Google Fiber, HBO Still Haggling
Google has its MTV. Now it wants its HBO.
The company has been in discussions to bring the pay TV network and hit shows like Girls and Game of Thrones to Google Fiber this year, but the two were still facing hurdles as of a few weeks ago even as Google was prepping for its newly announced high speed Internet expansion into Austin.
A senior Google executive discussed the situation recently at an unrelated gathering, providing a briefing of the progress between Google Fiber and the cable channel, according to one person who was present. At the time, a deal did not appear to be imminent, but talks were ongoing, this person said. (Neither is identified by name here because the comments were not meant for publication.)
That Google is reduced to begging HBO to sign on to its new TV service (not to be confused with its older Google TV service) speaks volumes about the state of disruption in the cable TV and broadband markets.
On the broadband front, Google Fiber offers a glimpse of the future that’s so bright you almost need to wear shades. In Kansas City, where it is already up and running, customers can get gigabit Internet for $70 a month, or opt for standard broadband free for seven years with a $300 sign up fee. It’s hard to tell what’s more interesting — ultra high speed data services that could spark a new wave of online innovation we haven’t even begun to dream of, or the prospect of giving our poorest a leg over the digital divide.
Those plans are tailor made to shame other U.S. broadband providers into doing more to fix the pitiable state of Internet in America, and it seems to be working. The day Google announced plans to launch in Austin, AT&T said it too would provide similar service options.
Now let’s look at TV.
In addition to getting Internet up to 100 times faster than standard broadband, Google Fiber subscribers can opt to pay an additional fee to get access to video from channels like ESPN, Fox News and MTV. You can record shows to DVR, and connect to Internet video services like Netflix.
In short, Google Fiber TV is almost a direct replica of the cable TV services it competes with, and pretty much a yawn. It’s biggest draw may be the ability to simultaneously record eight shows at once, compared to two for most cable services. And Google is still missing key partners.
Efforts to add HBO to its list are hampered by at least two things: It has a tiny television footprint; and, in going head to head with cable operators, it’s targeting HBO’s most important partners. Both factors are likely sticking points in the negotiations.
A Google representative confirmed Wednesday that HBO is still not available on Google Fiber but would not comment on discussions, saying only that ”we are always looking to make Google Fiber better by adding programming that people want.”
HBO did not immediately respond to an inquiry.
The message here is loud and clear: Content is still king on TV, and all the bandwidth in the world can’t force significant change, at least not yet.
The pussyfooting comes as HBO continues to push its content beyond cable by way of its HBO Go service, which allows subscribers to view shows on phones and other devices.
Google Fiber is completely separate and offers a very different experience from “Google TV,” the company’s ambitious plan to upend cable launched in October 2010, which already supports HBO Go.
Google TV pulls video signals from third party cable or satellite receivers and overlays a custom interface featuring Google’s Android operating system and Chrome browser that allow viewers to search and connect to Internet services such as Netflix and Youtube, as well as traditional cable programming. Google Fiber’s TV package, by contrast, involves direct licensing deals with content providers and draws the video signal through Google’s own receiver.
Like Apple TV, Google TV has never been a hit with consumers, who have generally stuck to traditional cable services or gravitated to other devices offering similar online video features. Perhaps the most successful is Microsoft’s XBox video game system. With about 76 million units sold worldwide, it is one of the largest de facto alternate TV interfaces in the world, offering its XBox Live subscribers video from a number of online sources, including HBO Go, since 2011.
Can Google Fiber TV do what plain old Google TV has not? Probably not in its current form.
First of all, the expense involved in building out fiber to the curb is daunting. Verizon, for example, the only telco to attempt it, sunk $23 billion into its FIOS fiber network before it stopped expanding into new service areas in 2010. It isn’t going to recoup those costs any time soon.
But it’s not just about cost. Google claims it is building a real business, not a charity, and there’s good reasons to think that’s true. Google famously bought fiber assets at fire sale prices years ago, when the telecom bubble burst, so its financial hit in rolling ultra high-speed broadband could be lower than you might expect. Here’s a story I wrote about it at the time that holds up pretty well: Google Wants ‘Dark Fiber’.
Even if Google Fiber doesn’t drown Google in expenses, it’s obvious the TV component isn’t really a disruptive online alternative to traditional cable. It’s incrementally better, arguably, but it is not a bullet to the head to the old model. In fact, it is the old model.
What Google Fiber TV highlights most of all is three things: 1) gigabit broadband won’t be allowed to replace cable TV; 2) content licensing is going to force high speed broadband providers to separate TV services and replicate the old cable TV business for years to come; 3) content rules TV.