Will Google TV be the Napster of the Entertainment Industry?

September 1, 2010 - Written By Chris Yackulic

Google TV is very real and it is causing quite a commotion in Hollywood. As Google says, “Google TV is a new experience made for television that combines the TV you know and love with the freedom and power of the Internet.” There is a little uncertainty about this whole Google TV and that is what is causing the stir.

Google TV could possibly do to the entertainment industry that Napster did to the music industry. The idea of Google TV is to allow viewers to watch movies and TV shows via the internet, without the networks and cable channels that supply them to us now. The fear is that Google TV will encourage viewers to drop their $70+ a month cable or satellite bill in order to watch video free via the internet. Much of the same content we watch now is available for free online.

In other words, Google TV has the potential to do to Hollywood what Napster did to the music industry by destroying their business model. Think about how great it would be for us viewers to not have to pay a cable or satellite bill anymore! Now think as if you were an executive at a cable or satellite company. This could ruin you! The music industry had to totally redo their business model because of Napster. Napster did have legal issues, but was the change it made to the industry worthwhile? I think so.

In the demo videos I have seen, it is like combining your TV and internet experiences into 1. You can record shows, search for shows, Google information while you watch a show. It really does sound promising. We do not know the full scope of what Google TV will do until we can see it in action for ourselves. On paper, it is a brilliant idea that could change how we do a lot of things.The most unclear thing about this whole Google TV idea is how they plan to compensate studios for their content or manage the advertising revenues from the shows it airs.

Let’s look at an example that I see as very fitting. Blockbuster video had the video rental market for many, many years. You paid up to $5 for a one night rental of a new release. We may have known that Blockbuster was expensive, but what could we do? There were more Blockbusters around and where else were we going to get movies? Netflix came along, taking advantage of the internet, and some of that Blockbuster business is taken away. No longer did we have to drive to the video store to get a movie, it comes to us! Just in the last couple of years, someone comes out with Redbox, one of the most brilliant ideas ever in my book! You can rent new releases for $1 a night! Sure the selection was not as great as a Blockbuster, but look at the benefits! I could keep a new release for five days and pay the same price as one day with a Blockbuster movie. Fast forward to present day, Blockbuster is probably going to file for Chapter 11 and close another 500 stores. Someone came out with a better business model, and the previous model gets mortally wounded. Although too late, I have seen Blockbuster kiosks around town, just like Redbox.

Here is my point; one business model is immensely successful. (Blockbuster) They run with their business model because hey, it is working and they are raking in the dough. The problem is, we are an innovative society and are always looking to simplify things. If these businesses would think that way, they would come up with the RedBox idea or the Google TV idea. What i’m saying is companies need to evolve if they want to last. Blockbuster could have easily come up with the Blockbuster kiosk first and maybe they save themselves. Directv or Comcast could have come up with a Google TV option. They unfortunately feel more comfortable sitting back while their pockets get fat while the geniuses at Google innovate away!

This is going to be very interesting to watch this unfold. I’ll say this. Look at the track record. The newcomer wins these battles nearly every time. Netflix won, RedBox won and Android is winning. In the economy we are in today, you can’t afford to let your guard down as their are people out there hungry enough to fight their way to the top!