Positioning to be a TV Gatekeeper… Without Even Trying
James is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Did Google (NASDAQ: GOOG) just succeed at what Apple (NASDAQ: AAPL) has failed to pull off despite years of effort? Maybe.
The task in question is becoming part of the physical framework consumers rely on to consume television-based entertainment in their dens or living rooms. Apple wanted to be the middle man – the gatekeeper - so much so that it unveiled a set-top box back in 2007, and has used that idea as the platform for some pretty impressive improvements, up to and including potential partnering with cable television providers; Apple-built televisions are rumored to be around the corner. Yet, the market hasn’t fallen in love with Apple TV the way it has the iPhone… a smartphone line that Apple has sold more than 250 million of since also unveiling them in 2007. Google, on the flipside, may have just snuck into America’s living rooms without even trying to.
Of course, what Apple wanted to do and what Google will do with the positioning may or may not be the same thing. Then again, ‘being there’ is half the battle, and Google is there while Apple isn’t.
The proverbial Trojan Horse is a device called the Ouya, pronounced (OOH-yuh). You’ve not seen the device yet, but you will in March once the company starts to ship them. The Ouya is a gaming console, in the same vein as the Microsoft (NASDAQ: MSFT) Xbox or the Nintendo Wii. There’s one difference though… where the Wii or Xbox plays disc-based or cartridge-based games, Ouya plays web-downloaded games played on Google’s Android smartphone operating system.
Hardcore, old-school gamers will argue that the best games can only be found on consoles. Tablet and smartphone owners may know better, however. Popular game titles like Final Fantasy, Human Element, Samurai Vengeance, and Dead Trigger are just some of the names that are slated for availability on the imminent Ouya device. [For those who aren’t in the gaming loop, these video games are popular because they’re graphically riveting and offer some depth to the game play.]
Great, but what’s that got to do with Apple? Because it makes Android the centerpiece of the living room rather than Apple’s operating system. Ergo, it makes Google the proverbial digital-media gatekeeper for what’s piped into the world’s living rooms via the television set.
OK – to say Ouya is the ‘centerpiece’ might be a little strong. It does position Google in the hearts and minds of consumers in their TV-viewing state of mind though. And, the device does more than just games. VEVO has agreed to pipe music videos through the device onto TVs. Media-playing software XBMC will also work on the Ouya. In fact, any app that will work on Android will work on the Ouya. It’s just going to be working on a much bigger screen.
To be fair, with the exception of some rather impressive gaming, what the Ouya can do now isn’t much more than the original Apple TV set-top box could do five years ago, and even with some significant upgrades in the meantime the Apple TV box hasn’t been a smashing success; CEO Tim Cook is still seeing it as a hobby rather than an enterprise. Yet, the Ouya is still a more exciting advent for Google – and the Google app store to be specific – than Apple TV may be for Apple. Why’s that? Because Apple’s interest in cable television scares the daylights out of cable television providers, while Google wasn’t even trying to crack the living room nut. It’s a testament to the unobtrusive power of open source software like Android (which invites everyone to spread your platform), versus a tightly-controlled ecosystem like Apple’s OS (which prevents anyone from spreading your platform).
See, the company has approached the nation’s major cable service providers as potential resellers of its Apple TV set-top boxes. A couple of the bigger names Apple was hoping would start offering the box were Comcast (NASDAQ: CMCSA) and Time Warner (NYSE: TWC). So far though, none of them have taken the bait. While none of those cable operators have come outright and said they just don’t trust Apple’s positioning in the supply chain – between the TV and the coaxial cable piping the signal in – that is the most common assumption. Putting the device between the feed and the TV makes it too easy for Apple to induce a “cut the cord” mentality… a position Apple would be in only because those same cable providers placed those boxes in their customers’ living rooms in the first place.
Not that Google wouldn’t/won’t do the same given the opportunity, but it’s taking an indirect approach – the kind that doesn’t terrify potential partners who don’t want to introduce their own customers to potential competitors. Indeed, Google didn’t introduce anything into living rooms and dens; a third-party is developing the Ouya.
Is Ouya going to be ‘the’ game-changer in the way consumers get their digital content? That remains to be seen, though first-generation technologies don’t always seem to start a chain reaction. If it’s not the Ouya though, something like the Ouya could do the job - as long as Apple insists on doing its way, or no way at all.
jbrumley has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Google, and Microsoft. Motley Fool newsletter services recommend Apple and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.
