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Google’s announcement Friday of its plan to bring a hundred channels of new Hollywood-produced content to the Web may well be a watershed moment for television.
Here’s why: It’s one more big step toward weaning me from the rip-off that is cable TV.
Cable television, known mainly as Comcast in my neighborhood of San Francisco, is charging way too much — about $65 a month for the most basic package.
And now Google, through its massively popular online property YouTube, is offering me a 100 new original channels, at 25 hours of programming a week. For the first time, I can cobble together a very decent palette of content for almost free — and I can watch it all from my home TV set.
Here’s what I’ve got: I’ll get those 100 channels, many of which are launching next week. And then also for free, I get the basic set of free network TV channels that I can pick up with an antenna. And then, because I’m willing to pay at least $8 a month for a Netflix subscription, I get a lot of other content to fill it all out.
And yes, I can watch all of this on my home TV set. Two months ago, I bought a set-top box from Logitech, called Logitech Revue, for $100, which lets me access Google TV, the Web and other offerings such as Netflix, over my TV set. (Google TV is also offered with Sony GTV televisions and with a Internet TV Blu-ray player. Better yet, Google TV will soon receive an update next week which brings Android apps, and a revamped interface and more.) Add in other offerings like Hulu, which I can also access on my TV through other set-top boxes (it’s not supported on GTV yet), and that’s quite an offering that I can get, for a pittance compared to the relative robbery that is cable.
So why fork out $65-$99 a month to the cable companies?
Unless the cable companies reform their price offerings, they’re going to lose a lot of customers.
To be sure, not all TV fanatics will be impressed by the free — or almost free, if you’ve got Netflx — offerings at their disposal today. None of the major studios appear to have partnered with Google’s content venture, mainly because they fear the loss of control in giving up their content, or haven’t got paid enough to do so. Networks such as News Corp.’s Fox and The Walt Disney Co.’s ABC have shunned Google’s TV effort. These guys have lucrative relationships with folks like Comcast, so why sabotage the golden goose?
But really, how long will these networks maintain control over the majority of quality content? That’s what makes Google’s latest announcements so interesting. It’s dividing Hollywood, because its going directly to content producers and commissioning content with competitive deal-making. And for the first time, it feels like the cable monolith is cracking. In case you missed it, the YouTube channels include programs by Amy Poehler, Ashton Kutcher, former Disney CEO Michael Eisner, Madonna, Shaquille O’Neal, Spider-Man creator Stan Lee, Jay-Z, and Modern Family star Sofia Vergara. See the full list here.
And Google is doing so with a very disruptive model. Google is relying on advertising. And its caught the advertising industry’s attention: It’s “the most audacious original programming initiative for the Internet,” according to David Cohen, an executive vice president at advertising agency Universal McCann told the WSJ.
Not that advertising is perfect. It isn’t. It interferes with viewing, and some people hate it. It still feels like we’re in an experimental phase, as Google and others innovate with online ad targeting. At the same time, the expensive, bundled pricing of the cables is more ripe for disruption than ever (see full argument here), and that’s why Google’s offering looks like a trojan horse. Google is reportedly investing about $100 million for its new YouTube channels, with advances reaching as high as $5 million for some channels. According to the Wall Street Journal, content creators will get a 55 percent split of revenue after the upfront costs have been earned out.
Meantime, cable companies don’t appear to be innovating. Right now, at least according to its web site, Comcast doesn’t even consider Google TV a competitor. It lists AT&T Universe, CenturyLink, DirecTV and Verizon FiOS on its site as competitors, but only in order to show how Comcast offerings are better. Even Google, in it’s announcement Friday about its offering, said its offerings aren’t intended to compete with cable (thought we’ve heard this game before from Google, when it claimed it wasn’t making a mobile phone, before it launched Android — a semantic game that clearly was meant to hide its stealth attack on Apple and others).
But the numbers already tell the story. Cable providers are already losing subscribers, apparently because people are canceling cable in favor of cheap internet TV. The U.S. subscription-TV industry first showed a small net loss of subscribers a year ago. But this year, that trickle turned into a stream.
Sure, there will be retrenchment. Traditional providers will continue to have doubts about giving their content cheaply to the Web. Netflix lost a major provider, Starz, for which suddenly saw Netflix as a threat when that company moved to provide an Internet streaming service fora low $8 a month. And Hulu, too, is being forced by its content partners to put more of its content behind a subscription wall. But even here, it’s not one way. Netflix has scrambled to sign other content providers to compensate, including (announced just today) Disney content.
The setbacks will keep me watching how providers like Netflix and Google actually execute. But for now, I’m still staring at a price of $65 a month for the most basic package at Comcast — which offers about 80 channels — and that’s just too much money, considering I’m already paying (in a sharply discounted six-month deal) $29.00 a month for internet — and I’ve now gota all these free options from Google.
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