Monday, October 24, 2016

Alphabet Inc’s (GOOGL) Google TV Could Threaten the Entire Cable Industry

Google TV should only exacerbate the culture of cord-cutting

According to Reuters, earlier this week an agreement was reached between Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) and CBS Corporation (NYSE:CBS). Apparently, Google will be carrying CBS television content on its yet-to-be-released streaming service.

If the few details revealed by Reuters are indeed accurate, Google will almost instantly become a dominant force in the streaming television space, and could eventually threaten the entire cable industry.

Google’s TV service is expected to launch at some point early next year. YouTube is the undisputed king of online video sharing, and Google has taken steps over the past few years to improve its subscription platform (e.g., YouTube Red) and live streaming capabilities.

The presence of a bundle containing traditional television stations and content wouldn’t be much of a stretch for consumers to digest, and in fact could be extremely well-received.

Google Is Already Involved in Streaming Television

For years, Google has remained present in the streaming television arena, as the Chromecast has stood tall alongside competitors such as Roku, Apple Inc.’s (NASDAQ:AAPL) Apple TV,, Inc.’s (NASDAQ:AMZN) Amazon Fire TV and a myriad of others.

The current force to be reckoned with in the streaming television space is, without a doubt, Roku. However, Google’s Chromecast isn’t far behind, despite its less polished user interface and need for a computer or smartphone.

For the uninitiated, the Chromecast — currently in its second generation — is the culmination of years worth of research and development, trial and error on the part of Google’s development team to come up with an affordable, viable replacement for the standard cable TV set-top box.

This discussion, however, is less about hardware and more about content. There’s no denying that YouTube is the No. 1 most popular video sharing website in the world, by far. Google’s ownership of YouTube puts it in a uniquely powerful position — with more than 1 billion visitors to the YouTube website every day, promoting a new Google TV service wouldn’t present a problem in the least.

According to Reuters, Google’s skinny bundle TV program service will offer content from CBS as well as Twenty-First Century Fox Inc (NASDAQ:FOX), Walt Disney Co (NYSE:DIS) and Viacom, Inc. (NASDAQ:VIAB). Along with curated content from its own YouTube service, a Google TV package could be a surprisingly attractive alternative to paying Comcast Corporation (NASDAQ:CMCSA) hundreds of dollars per month for hundreds of channels you’ll never watch.

Streaming television shows and content online is nothing new. The current industry front-runner, Roku, has refined a crisp, interactive and intuitive user interface that tops the list. Google’s Chromecast, on the other hand, has almost no mentionable user interface at all and content is instead pushed to televisions from smartphones, tablets and the Chrome desktop browser.

At this point, it is unclear whether Google’s coming television service will include or incorporate a consolidated user interface, if content will be accessed via YouTube or a newly-designed website, or even if the service will be accessible through Roku, Chromecast or Fire TV.

While online services similar to what’s expected from Google TV already exist, none of them come close to being able to match the potential popularity and instant viewership that Google will enjoy right from the start. So, where others have struggled to build a fan base and increase exposure, the billions of viewers already hooked on YouTube make an overwhelmingly advantageous captive audience. 

Google TV Could Kill Traditional Cable Providers

It’s no secret that cable television providers are among the most despised of all companies. Comcast, for example, has historically been known as the most hated company in America, holding the record for the absolute lowest score ever obtained by the American Customer Satisfaction Index from 2008-2015.

That being said, people are always on the lookout for a valid excuse to leave Comcast.

If Google puts out a television service that is at least comparable to packages available from Comcast, the likelihood that a statistically significant percentage of current CMCSA customers will jump ship and sign up for a plan through Google is high. With the number of people cutting the cord increasing every year, internet-based streaming television services are ever more popular, despite efforts by traditional cable providers to keep customers from leaving.

The truth of the matter is that the concept of television watching is evolving into an on-demand paradigm, with services like Netflix, Inc. (NASDAQ:NFLX) leading the way and cutting a new path. With the technological ability to stream virtually any program anywhere in the world at any time, the focus is now on convenience, reliability, ease-of-use and, of course, price.

Presently, there seems to be something of a lull in the storm and a tenuous balance exists, which arose only after traditional cable providers scrambled to create their own new bundles and discounted service packages. In the end, though, it won’t last, and when Google TV is finally available, it could arrive like a nuclear bomb that destroys the television industry and further endangers traditional providers.

Article originally appeared on InvestorPlace (10/24/2016)

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