Make No Mistake: Google Is Taking On The TV Industry

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http://www.businessinsider.com/make-no- ... ry-2011-10

Back in August, Google chairman Eric Schmidt gave a speech to TV executives in Scotland where he explained how TV was evolving, and tried to convince them that it was futile to fight it.
TV was getting more social and more mobile, he said, and content creators should embrace these changes if they want to continue getting paid.
But he denied that Google itself was trying to compete directly with them.
Here's what he said about Google TV:
When it launched, some in the US feared we aimed to compete with broadcasters or content creators. Actually our intent is the opposite. We seek to support the content industry by providing an open platform for the next generation of TV to evolve, the same way Android is an open platform for the next generation of mobile.
And here's what he said about getting into the content business:
Some have suggested Google should invest directly in TV content. To argue that misunderstands a key point: Google is a technology company. We provide platforms for people to engage with content and, through automated software, we show ads next to content that owners have chosen to put up. But we have neither the ambition nor the know-how to actually produce content on a large scale....But of course we are helping to fund content.
What a difference a couple months make.
Yesterday, Google made two major announcements that clearly signal its intentions to remake the TV business to its benefit.
First, it unveiled a new version of Google TV, its platform for interactive next-generation TV. The entire point of Google TV 2 is that it presents all content in one interface regardless of source -- when you look for comedy shows or movies, for instance, you get your cable shows, Netflix rentals, and (critically) YouTube videos all arranged next to one another.
Google TV spokespeople were pretty explicit about the idea that it thinks TV is changing from a world of a few hundred channels to millions of "channels" available via the web. And the number-one provider of web video content by far is YouTube.
Then, yesterday evening Google announced that it was launching more than 100 new YouTube channels with exclusive content from big-name celebrities and news organizations.
Google is directly funding this content with more than $100 million in advances, and it's probably just the beginning. The company has also explored buying Hulu, and a deal is not off the table even though Hulu has stopped considering other bidders.
In other words, Google is seeding the explosion of video content on its own massively popular online video network, where it sells advertisements and makes money. Then, it's providing an interface that puts that content on equal footing with the TV shows provided by the traditional TV industry, where Google's presence is minimal. (Not for lack of trying -- Google has a program called Google TV Ads that lets advertisers buy ads on traditional cable networks like CNN. So far, it does not make a material contribution to earnings, whereas YouTube is probably a billion-dollar business.)
This is smart -- Google needs new avenues of growth. It's already managed to move huge amounts of advertising budget from other media (particularly print) online. Video is obviously migrating online as well. So of COURSE Google is going to try and capitalize on this movement.
Yesterday's announcements were a first big step in that direction.
The traditional TV industry should consider itself warned.