Google Should Capitalize on TV Side of Proposed Motorola Acquisition

It's a Unique Opportunity to Make Medium Better

By Published on .

Google's announced acquisition of Motorola Mobility will lead to many parlor discussions related to large-scale, industry-transforming acquisitions and divestitures within the telecommunications industry. The combination should affect scores of multibillion-dollar companies touching the wireless sector alone. In particular, observers will be highly focused upon the company's stated focus around mobile computing, driving Android adoption and the importance of Motorola's patent portfolio.

But as followers of the video business are well aware, Motorola is one of the two most important players in set-top box manufacturing and the provision of related infrastructure, generating nearly $3.6 billion in revenue during 2010 from this activity.

As a key vendor of equipment for programmers as well as for satellite, cable and telco-based service providers, Google will have the opportunity to massively accelerate its own TV businesses. While it remains to be seen whether Google will retain its newly acquired set-top division, the company is by now likely undertaking a detailed assessment of opportunities with Motorola and its legacy businesses.

At the end of that process, Google should make sure to capitalize on this unique opportunity to deploy its armies of software engineers to make TV better for consumers, advertisers and distributors alike.

Initially, Google will have a hard time making this work because in the past it has created an environment where video distributors would prefer not to work with it. There is an active mistrust about Google's interest in helping distributors -- who, lest we forget, actually invested billions of dollars of capital in the facilities that directly touch the consumer. Consequently, Google can only make the video business work if it actively develops its relationships across the rest of the industry

The different layers of media trading. Credit: Simulmedia
The different layers of media trading. Credit: Simulmedia

In looking at the business through the lens of TV advertising, one framework for thinking about who Google will need to work with involves considering four different layers that interact with and build upon each other: Media trading -- or buying and selling -- is dependent upon data associated with viewing audiences. The execution of those trades is dependent upon software solutions, which in turn are delivered to consumers over physical infrastructure.

Inside of each layer are yet other sub-sectors, many of which are critical to satisfy the needs of advertisers and media owners alike.

Google is already active in a couple of these layers with Google TV Ads (as a "connector" enabling media trading) and Google TV (a component of infrastructure that enables over-the-top video consumption). Motorola Mobility's home-business unit sells infrastructure in the form of set-top boxes and provides an array of software services to the industry that enable the delivery of video.

However, because of technology limitations and the wide range of business issues every sector faces, it is difficult for any one company to offer solutions across and within all layers at an efficient or meaningful scale. For example, Google would have to spend many billions of dollars more to replicate the infrastructure that has already been laid by cable operators. Additional money would need to be spent to procure all of the programming necessary to satisfy consumer expectations around video services.

These points highlight the critical nature of partnership, whereby companies such as Google must work with others to ensure fulfillment of services across layers. If it does not, it will be unable to effectively bridge the relationships that consumers, programmers and advertisers are ultimately depending on, and an opportunity will have been wasted.

The alternative -- capitalizing on a unique set of assets to partner with companies across and within the industry -- should be much more appealing, and might actually lead to the transformation that everyone will be discussing.

ABOUT THE AUTHOR
Brian Wieser is chief marketing officer at Simulmedia.

In this article:
Most Popular