Just a couple of days ago, I wrote about what will happen when over-the-top video providers start broadcasting live events – and how that will be a large, spreading crack in the dam that holds up the cable TV bundle. And then yesterday, Peter Kafka at AllThingsD reported that discussions are underway between Google and the NFL to make it happen.
How’s that for timing?
Notably, the biggest objection to my prognostication came (via tweets, of course) from Mark Cuban and others who argued that bandwidth would be a huge obstacle. Live means millions of people logging on at once, and sending millions of simultaneous yet personalized streams in real-time without glitches is both hard and costly. How could an Internet connection possibly offer the quality of service to do justice to a brand as tony as the NFL?
Or, as my head of strategy and business development, Chris Kollas, asked aloud yesterday: “I wonder what Google has to promise to the NFL in order to win an exclusive?” The answer to that is almost certainly “very high quality service.”
The bandwidth problem is one that Google is in a unique position to overcome – and in that sense, it’s not surprising that Google can and should be more aggressive than its online competitors in pursuing live events. In particular, Google has at least three advantages over other video companies:
1. Google has the muscle for the job. When it comes to the advanced computer science and engineering required for outstanding and reliable video delivery, Google has some of the best and most experienced talent on the planet. Google has the expertise, the resource base, and the DNA to solve problems like this creatively – through zany combinations of hardware, software, infrastructure and imagination that others can’t or wouldn’t even consider.
2. Google has aligned financial incentives. Unlike anyone else on the planet, Google actually monetizes network performance – and they do so quite handsomely. Every time Google makes an investment in high-performance infrastructure that reduces response times, they see search revenues climb. Witness Google DNS, a service designed expressly for the purpose of speeding up the Internet so consumers will search more times per hour, and Google Instant, a search feature that delivers results (and don’t forget the ads!) to users posthaste so they will click sooner. Not to mention a spendy investment in high speed fiber in Kansas City. Whereas Netflix gets its flat $7.99/month for any above-threshold performance, Google sees outsized returns whenever they improve their delivery.
3. Google has a stronger motive. Google has more to gain. Despite tremendous efforts, YouTube hasn’t yet achieved critical mass as a go-to destination for top-tier programming, the way competitors like Netflix, Hulu, iTunes, and Amazon have. Instead, it is still capturing the long tail of video – which means it is capturing the long tail of advertising revenues, too. Google has already indicated its ambitions for both top-tier advertising and subscription revenues; and yet it hasn’t earned broad recognition on either of them. As I discussed in this week’s post, premium packages like NFL Sunday Ticket can certainly anchor content offerings to consumers – and more importantly, earn a right for YouTube to be the start page in everyone’s living room.
In the long term, Google won’t be the only Internet video provider to be able to serve up live events. The cost and capability of providing such service could easily become commoditized with a future generation of architecture, infrastructure, and content delivery services – the Akamai’s of the next generation. It may take years, but in the meantime, those who innovate and have the muscle and talent to apply to this problem have the chance to earn outsized market share before the others catch up.