An Example Of Google's—And Apple's—Sisyphean Quest To Reinvent TV

The Slow Decline Of Live TV

Photo: Deloitte

Troubleshooting website FixYa reports that the main customer complaint about Google TV is unavailable content—namely, professional Hollywood content (Hulu and other network shows available on the web) that the content owners have decided to block from Google TV.Until that changes, Google TV and other “connected TV” services like Boxee will remain niche concerns.

For the past 20 years, every technology company has tried to “take over” TV and turn it into a web-like medium. The reason why everyone has failed so far is twofold:

  • Customers don’t want it. To a technophile, a TV is a big screen and should therefore be as interactive and connected as the other screens she owns (smartphones, tablets and computers). To regular folks, however, TV is a “lean back” medium which is different from the “lean forward” web experience. People are fine just flipping channels and sitting down. They don’t want interactive stuff.
  • Content companies don’t want it, and they have what customers want. This is the FixYa problem. For all the talk about turning YouTube into the new cable by promoting professional content produced for the platform (which could be a great business) and the talk about “cutting the cord”, it’s not happening, as we showed in a recent note. Customers love the professional content that Hollywood produces and are willing to pay up for an “antiquated” system of cable boxes to have it (see chart). 
Pay TV Net Subscription AddsPay TV is actually gaining subscriptions (Click for note)

Photo: Bernstein Research

The current system is not only very profitable for content companies, it’s also unlikely to be disrupted, at least in the short and medium term, opposite to other media like music, because customers like it as it is and are willing to pay cable for it. In fact, if you look closely at the data, you’ll see that old-fashioned pay TV is actually gaining subscriptions (see chart at right).Thus the conundrum for Google TV, and Apple TV and others. As Henry Blodget argued, Apple’s apparent plan for Apple TV seems both exciting and impossible: for Apple’s plan to work, it needs to a) disrupt the cable and content companies, and b) get cable and content companies to agree to that.

The only way it could work, it seems to us, was if Apple (or possibly Google) used its gigantic cash pile to buy rights to content at rates that are simply too good to refuse, but they don’t seem to be able to do that.

Our note: Don’t Believe The Hype: Cable TV Isn’t Going Anywhere →

Also: Pay TV Is Actually Gaining Subscriptions →

Analysis: Apple’s TV Strategy → 

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