"Google is now in the pay TV businesses, sort of."
That was the lead line on a Bernstein Research client advisory on Google's announcement of details of its Kansas City fiber-to-the-home broadband TV and Internet access offering, which Google announced in March 2011.
"Sort of" because the Wall Street research firm points to the "significant holes" in its program lineup. While its TV offering includes networks from Viacom, Discovery, Starz and NBCU, it does not include Disney (it does include the local ABC affiliate), Time Warner or News Corp., so no CNN or Fox News or ESPN, three essentially must-haves for any cable system.
Comcast/NBCU might not be in there either save for the FCC requirement in the NBCU deal that Comcast make its programming available to online distributors.
"Without the full suite of traditional cable channels, it is doubtful Google will be able to attract core TV viewers and get them to switch from traditional cable," Bernstein Research says in the report. The researcher is also concerned about the upfront costs for high-speed access.
"[The] launch leaves many questions unanswered, the most important ones are whether or not Google Fiber offers will attract large number of customers in the Kansas City market and whether or not Google will be able to make its experiment into a profitable business without material subsidies,"according to the report.