In late April, Roku released an interesting and bold announcement about its partnership with YouTube TV. Roku issued the statement because Google is pushing the company, arguably the most powerful in smart TV technology right now, for additional control and ownership over household and personal data with its YouTube TV app. Roku will not agree to Google’s terms.

 

Let’s dig into this a little deeper and look at three areas: the Roku experience, Google’s demands and the implications.

 

The Roku Experience

Roku is not a TV company. It is a software and data company. Around seven years ago, Roku began licensing its smart TV software platform to TV manufacturers and collecting consumer data. The company now has 38% market share in the U.S.

 

Let’s be clear: 38% market share in the U.S. is MASSIVE.

 

Roku has been successful largely through creating user-centric, simple operating systems, but also because of the streaming partnerships it’s made over the years. People want variety and options, and Roku has done a consistent job of empowering viewers with choice.

 

Google’s Demands

Google, one of the world’s largest data and technology companies, wants a piece of the pie. YouTube TV is the second largest live TV streaming service in the U.S., closely behind Hulu + Live TV. But Google, being Google, is not happy playing second fiddle.

 

At the end of the day, Google is a business – and businesses have revenue and market share goals. Google’s goal is to destroy competitors. Here are a couple of examples of how:

  • Acquisition – When online video streaming was in its infancy (2005), Google Videos was being dominated by YouTube. So Google bought it.
  • Removal of third-party pixels – Google will depreciate third-party pixels from its internet browser, Chrome, in 2022. It is widely known that this will improve user privacy experience and that other browsers already have done this. However, it must be said that the removal of third-party DSP and retargeting pixels from Chrome is a very informed decision by Google. We anticipate that it will shift power back to Google’s ad platforms since Google has 64% of the worldwide browser market share. Whether Google did this to improve user privacy or block other technology companies from collecting user data – well, you be the judge.

 

Because YouTube is the largest online video platform worldwide (by a wide margin), Google has been shifting its business focus to paid TV streaming and YouTube TV.

 

Here are some of Google’s specific requests, as reported by Axios: a dedicated search results row for YouTube TV within the Roku TV interface, blocking voice search results from other streaming providers, and even requiring Roku to use certain chip sets or memory cards, which would increase the price of Roku hardware – which is in direct competition with Google’s Chromecast.

 

The Implications

The implications of Roku’s refusal to bend to Google’s commands are HUGE.

 

  • Google will lose massive future viewership numbers overnight if it does not come to a mutual agreement with Roku. With 38% market share, Google risks a long, hard, contentious fight with Roku, and also with total market share of live TV streaming over the next few years.

 

  • With online advertising being disrupted by the depreciation of third-party pixels on Google Chrome in early 2022 and smart TV streaming consumption continuing to increase year over year by high margins, this action may be an indicator that Google is shifting business priorities from online advertising to streaming advertising.

 

  • Google’s YouTube TV conflict with Roku and other technology partners is far from over. Google still has very successful and competitive streaming Chromecast and Android TV products, as well as partnerships with Samsung, LG, Vizio, Hisense and Sharp TV manufacturers.

 

  • Google has its eyes set on the future. The technology behemoth does not make major shifts in business partnerships without having plans for the future. Will Google TV launch its own smart TV? Does it have plans with Android to take over more market share? Will Google fold and sign a more mutually satisfying partnership agreement?

 

Only time will tell what Google is planning.

 

The one thing we do know is that with smart TV streaming skyrocketing year over year, this battle has only begun, and Roku and Google are not the only two companies that will be fighting over streaming rights, data and the future of video advertising.

 

To learn more about the state of streaming video technology, contact us for a consultation.

 

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