IP Democracy: Good Luck to Google in Getting into More Set-Tops

Google is pushing deeper into the TV business under a new pact with TV viewing measurement powerhouse Nielsen. Under the alliance, Nielsen will combine its demographic data sets with Google's second-by-second ad viewing measurement skills to offer advertisers more compelling information on who -- and, more importantly, who isn't -- watching TV ads.

Google has been running its ad measurement system with DBS provider EchoStar since May, pulling data out of the satellite subscribers set-tops. Advertisers seem pleased by the more accurate and comprehensive viewership reports generated by the search giant. Nielsen's participation can only enhance the value of Google's data and in a dream world all multichannel video providers would follow EchoStar's lead.

In the real world, however, Google is going to need all the luck it can get if it wants cable operators to play along. (EchoStar is not a cable operator, as the New York Times article on the alliance incorrectly suggests.)

Just ask Microsoft. The Redmond software giant has pumped billions of dollars into the U.S. cable industry since the late-1990s, all in an effort to get cable operators to deploy its interactive TV software system inside customers' set-top boxes. What has Microsoft gotten for all its money and labors? Um, not much of anything.

Why? Because cable operators like to control their suppliers and Microsoft isn't easily controlled. From the get-go Microsoft never stood a chance with cable operators because it never grasped this simple fact, this basic element of the industry's DNA. Cable operators were quite happy to take Microsoft's money and publicly made loud encouraging noises about the company.

In the end, however, nobody (by nobody I mean the big guys -- Comcast, Time Warner, Cablevision, Cox) deployed Microsoft's TV platform. It didn't help that the software sucked, at least from a cable engineer's perspective.

Google's ad-tracking system, on the other hand, obviously doesn't suck. But that doesn't matter. No cable company will let Google inside its customers set-top boxes no matter how much more ad revenue could be generated. To do so would be giving a very powerful company, with a market cap far greater than any single cable company, great leverage over a very important part of cable's business -- advertising.

Moreover, cable operators are notoriously cheap. In the extremely unlikely event that a major operator would cut a deal with Google, it would do so only under terms that might represent a new low for Google.

Barring some catastrophic event or substantial market shift that greatly weakens the U.S. cable industry, Google is going to have to develop its TV-based ad business without the help of the top cable companies.

Posted by Cynthia Brumfield on October 24, 2007 11:52 AM to IP Democracy