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Saturday, January 07, 2006

Google Video Buggles My Mind

Ever wonder about the moves made by successful moguls?

For some reason, people keep expecting Google to do something earth-shatteringly iPod-like in the entertainment biz, completely transforming the way people think about the company. Do they have it in them?

Maybe, but the new Google Video Store certainly isn't it.

Billionaire types commonly dive into sports teams, Hollywood studios, and other hobbies not as moneymakers, but because they can. They're "trophy businesses." Edgar Bronfman Jr. is one celebrated example. He took a big chunk of his family's beverages-related fortune and sunk it into the entertainment business, culminating in a bungled merger with French conglomerate Vivendi. How to make a small fortune in Hollywood? For Bronfman, the answer was: start with a big fortune.

Chatting about such ventures with a pal yesterday, talk turned to his days growing up, when a few working men would go out to the horse track to unwind. None were very good players, so it was purely entertainment. One man won a sizeable sum, and caught up in the excitement, vowed that he'd keep half and let the other half ride on the most outrageous longshots. After all, he was playing with the house's money. The problem was, one of the other men began following his bets, thinking he was acting in concert with a seasoned bettor or at least one who had inside info. The day's big winner hadn't explained to the earnest pupil that he didn't in fact have a strategy for the remaining day's bets. It was just scattergun craziness. The poor (poor, poorer) guy lost a pile of money following these bets.

That put me in mind of Mark Cuban. This guy's a billionaire. He owns a sports team. And he loves to have fun. Some of his fun has involved investing in real dogs, including a couple of also-ran companies in the search space. Woe betide the "student" who, without a spare million or two to burn, follows a Cuban or a Bronfman down the garden path.

So this is a bit on my mind as Google gently goes Hollywood with their new foray into being a "video store." Why are they doing it? Why are they doing it in the way they're doing it? Maybe it's part of a long term strategy to become friends with other media companies instead of antagonizing them. Maybe it'll make a bit of coin. But by and large, it's a no-risk proposition. They're playing with the house's money, and it's fun. Don't try this at home, kids.

Any rational assessment of Google's likely outcomes in this marketplace -- especially given that they've entered it so incrementally rather than launching anything that changes how people think about, use, or pay for content -- would be similar to this detailed piece by Gary: it sure looks like they have a lot of competition. So I can get old NBA games through Google. Well, surely a cable company (etc.) could offer the same. It's something, but it's somehow not very compelling. It's a business deal, rather than a technological breakthrough. (It's like Google's become more like Yahoo, or AOL...) Beyond established video sales and content creation businesses with "models," they have to duke it out with present and future billionaire bon vivants: Cuban, Bronfman, Branson, Trump, Murdoch, a few thousand software guys, financiers, oil moguls, hotel chain owners, and of course, Gates. Should be fun. To watch.

Until they do something big like acquire Tivo, though, I won't be able to say the earth has moved for me. (Then, they'd control two leading verbs in the English language.)

Posted by Andrew Goodman




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