Can Google Save DISH?

The blogosphere has been in a bit of a frenzy ever since The Wall Street Journal reported yesterday that Google (s GOOG) has started to test a new service on selected DISH (s DISH) set-top boxes. The Journal’s Jessica Vascellaro told her readers that the application makes it possible to search for content carried by DISH as well as YouTube videos and that it is “using elements of Google’s Android operating system.” It’s supposedly being tested by Google employees and their families as we speak.
Many blogs have concluded this to be Android coming to set-top boxes, an idea that’s not entirely unheard of but that hasn’t officially been pursued by Google itself. Dave Zatz is a little more skeptical, pointing out that DISH’s upcoming app store featured a Google app many moons ago. Personally, I think the timing is very curious: Why would news about a partnership between Google and DISH leak just days after the pay TV provider loses in court against TiVo (s TIVO)?
Just a quick reminder: A federal appeals court ordered DISH and Echostar to pay $200 million to TiVo last week, upholding a patent infringement ruling from last September. At the core of the dispute are TiVo’s time-warping patents, which essentially describe DVR-like functionality. Some analysts have concluded that the ruling could force DISH to stop distributing DVRs altogether, but the satellite TV company has already declared that it won’t impact existing DVR users.
Last week’s ruling set TiVo’s stock prices soaring, and DISH’s shares tumbled. However, they’ve almost recovered by now, thanks in part to yesterday’s news that the company is now in bed with Google. So what’s causing this confidence?
One option could be that traders hope Google could help DISH with its ongoing legal issues. That’s unlikely, but not entirely impossible. If Google weer to enter the set-top box market, it would have a vested interest in fighting overreaching patents, and it could assist others in doing so — think HTC vs. Apple, only for TV boxes.
The second option: DISH wants to replace DVR functionality with over the top video, giving its users access to free and paid online programming as well as its own VOD in order to forgo altogether any future per-subscriber payments to TiVo. The Wall Street Journal noted yesterday that Google’s app lets users “personalize a lineup of shows,” which sounds like DVR functionality to me, albeit possibly without any local storage if fed by the cloud. Again, somewhat unlikely. DISH may embrace over the top, but it’s still first and foremost a satellite TV provider, and as such needs to offer some kind of time-shifting functionality for TV programming.
The third option? A bargaining chip. DISH has announced that it’s going to keep fighting against TiVo, but most observers assume that the company is eventually going to have to settle. Having Google as a strong partner on your side could help during these negotiations, and the mere possibility that DISH could eventually replace a local DVR with cloud and over the top services should also help to keep the price down.
DISH may be testing some really interesting Google technology, or it may just have a neat search app in store that offers access to EPG data as well as YouTube videos. However, the fact that it opened up the kimono this week is nothing else than corporate politics.
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