For a company with Scrooge McDuck-sized piles of money, thousands of engineers at its disposal, a desire in both turning you into a cyborg and making cars that drive themselves, it shouldn’t come as a huge shock that the company is reportedly interested in moving into the television arena.
Google Inc (NASDAQ:GOOG) is also, at its core, an advertising company despite its forays into other technologies and industries. What’s even less shocking is that while Sony Corporation (NYSE:SNE) (TYO:6758), Intel Corporation (NASDAQ:INTC), and Apple Inc. (NASDAQ:AAPL) are looking to television that Google Inc (NASDAQ:GOOG) would simply stand on the sidelines with its wallet and give its competitors and future competitors a head start.
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Yesterday, saw The Wall Street Journal reporting that Google Inc (NASDAQ:GOOG) was interested in providing an online paid-television service. This was confirmed by The New York Times saying the same thing a few hours ago. Google is very clearly keeping this idea close to the vest, as neither of the aforementioned leaders in news reporting and publishing quoted a single named source and Google has kept mum on the notion whenever they’ve been approached about the idea.
Google’s Ambition Lies Beyond the Current Television Eco-System
Unlike the equally tight-lipped Apple Inc. (NASDAQ:AAPL), which is largely believed to be working on their own internet TV options—that is, speaking with the current providers of television as we know it, e.g. Comcast Corporation (NASDAQ:CMCSA) and Time Warner—it’s believed that Google’s ambition lies beyond the current television eco-system.
Both of the aforementioned publications are reporting that Google Inc (NASDAQ:GOOG) has been meeting with major media companies that own channels rather than cable companies that supply these packages to 100 million Americans.
Intel Corporation (NASDAQ:INTC) is hard at work on one such service and companies like Sony Corporation (NYSE:SNE) (TYO:6758) and Microsoft Corporation (NASDAQ:MSFT) have previously shown interest in the same idea, called an “over the top” service because the channels would ride on top of existing broadband connections.
Google Likely To Run Into Large-Scale Resistance
Unlike Apple Inc. (NASDAQ:AAPL), Google is likely to run into large-scale resistance by trying to subvert Time Warner Cable Inc (NYSE:TWC) and Comcast Corporation (NASDAQ:CMCSA). This is not to say that these companies might not see an upside to Google’s involvement in this type of project.
“Google feels the need to beat Apple Inc. (NASDAQ:AAPL) to the punch,” said one of the people with direct knowledge of the meetings, who like the others interviewed (by The New York Times) spoke on condition of anonymity.
Intel Corporation (NASDAQ:INTC) is looking at the “over the top” service but has been running into numerous roadblocks. These include contracts between existing distributors and some channel owners that prohibit the channels from being licensed to new competitors like Intel. An Intel spokesman declined to comment (to the NYTimes) on Tuesday.
Cox Communications, a smaller cable and broadband supplier, has already begun offering a similar 100 live-channel package to its customers in Orange County, CA that pays for bandwidth but not cable.
“We are still early on, results and customer feedback will determine if we proceed with any future plans on this product,” Todd Smith, a Cox spokesman, said.
If you’re thinking that Google Inc (NASDAQ:GOOG) should just buy Cox Communications and build from there, you may have a point. However, as a report on the market by the Government Accountability Office last month put it, “networks generally offer significant discounts based on the number of subscribers a provider has. Thus, a substantial disadvantage that an entrant has relative to a large provider is that it will likely have higher programming costs, making entry challenging.”
But if Google Fiber ever got big? Who knows?