The Big Picture

Patrick Goldstein and James Rainey
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Will Google TV do to Hollywood what Napster did to the music biz?

August 18, 2010 | 12:52 pm

Eric_schmidt My colleagues Dawn Chmielewski and Jessica Guynn have a fascinating Page 1 story in our paper today about the upcoming arrival of Google TV, which would allow viewers to watch movies and TV shows "unshackled" from the networks and cable channels that currently send them to our homes. It's the unshackled part that has Hollywood in a tizzy. As my colleagues dryly put it: "Entertainment industry executives fear Google TV will encourage consumers to ditch their $70 monthly cable and satellite subscriptions in favor of watching video free via the Internet."

In other words, Google TV could do to Hollywood what Napster did to the music business by upending the industry's entire carefully calibrated business model. If you can watch nearly everything you want to watch without dealing with a middleman, it could be a liberating experience for consumers but a disaster for the old media giants who've been raking in giant profits from their programming. Guynn wrote a separate piece for our business section that actually shows a young San Francisco couple, sitting in their living room, watching everything from AMC's "Mad Men" to Facebook updates and Flickr photos, all on the same TV screen. As it turns out, one member of the couple is running the marketing campaign for Google TV, so they're simply testing out the new venture.

But in Hollywood, everyone is wigged out about the dire possibilities of Google essentially inserting itself between the studios and their customers, since it remains unclear just how Google plans to compensate studios for their content or manage the advertising revenues from the shows it airs. In fact, the story makes it clear that Google's much-touted video search capacity isn't all that accurate, especially when it comes to identifying what networks envision as the most obvious place to find a show--their own websites. When Google had demonstrations with network execs, its TV confused one network's show for a rival's program and, even worse, "it listed the several ways a popular prime-time show could be watched online and on TV--except on the network's own website."

Ouch!

As I wrote in a post the other day, whenever new technology emerges that allows consumers more choices, it is inevitably a destructive experience for the companies making money off the old model, since they are the ones who find it most difficult to embrace and take advantage of the sweeping changes. Nearly all of the wealth that has been generated by new media technology in recent years has gone to entrepreneurial companies from outside of the old business--Apple, EBay, Amazon, Netflix and Google, even before its ambitious attempt to move into TV.  I suspect the networks will fight tooth and nail to stop Google from invading their lucrative territory, but when it's an old media company battling a new media company, the winner comes from the new media camp nearly every time.

RECENT AND RELATED: CAN HOLLYWOOD HANG ON TO ITS AGING BUSINESS MODEL?

Photo: Google Chairman Eric Schmidt. Credit: Laurent Gillieron / European Pressphoto Agency

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