The big, big deal of today is Google’s pact with News Corp.-owned BSkyB under which Google will license its user-generated video content (including YouTube), email, search and targeted ad tools to BSkyB’s Sky Broadband customers. BSkyB entered the terrestrial broadband business last year when it purchased EasyNet’s high-speed business and launched a series of broadband packages, the lowest level of which (still 2 Mbps download) is available at no charge to its Sky TV DBS customers.
This deal is Google’s first big agreement that leverages, at least in part, the company’s new YouTube division. But that’s not the interesting aspect of the alliance.
The pact between BSkyB and Google calls for Google to reach into BSkyB’s TV-only business, with the search giant powering the delivery of contextual TV ads delivered to Sky TV customers, which will be stored on and delivered from the set-top boxes of the TV viewers. No financial details were released but Google’s CEO Eric Schmidt is quoted as saying the deal is the company’s “most lucrative” yet…”if it works.”
That’s a big if, because cable and interactive TV engineers have long toiled to solve the technical challenges of delivering targeted, contextual video content to individual customers. It helps that SkyTV isn’t saddled with the costs of swapping out or upgrading technology resident in multiple local hubs, which is characteristic of the cable industry’s typical architecture. The expense in upgrading multiple headends or hubs is a disincentive for cable operators to toy around with new ideas like this. BSkyB, on the other hand, merely has to worry about one technical upgrade via its satellite-based platform and the job is done.
In any event, Google said it chose to do this deal with BSkyB because Britain is ahead in terms of bandwidth, which gives Google a lot of latitude to play around.
Mr Schmidt said Google had chosen the UK as a “test bed” because of fast broadband speeds and high broadband penetration. “Britain is ahead. They have so much bandwidth it changes the definition of how people use Google.”
I don’t believe that Britain is much ahead of the U.S., or any other country for that matter, when it comes to broadband speeds. In fact, according to ITU data released last summer, the U.K. doesn’t even rank among the top ten nations in terms of speed or price per megabit.
BSkyB’s terrestrial broadband service is definitely zippy. For about 10 GBP (or around $19.63) per month, SkyTV’s customers can purchase broadband that delivers up to 16 Mbps (download) service.
But it’s more likely that Google had a tough time cutting a deal with a U.S. cable operator (and forget U.S. DBS providers — one of which, DirecTV, is in the midst of a high-profile ownership change that, coincidentally enough, involves News Corp). Not only do cable systems, at least any decent-sized one, pose greater technical problems, but U.S. operators are extremely reluctant to allow powerful companies to mess around under their hoods.
Cable companies are notorious for wanting to control their technology suppliers, and Google is a company that any operator would have a hard time controlling. (Just ask Microsoft, which has been slogging away for nearly ten years and has barely made a dent in the cable business.)
Cynthia Brumfield at 12:27 PM|Comments(0)
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