and let’s move on to the other Consumer devices and analyze Google’s strategy.
Television is the next consumer device that is getting connected to the internet. It’s another device that would have maximum eye balls and is a mass consumer product. Television viewing has changed a lot after HD content started flooding the market. Analog Television sets which ruled the space for a very long time are being replaced with digital LCD TV sets which get Digital Hi-Definition TV Content directly or from a Set top Box connected to a dish. When we expected that this would go on for some time just like analog TV did, we have Smart TVs with 3D coming up in the market. And all these TVs are connected to the internet and can run apps on them (that’s why they are smart).

Television – Google’s strategy and efforts

Google came up with Google TV in October 2010 for the US market. As you would expect, it was based on Android and Chrome Browser. They had a partnership with Intel, Sony (No.3 in TV sales) and Logitech. Sony and Logitech came out with Google TV offerings. Some of these offerings were built inside the LCD TV itself and some of them came as add-on boxes (like a digital set-top box).

Google TV Initial Release – Poor Reviews and Brickbats

Google TV was not received well and it had more problems than positives. Many reviews claimed that Google came out with a half-baked product just to meet the festive season. Some of the popular complaints are listed below

No proper integration to Digital Set-Top Boxes (Dish TV Boxes) – The depth of integration was so poor that people ended up using multiple remotes and keyboards to watch TV. That’s a scary thought!!

Lack of proper Codec support – No idea how Google slipped on this basic stuff

Lack of Marketplace for more apps, games, etc. – Once anyone gets to know that Android is in the box, the next thing they would want it to access their apps and also the Android Market to buy content for their TV. Google TV’s initial release without the Android Market and its potential failure is a clear indication to anyone who wants to brand their product to run Android but not have Android Market. Customer thinks that Market is part of Android.

Bad User Experience and access options – The User Interface for a TV is complete different ball game. It has to be easy and uncluttered for anyone to use. Not sure how Google (with the simplest of UI screens on its websites) failed on this one. But the feedbacks were that Google had concentrated on what it does best (search and related stuff) and had missed the nuances on the User Experience with the Google TV.

All it made very poor sales and Logitech one of the 2 initial adopters of Google TV cut down the price of its Revue Set-top box from $299 to $99. Logitech had a top level management reshuffle as well due to the impact of this failure.

Google TV Initial Release – Problems with Broadcasting Companies

The above mentioned problems were not the only ones Google had to take care of. There was yet another serious problem that was more threatening to Google’s existence in the TV Space itself.
It was the fact that the top broadcasting companies in the US namely ABC, CBS, NBC, FOX and Viacom blocked their online content for Google TV. So if you have a Google TV you would not be able to access the online content from these broadcasters and content creators.

The TV business in the US and many parts of the world is quite complex.
If you are reading this from the United States, you might be aware of HULU (should have probably used it…), the website that streams unlimited TV Content (Sitcoms, shows, interviews, games, etc) on demand for free. HULU is a joint venture between major broadcasters like ABC, FOX &NBCUniversal. They have made their content (both current and classic) available in HULU for people to stream them online. This is available only for the US and Japan. HULU is also available for IPAD, XBOX, etc. as HULU Plus again a subscription based, ad supported TV Content.
The reason why HULU came into existence was that the broadcasting companies were creating content or paying for content, which they could telecast and earn through Advertisements and Subscriptions (Pay TV), where Ads were their prime revenue spinner. When this hard created content was pirated and started becoming available in websites and were streaming for free, these companies wanted to counter this. They understood that the only way to stop this piracy was to provide the content themselves on the internet and make it advertisement supported, so that they can have people view content freely and legally and the companies could earn some revenue from the Ads (however small they might be…). The main idea was to kill the illegal content on the net and make at least a few dollars doing it.
The reason behind explaining HULU was to show you how concerned the content creators and broadcasters are because of internet and high data rates offered today. They are in constant need to protect their content and make money out of it, a real tough thing to do in this digital world.
HULU is just one example; each broadcaster is trying multiple ways to fight this menace.

When Google TV was launched it provided access to HULU and also to other digital content from various Broadcasters. The main idea behind providing the internet content was that people would access the content when they are not in front of their TV. But when Google directly brought that TV with HD, these broadcasters let the hammer down and BLOCKED Google TV boxes from accessing their content. They see it as a direct threat to their revenue. There is a feeling that Google is taking advantage of their hard created content.

Google as a threat to Broadcasting Ad revenue

Ok, you may have a question, “How hard is it to connect your PC to the HDTV and view HULU and other digital TV content?  ” This is possible if you are ready to meddle with cables, settings etc. and is able to dedicate a computer for that. Not all would make this effort. The problem with Google TV was that it simplified this and provided digital content on the internet alongside live TV.

Apart from this, there is a feeling that there is more to this (Blocking Google TV) that what meets the eye.
The TV advertising business is worth a hefty 160+ billion dollars worldwide. As we saw earlier, Google’s only revenue is from online advertising and it made around 28 billion last year… Google does not make money by selling devices, selling platforms or applications or licenses. It lives on advertising. So does the broadcasting corporations. They thrive on the TV advertisement business. Today, the share of the advertising dollars of big brands and corporates are more in the TV Broadcasting than the internet. Though there are reports that the TV Ad market is slowly shrinking and internet is increasing (which is expected) we do not see radical changes to this equation in the near future.
Google is the undisputed leader in the internet and when it wants to come to the TV space, I am not sure how the big broadcasting giants would take it lightly. They see a threat and they should see the threat. And in the TV business, Google needs them more than they need Google and so they would play their card.
Google Executive Chairman Eric Schmidt went to Europe to make announcement of Google TV in Europe by next year. He tried to pacify the TV Broadcasters with re-assurances on the content side. But as we would expect, it did not seem to cut much ice.

This has not been an issue only with Google TV but with others like Apple TV as well. But Apple sells hardware, platform, has a iTunes store, iCloud services, etc. to generate revenue and they may not pose a direct threat as Google does today.
How Google and Broadcasters handle this is going to be interesting to see and follow.

Google TV Ver 2.0 with Android Market

Google’s initial foray to the TV   market was humbling as we saw earlier. They learnt their mistakes on the platform, technology side and made all necessary changes to it and have recently released the next version which is based on Android Honeycomb and has Android Market. It also allows 3rd Party Android App installation. The User Experience seems to have improved with better picture in picture and overlay options. They search is also more optimized for the TV viewing requirements. Demos look cool enough (https://www.android.com/tv/). So they seem to have solved many of the teething problems that seemed to have dogged them (mentioned earlier).

Wider Acceptance from Hardware Vendors

This version of Google has impressed other TV Hardware vendors apart from Sony & Logitech as well. That’s a welcome sign for Google.
Samsung showcased a Google TV box in one of their shows (http://www.engadget.com/2011/01/07/samsung-shows-off-google-tv-companion-box-and-blu-ray-player/ ). Though they have their own Smart TV software platform (they are trying hard to generate applications for that platform, even by announcing competitions to create apps..), Samsung has also committed that it would come out with TVs with Google TV (Android) on it as well. Being the No.1 in TV sales Samsung is not ready to stay behind in this. Samsung is also used to this multi-platform approach. They support Android in a very big way in the mobile market but have BADA (from their stable) and WP7 phones as well.
LG (2nd in TV sales) is also promising a Google TV.
So with all 3 leading TV sales companies announcing Google TVs, we should surely expect this to pick up from here.

Addressing Broadcast Company concerns

Google has its task cut out on this. It has to strike a deal with the Broadcasting companies and make them believe that they can co –exist and they would need Google at a later time when internet would be the major player and all things would be improving with internet reach and bandwidth. Google can provide excellent demographic and usage pattern information to Broadcasting companies so they can create content that is best suited and accepted. https://gigaom.com/2010/10/22/broadcasters-block-google-tv-but-cant-stop-the-future-2/

But this is easier said than done. When one of them views the other as a threat, when the fruits from the collaboration are going to be long term and one needing the other more in the short term; striking a deal is going to tricky. Also Google’s acquisition of the Motorola Mobility business gives access to the Motorola Cable Set-top box business and thereby providing an option to include Google TV as part of the Motorola boxes. These are early days!!

As I said, this is going to be interesting and can potentially set a trend on how Google would move Android onto other consumer areas. Keep following!!

Is your next product a TV or Set-Top Box and are you considering to use Android for it?

Like we discussed in our earlier blog, if we see Google is bent upon bringing Android into a market, it would not be very prudent to customize the open source Android for that market. Google may just come and wipe that out. Google is committed towards to the Google TV (as I explained the business it opens up for Google) and with the latest version, access to Android Market, etc., they have openly shown that commitment as well.  Whether they would release the Google TV source under open source is questionable (Honeycomb, the tablet Android never came out).

There are some companies already offering some TV solutions based on open source Android, but at least as of now we don’t see a big future in it.
So as of now, without Google’s blessings using Android for the TV market would be a very risky proposition for any OEM.

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