Google TV: Why It Will Fail

Analysis of Google TV and Its Projected Consumer Adoption

Having dominated search, revolutionized on-line advertising and entered the mobile phone business, Google announced plans to conquer TV.  While many have already declared the death of television at the hands of the Internet, the people that know data – like Google – know otherwise.  Television is a strong, sophisticated, vibrant business and in the announcement last week, Google executives acknowledged TV’s dominance. 

The average American watches 5 hours of television a day.  They spend 10 times more of their leisure activity in front of the TV than the PC.  And more than 70 billion advertising dollars are spent annually in the US, with 4 billion TV users worldwide. 

People love TV and they love the Internet, but they love them for very different reasons.  This overview outlines what Google TV is and why it will fail in the quest for consumer adoption and television advertising dollars, similar to Microsoft’s Web TV, Apple TV and Yahoo! TV with their combined market share of around zero.

Google TV: The Pieces and Parts

Google TV is a new platform for HDTV subscribers who purchase new equipment in order to surf the web on their TVs and navigate guide listings more easily.  Google TV lives outside TV’s content and advertising ecosystem, and is an add-on to set-top boxes.

• Platform:  Google TV is a new platform that delivers Android to TVs and companion boxes in an effort to shield third-party developers from television device complexities.  Android delivers the platform and toolset to foster the creation of applications across devices.
• For HDTV subscribers:  Google TV relies on HDMI input so the service is either limited to HD video subscribers, or will require an additional adapter to convert SD video sources.
• New equipment: Google TV requires a device that runs Android and applications, whether a new TV or companion box, which serve as an add-on to an existing set-top box.
• To surf the web:  Google TV is about delivering the open web to television via the Google Chrome browser. This is surprising in light of Web TV’s well-documented failure and the continued lack of consumer demand for a full web browser on TV.
• And navigate TV content:  Google TV’s search results include program listings for easy navigation of television programming.
• Outside the TV content and advertising ecosystem:  With the exception of integration with DISH DVR boxes, Google TV sits outside the TV delivery value chain, which separates Google from the $70 billion of television advertising.
• Augmented with Android phones that function as remote controls:  This helps close the ecosystem gap by delivering TV search terms back to Google servers, but access to the holy grail of linear TV advertising remains elusive.  Nonetheless, Android remotes could be powerful.

Google TV: Adoption

CEO Eric Schmidt admitted Google is not the first company to make an attempt at this.  According to Google, many have tried but got limited adoption for three reasons:

1. Dumbed-down the web for TV.  Google believes the entire web should be brought to TV; however, if this were the only objection, Chrome is all they would need.  In fact, market results are overwhelming in support of tailored applications for devices, whether TV Widgets® for television or apps for the iPhone, which is why Android for third-party developers is actually interesting.
2. Closed solutions, and “closed just doesn’t work.”  The most successful app store, Apple iTunes, is a closed system with numerous participants.  If you want to build an app for Apple, you have to do it their way, according to their rules, to run only on their devices, and if you do, you’ll get distribution.  That’s closed – large, successful, and vibrant – but closed.  In defense of open systems Google says, “Once people have had the freedom to go anywhere, they’re not going back.”  But years of interactive television endeavors validate that once people have an easy, one-click experience, they are unwilling to work any harder.
3. Choose between TV and the web.  Google is right about this.  Solutions that require viewers to switch between devices in order to access a feature will lose 90% of the audience.  An enhanced TV experience must come in a coherent package that provides convenience, control, and context: something that everyone is working on in one form or another.

These are the reasons Google gave for previous technologies’ lack of adoption, so let’s put Google TV to the test and project whether it will fare any better.  Using Everett Rogers’[1] five product-based factors that govern the rate a new innovation will be adopted, and comparing Google TV with solutions delivered in conjunction with TV service providers, specifically EBIF, it doesn’t stack up.

Let’s remember how Google succeeded.  They wrote a brilliant algorithm that re-purposed existing content that satisfied user intent while working within the existing browser and delivery ecosystem.  For interactive television to succeed, a similar compatible approach is necessary.  But that’s not what Google TV is. Google TV is an end-around the TV ecosystem with a complicated setup.

Companion boxes, IR blasters, HD converters – it’s enough to drive an average consumer to Google “martini bars in my zipcode.”  Imagine what would have happened if they had forced Internet surfers to purchase a separate appliance to sit next to their computer.  Simply put, they wouldn’t be a verb today.

Beyond the complexity, Google TV is pricey.  To make it work, consumers have to spring for the Logitech box (rumored to be north of $400) or a new Android HD TV, an even more significant purchase.  And this is in addition to what consumers already pay for cable and satellite since Google TV doesn’t deliver television programming.

Google TV also misjudges consumer behavior.  Every shred of consumer research tells us that viewers want much more from their TVs, but not open surfing of the web.  They want features that enhance programming and let people multi-task to engage with content and advertising more immediately and intimately.  They don’t want to read their email.

Lastly, Google covets a slice of the $70 billion advertising pie, but with the exception of the DISH DVR, Google TV sits outside this lucrative flow of dollars. Google can deliver new ads in their overlays - but that’s not enough.  They have no solution to make linear television spots more targeted and interactive.  In fact, Google TV would create even greater audience fragmentation that undermines television content models the way they’ve de-monetized the newspaper and magazine industries.

I’ve spent the last 12 years bringing interactive television and advanced advertising to the living room. I have the scars and bruises that come from understanding what consumers want, and the platforms, tools, and models necessary to deliver Interactive TV to all American homes; so I don’t make this judgment lightly.

Google TV: Competition

By the time Google TV launches, 25 million cable homes will have interactive features at no additional cost or effort thanks to a joint industry initiative to launch EBIF[2] technology and applications across operators. 

EBIF is a common platform for cable set-top boxes that shields developers from the complexities of devices and operators, like Android.  Digital cable subscribers will receive interactive apps automatically as new features in the guide, or applications delivered directly in-stream with TV shows and commercials.  EBIF apps provide new benefits to consumers with no cost or effort on their part making these types of interactive features highly diffusible.  And actual market data supports this with consumers overwhelmingly engaging with cross-platform apps, programming, and advertising generating high repeat usage, and word of mouth referrals.

Consumers will be able to vote for their favorite American Idol singer with one-click on their existing remote.  And in consumer research performed for FourthWall Media, 60 percent of respondents prefer to vote with their remote with the second most popular choice coming in at a distant 15 percent.

All the activity in the TV space highlights the fact that everyone can sense the nearing media inflection point of enabled footprints and converged devices.  Partnerships are sure to form, which is good.  But the winners will be companies delivering solutions that play to the strengths of all available devices.

Google TV: The Winners

Through increased attention and focused effort Google TV will yield some winners, and they are:

DISH Network: Advanced DVR box with an integrated interactive TV experience combined with the awareness that Google drives.

Logitech: Not the companion box, but Harmony remote, iPhone, and Android apps integrated with a new breed of interactive television apps and platforms.

iPad: iPad apps with TV extensions, like the Comcast iPad controller demonstrated by Brian Roberts at the Cable Show.  An iPad app integrated with a video provider could be the best personal search and discovery platform replacing or augmenting existing EPGs.  Only upon finding the desired program, should the command be sent to TV to tune to the content.

Cable: Google’s entry provides further validation of TV’s value; the power of interactivity, set-top box measurement, and analytics; and the use of extended devices for search and discovery.

Google TV: Conclusion

When Silicon Valley speaks, the world listens in hopeful anticipation of the next cool gadget or rocket-ship ride.  I must admit: I do it myself.  But Yahoo! TV, Microsoft TV, and Apple TV have very little business.  They put out press releases, get widespread coverage, and appear to be conquering the world, but the results aren’t there. 

The television industry is big and complicated and quite different from the Internet.  There are $70 billion of annual advertising spend and $35 billion of programming license fees preventing the disruption the Internet seeks.  The Internet likes disintermediation and driving to efficiency.  TV likes margins. 

No doubt the television business has its problems.  Programmers and operators squabble over fees.  The FCC intervenes resulting in platforms designed by committee.  Programming is more fragmented and it’s harder and more expensive than ever to create a hit.  Television advertising needs to add functionality and measurement.  And many of our stars get arrested for drunk driving and spousal abuse.  We are not proud of that.  But television is a great business that is poised for an enormous coming-out party that will rival the best Silicon Valley rocket-ship ride, and that’s why Google wants in.  Unfortunately, Google TV as presented won’t get them there.  And remember, Google has flopped in other areas adjacent to their core capability – Google Buzz, Google Catalog, Google Answers.  The likelihood of them succeeding in a complex hardware and software business is slim.  They may do no evil, but when it comes to TV, the proposed product will certainly do no good.

M. Ellen Dudar

Chief Product Officer

FourthWall Media

twitter.com/fourthwallmedia

twitter.com/ellendudar

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[1] Everett Rogers, Diffusion of Innovations (New York, NY: The Free Press, 1995)

[2] Cablelabs’ Enhanced TV Binary Interchange Format

The Long Tale of the Long Tail

There’s a long story to tell about the quest to bring regular advertisers in your community to the television set.  The regular guy doesn’t usually buy TV advertising because of its sophistication – it seems too hard and out of reach for plumbers, and painters, and the local sandwich shop.  But FourthWall Media has been on a quest for years to do exactly that – bring TV advertising to small businesses providing viewers with even more opportunity to support their local communities through convenient connections.

Our quest began over twenty years ago when half of our founding members were blazing the ITV trail at SourceMedia.  This was back when everything was done on the backend and delivered over analog connections.  If you think it’s hard today, it was almost next to impossible then. 

Almost is all they needed to hear to take on the challenge.  From manufacturing set-top boxes, to installing LaserDisc players in neighborhoods, to managing thousands and thousands of business and product listings, these guys did it.  And it worked.  Sort of.  It worked in the neighborhood, but the solution wouldn’t scale to the entire country.  But what was undeniable, even back then, is that people wanted to use Yellow Pages on their TV.  And our guys never forgot this.

As our current team formed and created the company formerly known as Biap – if you’re wondering whether we have a symbol for this, the answer is yes – we combined the ITV pioneers with Internet and Artificial Intelligence expertise to build a platform and suite of products specifically designed for scalability.  We were still on a quest, but had to focus on laying a strong foundation before moving forward.

The result was a cool platform we called RIOT – I guess the developers were getting restless the day they named it.  RIOT runs on all flavors and vintages of set-top boxes, and is an edge-based solution inspired by peer-to-peer Internet technology we had previously built.  It’s small, fast, and powerful, and it ran our own application bundle for many years including apps like Personal Information TV, eBay on TV, My Football Tracker, My Baseball Tracker, NBC Olympics Now, and yes, Yellow Pages on TV…and they scaled.

While we were enjoying great success with our own apps, the industry was reflecting on how to manage different apps from different vendors across millions of homes over many, many years.  Rightly so, they wanted a common way to deliver these services.  We had proven it could be done and that our solution could scale, but we still needed operational scalability across MSOs, Programmers, Advertisers, and the rest of the ecosystem partners.

Since we were on a quest, we rolled up our sleeves and began building the first commercially-available EBIF platform for the industry.  For those of you that don’t know, EBIF is the common specification created by CableLabs: you can think of it as the kindling that’s about to ignite and fuel enormous growth for the television business.  And we were able to deliver our EBIF platform solution so quickly because of all the work we had done on RIOT, and all the attention we had paid to a resilient, scalable architecture.

Okay, to make a long story, short, we have been running our EBIF platform and a set of EBIF applications, including Yellow Pages on TV, in San Juan, Puerto Rico with OneLink Communications.  And today we announced a partnership with the local yellow pages publisher, Axesa SuperPages, who has just kicked-off sales activities this week in the San Juan market for bringing long-tail advertising to TV. 

Upon partnering with Axesa, we migrated 9,000 of their current advertisers over to the Yellow Pages on TV product, and provided them with a bold listing.  Now, the Axesa sales force is canvassing the market with an expanded advertising offering that includes all sorts of features like click-to-call and premium microsites.  Axesa has a more competitive local product, and OneLink has a brand new set of advertisers that can buy VOD showcases and more.

Aaahh, satisfaction.  At last.

Interactive TV Advertising Is A Diamond That’s Forever

You know the scenes in those cool James Bond movies when he and a Bond girl are whisked away to an exotic locale and they enter a normal-looking building – or maybe even a beach bungalow.  They press a button, or lift a panel, and voila – there’s a twinkling high-tech room filled with the latest gadgets and gear.

That’s what Ad Widgets in San Juan reminds me of.

Over the last 24 hours we’ve been talking to a lot of people about our announcement, “The Future of Interactive Television Advertising is Running Now in Metro San Juan on OneLink.”  They’re a little surprised – even shocked - that all this is going on in San Juan.  When they think of Puerto Rico, they think recreation, not technology.  They think of gorgeous beaches and rich Spanish culture, but not a place that boasts the most advanced, leading-edge television advertising and measurement capabilities.

This James Bond scenario is easy to believe when you realize the people behind OneLink are long-time cable and media experts that understand the importance and value of advanced advertising.  Backed by Crestview and MidOcean – who recently joined forces again with an equity investment in Insight, OneLink has amazing talent.  This leadership brought our efforts over the last several months to life, as we integrated with each vendor in the video delivery value chain, culminating in the successful launch of an easy-to-use, end-to-end system. Now, OneLink’s media sales team can run with it.

Here’s to the Future of Interactive Television Advertising, San Juan, and futuristic gadgets!

FourthWall Media Celebrates May 3

There’s a big celebration at FourthWall Media today – and not just because it’s Tim Peter’s birthday (yet again).  We’re celebrating May 3^rd as the landmark day when advanced advertising steps out of R&D and becomes an operational business.  Because today we announced the launch of Ad Widgets^® in San Juan, Puerto Rico with OneLink Communications.  

Ad Widgets is an addressable, interactive advertising solution that moves advertising from zapp-able to umiss-able.  Our Ad Widgets will drive consumer engagement, making advertising more valuable and more trackable.  These are the innovations and insights TV advertisers have lusted after for generations. 

The OneLink launch is a landmark event because it’s a living example of what the cable industry envisioned when they created all the specifications and standards for synchronous interactivity.  Ad Widgets are based on these industry specifications; all the loops have been closed from media sales, to delivery, to reporting back to the advertiser in an operational environment. 

The entire ecosystem is poised for success.  We took no chances.  None.  The sales tools are in place and the media sales team has been trained.  The Ad Widgets Manager is installed and interactive spots are being created in minutes, with a few simple clicks.  Those spots are being delivered through the normal playout system, data is getting collected, and reports are being generated.  The pipes are clean, and the ads are flowing.

People in our world understand the significance of this achievement.  It’s not easy connecting all those disparate dots that are flung across digital ad insertion systems, splicers, multiplexers, set-top boxes, operating systems, and resident apps.  The work done with our ecosystem partners and the OneLink team was an amazing, collaborative effort, and we’re incredibly proud to have delivered certified, addressable features.

The Ad Widgets features include Request for Information, Voting & Polling, Click-to-Call, and Billboards. Next in the queue are VOD Telescoping, T-Commerce, Microsites, and cross-sell/up-sell features – which have already been implemented within our Yellow Pages app.  These Ad Widgets features can increase the value of TV advertising by as much as 240%. 

For us efficacy is a foundational pillar. So FourthWall conducted independent research across key media formats including cinema, Internet, network TV, cable TV, radio, print, and outdoor, isolating the drivers that determine value and efficacy.  We then mapped these findings to Ad Widgets features.  Depending on the specific feature and campaign reach, the increased value was projected to be between 15-240%.  And now that we’re past the technology integration period and have entered into the operational phase of advanced advertising, we can focus on delivering this for advertisers.

Thanks to Ron Dorchester, OneLink CEO, for his support and dedication that made this project possible, and thanks to FourthWall Media’s incredible engineering team.  Our guys are simply the best set-top box engineers around.  

If you’ll be at The Cable Show next week in Los Angeles, come see us in the CableNET booth.  We’ll have a live setup of Ad Widgets including the Ad Widgets Manager: we’d be happy to build an interactive spot for you while you watch.  We’ll also be running a suite of TV Widgets^® in the CableNET, Rovi, and Comcast Media Center booths.  So whether you’re interested in advanced advertising or interactive programming, we have the right applications and the EBIF platform to power them.

Let the celebration begin, and happy birthday Tim!  Again.

Winter Conference - Clearleap

The Killer App on TV is TV.

Last week we announced that we’ll be showing off an unbound, EBIF weather application produced by us and including The Weather Channel and a new TV Widgets plug-in from Clearleap. The Clearleap plug-in helps us close the loop between personalized, dynamic content and dynamic video. In this case, our personalized weather TV Widget lets you pick locations, get dynamic text content on conditions, and then get localized video forecasts from the Weather Channel’s meteorologists. Pre, post, and mid roll ads can be inserted into the video. The killer app on TV is TV, and we intend to include contextual video in every one of our TV Widgets. Clearleap’s TV Widget plug-in allows us to dynamically (within 3 minutes) attach video from the web to any TV Widget. Weather is a great TV Widget, but it’s just the tip of the iceberg –imagine dynamic news stories, sports highlights, local news, local ads, movie trailers, etc. TV Widgets are supporting and extending the TV Platform, effectively creating a new world of programming by bringing dynamic personalization and context to on-demand video.

FourthWall Media-Rovi Mashup

Today (Monday, February 8, 2010) we announced our partnership with Rovi. If you’re in the industry, you know about Rovi’s tremendous scope: they are in over 100 million homes worldwide, they manage digital rights across literally billions of pieces of media, and with their Passport Guide and i-Guide, they provide the most widely deployed interactive program guide in the industry. Our TV Widgets and EBIF platform will be integrated with Rovi Guides, creating a new, innovative way to interact inside an app-guide mashup. Together we’ll be providing a starter set of TV Widgets: News, Weather, Sports from every league, team and college, Finance, Yellow Pages and eBay on TV. Our partnership will make EBIF and TV Widgets available to tens of millions of subscribers across the Americas.

This is a real signal that 2010 is the year for interactive TV and EBIF. EBIF is now available on any set top box platform, and our TV Widgets support the cable operators’ offering, the advertisers’ needs, and the viewers’ desires.

Couch Potato Headed for Extinction

Is the couch potato – the much-derided passive spud, think Al Bundy, the TV-watching Mt. Rushmore from “Married With Children” – headed for extinction?

As someone in the business of advancing interactive television, I’d sure like to think so.  And I was given some encouragement by a piece I read the other today in the New York Times headlined “Now, Electronics that Obey Hand Gestures.”

The piece reported on a range of upcoming new consumer technologies and products that will, in the giddy words of the author, potential become:

“…one of the most significant changes to human-device interfaces since the mouse appeared next to computers in the early 1980s.”

Well, in my book the television set is still “a device” so this onrushing revolution is also poised to change the relationship between Mr. Bundy and his Mitsubishi.

Because once a viewer is connected to his TV-set by hand gestures – the same way we are intimately bonded to our iPhones, except writ larger (like 52”-inches plasma-large) – we can safely consign our unengaged Idaho to the Museum of Viewing History.

The Times pieces makes it clear that the hand-to-screen nexus isn’t a futuristic fantasy:

“In the coming months, the likes of Microsoft, Hitachi and major PC makers will begin selling devices that will allow people to flip channels on the TV or move documents on a computer monitor with simple hand gestures.”

So let’s get back around to what this means to me as an evangelist for the power of interactive television in all its potential: as a viewing experience, spur to programming innovation, and marketing tool.

I am massively encouraged by this development as a powerful augury for the rapid deployment of interactive TV because it points to the welcome emergence of a new viewing behavior.

There are many stars that have to align for the mass availability of interactive television, and pretty much all of the blinking balls of gas in the firmament are ready.  The technology and all the nuanced set-top integration is there.  The standards and protocols are in place. 

What’s missing?  I believe one of the stumbling blocks is emotional, a lack of belief that viewers will move from a lean-back to the much-discussed lean-forward experience.  That TV viewing can become, well, physical.

But innovations that profoundly re-shape the lean-back experience are around the corner.   Soon we’ll have “…TVs from Hitachi in Japan that will let people turn on their screens, scan through channels and change the volume on their sets with simple hand motions.”  And then there’s Microsoft’s Project Natal, a gaming system that “will require nothing more than the human body.”

Instead of a remote (and I mean that literally and figuratively) relationship between viewers and TV sets, technology is bringing us a new intimacy, a technological pas de deux.   This new behavior and new set of expectations that are associated with it will change the landscape that interactive television lives and breathes in.

Suddenly, we won’t be the voice in the wilderness arguing that television must move beyond the current archaic, one-way relationship it has with viewers.  Because we will be surrounded by a thrilling new marketplace filled with innovative ways to connect the hand to the screen.

Consider that the phone used to be a kind of lean-back instrument.  You held it to your ear and talked and listened through a device whose purpose was to be a conduit for sound frequencies.   Just as the TV set has always been a conduit for radio waves.

Then Apple came along and said hold on a second, the phone can be something far more than that.  And wow pow, shazam , a new behavior was born; we touch and interact with our phones as if we’re all gripped by Jobs-inspired OCD.

I smell something in the air that says a similar phenomenon is about to happen with our television sets.  In another context, David Pogue wrote “It is a very human, almost innate, urge — readers want to touch what they are seeking to learn.”

Interactive TV is the first innovation, actually, in the history of the medium that brings this primal instinct to life.  That’s why it’s a revolution waiting to happen, and the decades long belief  (and simultaneously, skepticism) embodied in the familiar locution “Not if, but when” is about to be answered by “Now.”  And who’d have thunk that it would be companies in a whole other industry – the interface business – to complete the transformation?

Then again, isn’t that how change happens?  The inevitable gets accelerated by the unexpected.

Adam Hanft

Hanft Projects – Agency to FourthWall Media

twitter.com/hanft

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