Karthik Leong Kong Fee Duan Jinglong Qing JinJian

Business Model

Outline

1. Introduction : What is Google TV

2. Customers / Value Proposition • Television • Applications and Games

3. Strategic Alliances & Complementary Services

• YouTube Channels • Google TV Ads

4. Value Capture

5. Strategic Control / Network Effects

What is Google TV

• Platform with Android OS integrated with Chrome browser to create web-enabled, interactive TV overlay on top of existing TV

• Can switch between TV (cable and satellite) and web

• co-developed by Google, Intel, Sony and Logitech.

• incorporated into set-top box eg. Logitech to connect to existing TV or built-in directly to TV eg. Sony TV

• NBC, ABC, CBS and Hulu blocked Google TV from accessing their content

Logitech - Revue

Sony TV

Remote Control

Existing TV Value Chain

TV Networks Over The Top (OTT)

Aggregator (Quality of Service not

Guaranteed – depends on Broadband Connection)

Cable, Satellite, Telcos

Movie Studios

TV Subscribers Pay TV / Premium Channels

- A la carte

Basic Package

Pay Per View

Accessed online

(30% of US households)

Accessed on TV

(91% of US households)

New Google TV Value Chain/Network

Google TV: Contents Convergence (Web Search) • Search both internet, TV programming and Android

TV apps installed on Google TV to find shows

TV Customers

Online Contents

TV Contents

Value Proposition Television

Types of Customers

Google TV Device Customers • Customers who purchased Google TV from device

manufacturers eg. Logitech or Sony • Search and watch internet or TV contents • Run applications and games on Android

Advertisers • Advertisers for Web Search on Google TV (AdWords) – in

future; keep interface simple for early adopters now • Google TV Ad (New Complementary Service; AdWords

platform) Google TV Device Manufacturers • consoles and TV manufacturers with built-in Google TV

Apps and Games Developers on Google TV

Value Propositions Google TV Device Customers

• Bundles contents from TV and web – Choose from program listing or search for entertainment on demand

• search algorithms profile behaviour based on keywords to predict relevant contents (Personalized Contents)

• Android Applications / Games eg. Social applications for live discussions on the program

• Access to free contents online eg. YouTube or low cost online subscription (eg. Netflix - $7.99 per month compared to $60 per month for cable / satellite subscription) on the big TV Screen

Value Proposition Applications & Games

Google TV

Value Proposition (Game players)

• Flash support inbuilt – Existing HTML5 and Flash games requires no change to run on Google TV (Network Externality)

• Touch screen consoles for games.

• Familiar platform attracts more developers • More creative games

• Platform also supports API for • D-pad

• HD Graphics

• Sound Support

Games with better graphics and

Sound quality

More interesting social games

Better living room entertainment

Google TV

Value Proposition (App Users)

• More free apps in android compared

to apple IOS.

• User friendly and need of the hour

apps supported – NBA scores,

news feeds

• Support for social networking apps

like facebook and twitter

• Affordable price of the device (99$) compared to tablets and smart phones Typically for early adopters who just want to try new apps.

• Specialized apps -> Optimized only for google TV.

Google TV

Value Proposition (Games & Apps

Developers)

• The brand name Google

• Android Platform – Ease of use and

familiarity

• Google TV gaining momentum recently.

• Familiarity of the development platform and availability of the development kit.

• Reduced time to learn and

master the technology.

(Android Programming)

Strategic Alliances Complementary Services

Strategic Alliances – Complementary Services

[1] YouTube Channels (Partners with Media / Production Co.) Google TV blocked by: Major TV Networks: NBC, ABC, CBS Online Content Co. : Hulu -> Limits effectiveness of Google TV Search Google partners with media / production co. -> create original programming

on YouTube channels - alternative to cable TV on internet - initially 100 channels but eventually targeting millions of channels

(compared to 100s for cable / satellite TV) on Web

- wide variety of interests -> Infinite contents (Long Tail in TV programming) [2] Google TV Ad (Partners with Satellite / Cable / TV Service Co.) Create in-roads to TV advertising - Broker placement of advertisements on TV and online programs

Partnerships with Media Co. – YouTube Channels

• Channels will receive programming from dozens

of media / production co. and online video creators

• each channel will contain hrs of programming

• Channels are free for users supported by advertisers

• Media / Production Co. receive as much as 55% of ad revenues after cost paid to producers

Partnerships with Content Aggregators – Google TV Ad

Steps: 1. Logon to Google TV Ad Self Service

Portal: Choose Network, Day/Time, Program for Ad to appear (local or national)

2. Set Maximum Budget 3. Highest bid will be shown (Auction

Model) 4. Pay by Cost Per Thousand

Impressions (CPM) 5. Google provide report on cable TV set

top box impressions and audience tuning behaviour

Google Ad Creation Marketplace - industry professionals provide script writing, editing, production, and

voice-over at affordable package cost

Network Program Day/Time

Guidance on target audience (demographics)

Value Proposition – Advertisers Google TV Ad

• Google Analytics - guidance on audience demographics - stats of the impressions / tuning behaviour

• Google Ad Creation Marketplace – caters to all budgets

• Advertisers set maximum budget - transparent bidding mechanism

• Only pay when advertisements are watched

• For online + TV programs

Value Proposition – Content Aggregators Google TV Ad

• Partnerships with Dish Network,

DirectTV, Verizon FiOS TV, EchoStar and Astound Cable for Google TV Ads

• Auction model ensures they get

the most advertising dollars for their programs

• monetize more programming (transparent bidding mechanism -> more bids for all programs advertising space)

Value Capture

Industry Architectures

- Value Chain

Content Creation

Content Packaging

Content Distribution

User Interface

End User

Hollywood

Studios

Independent

Producers

Broadcast

Networks

Cable

Networks

Broadcast TV

Stations

Cable

MSO’s

TV Viewers/

Consumers

User

Generated

Content

Google TV Google TV

The Internet

TV

PC

Viewers/

Consumers

Traditional

Changes/Additions

Industry Architectures

- Value Network

Internet Value Network

Multisided

Market Search Users Advertisers

(e.g., Online Store)

Search Advertising - AdWords

1

3 5

Industry Architectures

- Value Network

Internet Value Network

Website visitors Online Stores

AdWords/AdSense

Content Providers

Multisided

Market

Industry Architectures

- Value Network

Today’s Model

Subscribers

(End-user)

Cable operators

(Comcast, Time Warner)

Satellite

Content Providers

(HBO, ESPN)

TV Broadcasters

(NBC, CBS)

Advertisers

Internet TV’s Model

Subscribers

(End-user)

Internet TV

(Google TV)

Cable operators

(Comcast, Time

Warner)

Content Providers

(HBO, ESPN)

TV Broadcasters

(CNBC, CBS)

Advertisers

Video Service Provider

(Netflix, Youtube)

Application/Game

Providers

Internet

Service

Providers

TV or Set‐top

Manufacturers

Both TV

and Web

sites.

(Except:

NBC,

CBS,

ABC

Web Sites)

Movie/ Video

Makers

Movie/ Video

Makers

Money Flow within the Architecture

Subscribers

(End-user)

Cable / Satellite

operators

(Comcast, Time

Warner)

Premium Content

Providers

(HBO, ESPN)

TV Broadcasters

(NBC, CBS)

Online Video Service

(Netflix, Youtube)

Application/ Game

Developers

Internet

Service

Providers

(AT&T,

Comcast)

TV or Set‐top

Manufacturers

A

D

V

E

R

T

I

S

E

R

S

Movie/ Video

Producers

Google TV/

Google TV

Ad

Value Capture

Google TV/

Google TV Ad

Advertising

Advertising Revenue from Google TV Ad

Commission from the sale of

applications

Movie/ Video

Producers

Sale of Products

Advertising

TV Broadcasters & Content providers

Advertising

Subscription

Video Service

Providers

Advertising

Subscription

Application/

Game providers

Advertising

Sale of applications

TV/

Set-top Manufactures

Sale of products

Strategic Control

Google TV

(Android OS)

TV/Set-top box

(Sony, Logitec)

Apps/games S/W

(apps/games developers)

Peripherals

(remote control)

• Control key interface standards

• Create network effects

• Develop complementary assets

Multi-sided Platform

Content providers

Advertisers

End-users

• TV/Set-top box manufacturers – Android Open ADK (Accessory

Development Kit)

• Apps/Games developers – Android Open API (Application

Programming Interface)

– Chrome Web Store & Android Market

• Peripherals – Remote control by Android

Phones & Tablets

• Users – OS upgrades, Chrome Web

Store & Android Market

Control Interface Standards

Google TV

(Android OS)

TV/Set-top box

(Sony, Logitec)

Apps/games S/W (apps /games developers)

Peripherals

(remote control)

ADK

API, Chrome Web Store, Android Market

Android Ecosystem

End-users

Upgrades, Chrome Web Store, Android Market

• Partnership with – Cable Co.

– Satellite Providers

– TV networks

– OTT aggregators

• Draw on pool of – Advertisers (Adword

platform)

– App/game developers

• Device manufacturer – Free license for Google TV

Create Network Effects

Cable Co.

Satellite providers

TV networks

OTT aggregators

Advertisers

App/game developers

End-users

• Complements produced by complementors

– Contents, Ads, Apps/games

• Complements developed within Google

– data centers – servers and network

– Google TV Ad for both online and TV contents (pending patent application): analytics for tracking and reporting impressions of ads

– YouTube Channels: millions channels available online

– Brand name & reputation

Develop Complementary Assets

Summary

Google TV • searches contents online and on TV • Android market and Chrome Web Store – Apps and Games

Complementary Services through Strategic Alliances • Google TV Ads brokers placements of ads on online and TV programs • YouTube Channels generate millions of channels online

Value Capture • Advertising – Google TV Search (Adwords platform) – in future • Advertising – Google TV Ad (Adwords platform) • Advertising – YouTube Channels • Revenue from Apps and Games

Strategic Control / Network Effects • Interface Standards • Network Effects – users, apps / games developers, advertisers, partners,

device manufacturers • Complementary Assets

What Google could do

Value Proposition to TV consumers: • User Interface – Explore more user friendly ways of searching apart

from keyboard eg. Android voice search Strategic Alliances: • More partnerships eg. with movies studios to make contents available

on the web to coincide with DVD release

Value Capture: • Enough advertising dollars to fund millions of YouTube Channels? -> monetize contents of minority interest directly ie. paid service Network Effects: • Merge Android and Chrome Web Store into one single platform -> more network effects from apps and games developers and

advertisers

The End Q&A