Google and BSkyB - Have We Got Ads for You?

Implications: Short-term:  BSkyB trying to appeal to youth family members of its customer base by bringing Google's user-generated content capability.

Long-term:  Is it the winning formula?  (Google adsense technology *  TV ads stored in your home) + BSkyB ability to simplify technology for customers + penetration of video hard drives = acceptability of personalised ads while you interact with your personalised TV consumption?  Or ... is TV consumption dying out, so this deal becomes just another Google wholesale deal on a broadband service?

One to watch.




Analysis: BSkyB has been the most successful player at bringing personalised TV consumption to reality in UK, primarily through Skyplus service and satellite ubiquity.  The key element is the simplicity of user interaction with the Skyplus settop box and Electronic Programming Guide.  As a result, BSkyB continues to grow ARPU.

One of the big risks of personalised TV is ad-skipping or loss of link between ad's timing and its viewing.

By using Google technology, combined with storage capability to have targetted ads "waiting to pounce" on user's Skybox, then ads can be implemented more effectively - especially when combined with "red button" interaction via a broadband uplink.  This would be the TV equivalent of "pay on clickthru" or "pay on clickthru to purchase," ie a relatively painless way for Google to extend itself into mainstream TV advertising revenues.

BSkyB is more adept than BT or NTL at bringing new technology to market and at the same time "hiding" the technology's complexity from the user.  If they apply this strength to the Google capability, then they could steal a big march in their attractiveness to advertisers, who are desperate to reach fragmenting TV audiences.

On the other hand, BSkyB relies on its satellite delivery system, which has limited uplink capability and is most suited to traditional broadcast.  If broadband speeds or codec algorithms improve, then satellite could be a liability, making it less appealing to advertisers.