Google last week unveiled GoogleTV, heralded by Intel CEO Paul Otellini as "the biggest improvement to television since color."  And hey, what fun is a huge announcement without unrestrained hype, hyperbole, and flashy demos?  Right?

Whooops!

Never Work with Children, Animals, or Bluetooth

Demos often seem predestined to fail.  Anyone who has been on the receiving end of a trade show demo can attest to that.  Well, this isn’t working as planned, but you get the idea moments are hardly rare.

So it was not a big surprise to see the Google TV demo hampered and delayed by technical glitches.  For a  technology meant to harness the power of Internet, and bring the experience to the television seamlessly, this was not particularly confidence-inspiring. 

But we still get the idea…

Introducing WebTV 2.0?

Some of us are old enough to remember painful previous attempts at bringing the experience of the Web to the television screen.  Was WebTV simply misunderstood?  Or was it ahead of its time?

Perhaps both.  

What WebTV fundamentally missed was the singular and individual nature of Internet experience  One could argue that it did little more than render the tv screen a monitor viewable by the whole family.  The result was an experience similar to having someone read over your shoulder.  Creepy and annoying.

To be sure, the technology has been there for years—it’s the business case that has been lacking.

Why it just might work this time

GoogleTV has a fighting chance this time, for several reasons…

Cord cutting is fast becoming a reality

Today things are markedly different.  With a growing abundance of online video, “Cord cutting,” the notion of Cable and Satellite customers moving to unmanaged free or almost free Internet-based platforms, is fast becoming a reality. Strategy Analytics sees the number of so-called "cord cutters" exceeding 10% of US television households by the end of the year. Video will continue to dominate, accounting for over half of all of all consumer Internet traffic in the next five years.

Source: Strategy Analytics

Although the GoogleTV talking points bill the platform as “complementary” to cable, satellite and Telco TV, make no mistake—GoogleTV is a competitor to traditional “managed” pay tv.

It satisfies a demonstrated need

While it has been possible to emulate a pay tv environment with a game console, a tv and a PC, the level of sophistication required to knit these together into a seamless and enjoyable viewing experience went far beyond the aptitude or interest of the average consumer. GoogleTV may just bridge that gap.

Observational research of Connected Media Users in the US and Europe, performed under the auspices of Strategy Analytics’ Digital Home Observatory, uncovered some common missing elements consumers identified in today’s Over the Top (OTT) ecosystem

In addition to the desire for an integrated experience across devices, respondents brought up the wish for a more personalized viewing experience, and the ability to discover new relevant content based upon their existing likes and interests, and more relevant advertising and payment options.

These are all places where GoogleTV can deliver.

The Power of the Value Chain

As strange as it may seem to see Sony chief Howard Stringer sharing the stage with Google and talking about “openness,” a critical success factor for GoogleTV is the power of its value chain, and the A-list partners it has teamed up with. Along with Sony, the presence of Intel and Logitech, as well as BestBuy and Dish bring some credibility to the table.

TBD?

Pricing

Rumors are floating around about likely price points, but nothing firm as of yet. This could be critical, as a $399 Logitech “companion box” sounds like it may collect dust on the BestBuy shelves.

Content

Somewhat surprisingly absent from last week’s announcement was any real mention of the content side. Sure, there was lip service paid to “You Tube Lean Back,” but nothing of any great consequence. YouTube, which turns five this year, is starting to offer full-length movies, though it still lacks enough professional content to make it a viable alternative, and UGC (User Generated Content) is, by nature, ephemeral. How many times can you watch “David After Dentist?”

And what about Sony’s extensive library of television series and movies?

Net Neutrality

As I mentioned in an earlier blog, the goings on with the FCC are doing very little to inject any sort of confidence or certainty into the minds of investors. And even though Chairman Genachowski’s “Third Way” strategy appears to be the current path, the fight has not even started with the MSOs and Telcos.

Expect this to be tied up in court for the next few years.

And that,, we get.