SME#33: "The Battle For The Living Room Series - The Google Edition
Streaming Made Easy #33 - Google's secret sauce in the TV OS Wars
Welcome back to Streaming Made Easy. I’m Marion & this is your weekly European take on the Global Streaming Video Business.
This week brings the 4th blog of the Summer Series “The Battle for the Living Room” with a Google edition.
If you missed the previous editions, head over here → Summer series.
Enjoy today’s read and don’t forget to subscribe, comment and share.
Google needs no introduction.
→ It’s a 1549.41B$ company present in our day to day lives.
Android doesn’t either.
→ It runs our phones.
Android indeed governs 71.7% of mobile OS market share globally (Source: Bank my cell).
But how does that translate in the TV OS ecosystem? What is the difference between Android TV & Google TV?
These are some of the questions I’ll try to answer today.
The Original Google TV
Google TV was announced at I/O 2010 and landed on devices from Sony and Logitech, LG or Vizio.
At the time, users could navigate through the platform to access apps and even the Google Chrome browser.
Said to have met little success, it was nevertheless the beginning of Google’s TV OS journey.
Android TV
At Google I/O 2014, Google announced Android TV.
At that point, Google had two OS running: Android TV and Cast OS.
Android TV was operating 3rd-party TV devices while Cast OS was behind the 1st Chromecast launched a year prior.
Chromecast was a streaming dongle or stick (you could plug to your TV via HDMI). It was sold for 35$ and was meant to compete with Fire sticks or Roku’s streaming devices.
At the time, you didn’t have an interface to interact with, users were casting content from the app.
Unlike the Original Google TV, Chromecast was a success and Google is said to have sold over millions of devices worldwide.
Google released 6th generations of Chromecast:
From 2015 onwards, Android TV took over as the OS (until 2020).
Each new Android TV OS update brought new features (UI/UX improvements, voice search, personalised recommendations, ads in 2019, Google Assistant):
Year on year the list of supported TV brands grew:
Sony
Philips
TCL
Nvidia
Xiaomi
Hisense
The platform was the same across all devices. TV manufacturers licensing the OS could not customise it at all.
There’s one exception though and it’s what gives Google a competitive edge over its TV OS competitors: the Android TV Operator Tier.
The Android TV Operator Tier is a level of certification for an Android TV device which allows companies, such as pay TV operators, to customize the platform to suit their individual needs.
Why do Operators choose Android TV?
Instead of building a platform from scratch, they have a platform ready to go (with thousands of apps) which they can customise.
Operators can indeed customise the home page, surface prominently their own and operated apps, link Google accounts and Pay TV accounts, integrate DVR capabilities etc.
With the help of Android TV, new devices see development cycles that are up to 60% shorter (WeTek).
For the end consumer, it means a set-top box provided by their Pay TV Operator but with the Android TV experience built in.
Customized Android TV UI w/ operator tier – Image Credit: WeTek
According to Infomir, 70+ Operators use the Operator tier.
Why is it a competitive edge?
TV OS compete within a limited set of Smart TV brands. You will often see one model with the Roku OS and another model from the same brand running on Android TV, Fire TV or Vidaa.
With the Operator Tier, Google expanded the playground and I don’t see any company capable of catching up with them on that front.
In addition, despite a steady decline, Pay TV will still represent a 125B$ revenue and a 1B subs by 2028 (source: Digital TV Research). Headwinds encountered by Pay TV Operators will push them to a 3rd-party platform more and more in order to reduce costs and development time.
The New Google TV
In 2020, Google launched a new platform called Google TV (let’s say it’s Google TV 2.0).
Android TV followed the pattern of Android for mobile as in it was an App Store approach. The biggest change with Google TV is the move to a Content 1st UI.
Google TV is the most feature-rich option here:
native homescreen integration with live TV services like YouTube TV,
a powerful recommendation engine,
the ability to search through tons of different streaming services,
individual user profiles
a kids filter
The list goes on.
Google’s scale
At CES 2023, Google announced that Google TV and Android TV run on over 150M monthly active devices worldwide (up by 40M YoY).
It’s the 2nd biggest OS behind Samsung (at 22%) with 21% market share (source: Omdia). With the Android forked version available in China, it takes Google at 41% market share but this version doesn’t give access to Google services so 21% better reflects Google’s market position in my opinion.
Google’s Platform Engagement
Engagement seems to be lagging behind its competitors at a global level:
Although in regions like Asia & Oceania, Android TV does enjoy a market leading position but see how it doesn’t even make the top 5 in its home market:
Google’s Platform Revenue & ARPU
Google does not disclose specific revenue, nor ARPU figures, for Google TV and Android TV.
In Google's Q4 2021 earnings call, CEO Sundar Pichai said:
Google TV and Android TV are "two of our fastest-growing platforms" and they are "driving significant revenue growth".
In Google's Q1 2022 earnings call, CFO Ruth Porat said:
Google TV and Android TV are "continuing to grow rapidly" and "generating strong revenue growth".
That doesn’t help, right?
They generate revenues through hardware sales, OS licensing fees, ad sales, app distribution.
Youtube
A snapshot of Google wouldn’t be complete without talking Youtube, the behemoth with its 2.68B Active Users ('23).
Google may not lead in engagement with Google TV and Android TV but Youtube is doing great on Smart TVs with nearly half of its US viewership now on TV.
Youtube actually eats away on platform streaming hours without sharing much on the ad revenue front with its distribution partners. This explains, in part, why The Roku Channel or Samsung TV+ launched their own and operated streaming services. They control and monetise the ad inventory. It’s in their interest to take eyeballs away from Youtube onto their O&O services.
Google has one last trick up its sleeve: Youtube TV.
Youtube TV is Google’s own and operated Virtual MVPD (Multichannel Video Programming Distributor) and I can’t wait to see how the NFL will boost their 6.3M customer base and benefit the overall Google TV / Android TV business.
It’s a pricey content investment (2B$ / year over 7 years) though, so will it pay off?
That’s it for today. Enjoy your weekend and see you next Friday for another edition of Streaming Made Easy!
By night, I write Streaming Made Easy and post on Linkedin.
By day, I run The Local Act, a streaming video consultancy.
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Very interesting. I am curious to see what comes of the YouTube FAST experiment from January - will it come back as a wider release? Will the native channels be the same as the 77 Google TV offers in the States (these ones are in the EPG before one can add Plex, Pluto etc to it).
I also remember being excited for the first Google TV device! I went out and got one and it was much worse than the Roku at the time. I ended up giving it away to someone at work.