Google Chromecast: Your TV Might Be the Next GOOG Ad Platform

GOOG makes its money from ads, and Chromecast is no different

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When it was released last summer, the Google (GOOG) Chromecast was huge news. A $35 HDMI dongle that plugged into TVs and promised streaming video, audio, games and websites seemed like a dream come true.

Chromecast Ad 300x168 Google Chromecast: Your TV Might Be the Next GOOG Ad PlatformMany of us thought this was the disruptive device the living room was waiting for. The realty was slightly less spectacular. Netflix (NFLX) and YouTube were there at the start, but Google Chromecast-enabled apps have been slow in arriving.

However, that’s true of many successful GOOG products. They start slow, then ramp up. Now that Google has opened up the Chromecast SDK to all developers, the company could be on the verge of pulling an Android on your TV set.

Apple (AAPL), Roku and perhaps even Amazon (AMZN) — if it’s truly working on that rumored set-top streaming box – should be worried.

Google was criticized early on for not charging a licensing fee for using its Android mobile operating system. After all, Microsoft (MSFT) was charging somewhere in the $20 to $30 range to license its Windows Phone OS. Of course, we know how the competing strategies have played out: Android is now on more than 80% of smartphones and the majority of tablets, while Windows has less than 4% of the market in both smartphones and tablets.

The free OS strategy that GOOG employs — along with a policy of selling Android hardware like the Nexus 5 smartphone at cost — ensures more people are using devices with its core services (like Google Search, YouTube and Google Maps), in turn driving its all-important ad revenue.

The company is calling from the exact same playbook with the Google Chromecast.

With the Chromecast selling at $35, GOOG is breaking even (at best) on the hardware and seriously undercutting the competition. When Apple shrank its Apple TV to the current form factor and dropped the price to $99, that looked like an unbeatable combination. Especially when AirPlay (AAPL’s streaming/mirroring protocol) is factored in.

AirPlay lets Apple device owners stream content from their device to an Apple TV. But Apple keeps close control — there’s no official support for other platforms (although some Android developers have managed workarounds), and Apple charges a licensing fee to AirPlay-enabled devices.

GOOG completely upset the applecart in the living room when it released the Google Chromecast.

It significantly undercut Apple (and Roku) on price, and the Google Chromecast looks tiny compared to the Apple TV (although there are more wires sticking out the back than people might realize). Access to Netflix, YouTube, Pandora (P) and a few other streaming apps make any TV into a “smart” TV for just $35. The device let Google Chromecast owners mirror content from GOOG’s Chrome browser on their smartphone, tablet or laptop onto their TV as well.

But the release of the public Google Chromecast SDK is where Google seriously cranks up the heat on the competition.


Article printed from InvestorPlace Media, http://investorplace.com/2014/02/google-chromecast-goog/.

©2014 InvestorPlace Media, LLC

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