Google Wants To Tap The Second Golden Age Of Television

Google Wants To Tap The Second Golden Age Of Television

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Traditional pay-television providers, already under pressure from consumers opting for streaming internet video, are facing a new threat.

Google is getting into TV advertising, and a decision made earlier this year by the US Federal Communications Commission (FCC) has everyone from traditional set top box providers to diversity champions worried.

The FCC says it wants to “unlock the box”, approving a proposal in February to force traditional cable providers to share programming, device and content delivery data with “creators of competitive devices or apps”.

The FCC has denied that it will mandate “a government-specific standard”, believing to do so would impede innovation. Rather, the FCC proposed that the specifications be set by “an independent, open standards body”.

Early backlash from the industry

But not everyone agrees this new ruling would encourage innovation. Dish Network Corp’s Stanton Dodge argues the proposal “would actually hinder” innovation in the area.

Bob Quinn, AT&T’s senior vice president of federal regulatory agrees, stating “the FCC has chosen to go down a path that threatens the very competition and innovation that has led to this vibrant marketplace”.

Major TV producers including Disney, Time Warner, Fox, Comcast-NBC and the National Cable & Telecommunications Association have both submitted responses to the FCC. Their common argument is that “creators need to maintain control over product placement and commercial content”.

The Motion Picture Association of America along with the Screen Actors Guild is asking the FCC:

“that in seeking to ensure set-top box competition, the FCC not give third parties our content without our permission and without compensation, not put our content at risk of theft, and not threaten the economics underpinning the creation of programming that is fostering a Second Golden Age of Television.”

Pay-TV set to grow

The backlash from US pay-TV services likely stems from already declining pay-TV revenue in North America. It is expected to fall by US$13.5 billion over the next five years. Removing set-top box rental revenue to pave the way for competitors like Google, Apple and Tivo, will only add to this decline.

Despite the decline in North America, pay-TV will continue to grow globally. The largest revenue growth regions between 2015-2021 include the Asia Pacific with 25% growth ($8 billion). Revenue in India is forecast to more than double from $3.5 billion to $7.8 billion. China is also expected to see a massive increase from $1.9 billion to $11.7 billion.

The Middle East and North Africa will also see revenue increase by 26% and the Sub-Saharan Africa region is expecting massive growth of 63%.

This comes after a call by Fox CEO James Murdoch for pay-TV services to decrease the number of channels offered, to remain competitive in the new subscription media landscape. A Nielsen report shows that despite the number of available channels increasing from 129 in 2008 to 189 in 2013, consumers continue to tune in to an average of just 17 channels.

Who will benefit the most: consumers, Pay-TV or Digital Disrupters?

The FCC argues consumers will ultimately get more choice, greater flexibility, increased innovation, more competition and better prices.

The FCC’s proposal will open options to cable subscribers in the United States, who currently pay on average US$231 per year to lease a set-top box from their cable provider. These businesses last year generated an estimated US$20 billion dollars in revenue.

The FCC noted that set-top box prices have risen by 185% since 1994, three times that of the Consumer Price Index (CPI).

Much of the discussion of the FCC decision is focused on the benefits for consumers. But an open set-top box market will also open up opportunities for other companies involved in media distribution, particularly those that have already disrupted traditional media, like Google, Amazon and Apple.

These companies are not only established within the United States, all have interests within a number of other countries. This raises questions as to what the flow-on effect of the FCC’s decision could be in other countries, particularly those regions expected to see growth in the pay-TV sector.

Is the box needed?

The FCC proposal is based around “the box”, but we have seen a massive shift in the way consumers view content. Consumers now watch video across a number of devices including, smartphones, tablets, computers (laptops and desktops) and gaming consoles. Viewing video content is no longer platform or device dependent, rather requiring a platform-agnostic approach.

In addition, the rate of internet connected televisions is projected to be 26.8% globally in 2018. In the UK 29% of televisions are smart televisions, with more than 78% of these being purchased in the past two years. In Australia, 32% of homes have a connected TV. This only adds to the ease of access to online video content to the TV screen.

In an unlocked set-top box environment, subscription television services could offer content from a number of different companies, raising issues around data and ratings.

Is it about content or data?

Ratings are crucial for the sale of advertising by commercial broadcasters. Having an open approach to content could allow multiple organisations to have access to this rating information.

The open approach could benefit companies like Google, known for its data collection. If Google was to develop applications and other peripheral technology that would allow access to pay-TV services, this would also allow it to gain access and gather the data associated with consumer viewing habits and behaviours.

Google has been extremely successful in data collection with YouTube. This approach could be integrated into a larger viewing analysis and used for targeted ads across its networks.

Google could present a wealth of program viewing information to media producers. This could not only be specific to local markets, but could give a global analysis of viewing habits by consumers for specific programs. This would see Google become a competitor to other television and media ratings companies across the globe, like Nielsen.

Last year, Nielsen announced a strategic agreement with Roku to enable the measurement of online video streaming through Nielsen Digital Ad Ratings.

Amazon could use this data to recommend products relative to the consumer’s viewing habits. Amazon’s program Transparent won a Golden Globe, which founder Jeff Bezos said assisted in the sale of other products on the site.

Netflix has already hinted at releasing a second screen experience element to its mobile app later in the year.

Google, along with Netflix, Apple and Amazon could also use this information to recommend programs, and products across various online networks and devices.

While consumers may see the FCC’s decision as a win, there needs to be consideration and further analysis of what open access of media content really means. Do consumers want all of their online and media viewing habits (data) to be collected?

This would allow services like Google and Amazon to provide products, services and advertisements that would arguably be personalised based on the individual’s online history.

But this could be taking personalised media too far. It has the potential to remove the chance to stumble across a program, the the choice to go outside your regular viewing and to potentially view content based on a friend’s recommendation.

Marc C-Scott, Lecturer in Screen Media, Victoria University This article was originally published on The Conversation. Read the original article.

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