Will Cable Operators Let the Google Fox Into the Henhouse?

While much attention last week focused on Google TV’s new box from Logitech, more interesting news was the partnership that Google struck with DISH to distribute Logitech’s Google TV device and allow for limited integration with the satellite TV provider’s set-tops.

The move is interesting because it’s the first time Google has effectively cracked the pay-TV oligopoly with its OTT platform in Google TV. Think about what that means: Pay-TV operators are famous for their clinch-fisted control of networks and the consumer experience. The very idea of letting the likes of Google into the henhouse is a sign that operators, much like mobile carriers, see using a Google platform as a way to add interesting features to an OTT applications ecosystem they themselves could not develop internally.

But DISH is not a cable MSO, and has historically been the biggest risk-taker of the U.S. pay-TV operators, mainly because it knows it is hamstrung by the lack of a good backchannel for Interactive TV. It also doesn’t have a true answer to cable VOD.

So the real question here is if Google can sell its act to the Comcasts of the world. In other words, will cable MSOs be willing to give up some of the control they so much desire in exchange for implementing a forward-leaning, dynamic, harder to monetize and possibly dangerous OTT platform onto their set-tops?

A Google TV platform will be a tough sell, but I think after a decade-plus journey through the interactive TV desert with OCAP/Tru2Way, many MSOs may be too tired to resist Google. Below I outline three potential phases for Google TV integration with carrier-based pay-TV offerings.

Google TV, Dabbler Edition. Some carriers will no doubt want to offer Google TV features through limited deals — offering a sidecar Google TV box in test-markets, for instance. In fact, it’s likely any deal with a MSO would be extremely limited geographically, as the MSOs would want to test and see usage behavior. But in this scenario the MSOs would likely seek to limit the types of OTT offerings Google could offer. They could even request that apps seen as competitive to their own VOD offerings, like that of Netflix, be excluded from any integrated offering.

Google TV, Sidecars For Everyone! Edition. This would essentially be the DISH network deal: The carrier would allow for integration with its set-top, with plans to roll the offering out to its entire subscriber base. The carrier would still maintain control of the UI and EPG. We’ll likely see a smaller cable MSO — Cablevision, for instance — go down this route. Chances are, we won’t see any big MSOs — meaning Comcast or Time Warner — bite on such a big commitment for at least a couple years.

Google TV, Full Monty Edition. While Google is today taking a sidecar approach, I think the company’s ultimate goal would be to have a full integration with carrier set-tops. In doing so, it could control the EPG and UI, at least to the extent of having cobranding between itself and the carrier (this is similar to TiVO-based set-tops). Google may ultimately want this, and may get it with someone like DISH. But I don’t see any cable MSO’s going down this route in the near term; doing so would likely put too much control in Google’s hands and also dilute the MSO’s own brand.

The success of the iPhone changed mobile carriers’ thinking quickly as they looked for a weapon to counter the Apple freight train. But the cable world doesn’t, at least in the near-term, face a threat with as much momentum as the iPhone. I don’t think even Apple would predict Apple TV will result in a huge percentage of cordcutting in the next year or two. So it’s unlikely we’ll see Google TV, Full Monty edition, for at least a few more years.

Question of the week

Will Google be able to sell its living room strategy to cable MSOs?