Google Shakes It Up With Chromecast

By Carol Kopp  JUL 30, 2013 9:00 AM

It just got cheap and easy to play a movie from the Internet on your television.

 


Here’s what all the noise was about Monday morning. At Netflix (NASDAQ:NFLX) headquarters, people were cheering. At the big cable companies, they were shaking in their boots. At Amazon (NASDAQ:AMZN), one executive might have been trying to explain what went wrong.
 
At Google (NASDAQ:GOOG), they were just quietly smiling.
 
It was all about a thumb-size, $35 gadget called Google Chromecast that came out last week with little fanfare, almost as an afterthought to the announcement of a new version of its Nexus 7 tablet.
 
It’s sold out already, with more stock due in three or four weeks.
 
Google Chromecast is an HDMI device or “dongle” that plugs directly into any HDTV so that you can wirelessly play video and music from the Internet on a big screen.  It doesn’t use a remote, doesn’t have a set-top box, and has no interface to speak of. It’s supposed to be close to plug-and-play. You download an app in order to connect it to your Wi-Fi service. And then you click on a button to watch a video or play music on your TV.
 
You can use any device—that is, any smartphone that uses Google’s Android software, or any tablet or PC, with the Google Chrome browser. (Chrome for Mac (NASDAQ:AAPL) and Chrome for Windows (NASDAQ:MSFT) are supported.)
 
In this initial phase, the Chromecast smartphone app has only Netflix and Google’s own Google Play and YouTube sites built in, plus “select other content” that is not identified. That means users will see a button on those sites that allows them to start a “cast.”
                                                                                                                                                 
In fact, you can play any video available on any site once you’ve set up Chromecast, though some occasional loss of video quality has been reported by early users. There is a difference though. When you’re using the app and accessing partner content such as Netflix, the video is downloaded directly from the cloud, not from your computer. While you watch, your device is free. If you stream from any other site, you’re streaming it from your device, and mirroring it on the device.
 
So, Amazon and others didn’t really miss the boat, technically. But they might have missed out on the initial promotion, marketing muscle, and buzz that will come with the product. Netflix is effectively the default choice, not Amazon Prime.
 
The New York Times expects some major broadcasters to move quickly to block their programming from Chromecast, just as they blocked Google TV. Surely the cable companies that pay to carry their programming will make that suggestion.
 
It’s difficult to overstate how big Google Chromecast could be, if it is all it’s cracked up to be. All of the other attempts at “Internet TV” have flopped, or have appealed only to a narrow audience of enthusiasts. All were difficult or expensive to set up or to use—or they were perceived to be, which is just as bad.
 
Google Chromecast doesn’t do anything that you can’t do now with an HDMI video connector. But that requires some fiddling every time you want to watch a movie. The result is awkward, and it ties up your device.
 
All of the above may be why only 15% of consumers currently stream video from the Internet to television, according to Google’s own research.
 
If Chromecast takes off, it will be interesting to see how Google continues to work to build its programming. Google Play and YouTube both have an infinite amount of video, but neither has anything like the recent hit movies and television series, or the low monthly pricing that Netflix and Amazon offer. It’s hard to argue that YouTube needs to boost usage, but Google has shown that it is very interested in boosting use of its pay-per-view options.
 
And it does look as if Google has a hit on its hands. We all know that “sold out” can be a marketing ploy. But Google Chromecast is sold out at the three sites that have been announced as suppliers: Google Play, Amazon.com, and Best Buy (NYSE:BBY). Netflix has withdrawn a three-month free subscription offer that had been packaged with it. Google Play promises more stock in three to four weeks.
 
Inevitably, it’s listed on eBay (NASDAQ:EBAY) at premium prices. Sales are recorded for up to $130, packaged with the Netflix promo.
 
As of Monday, early users rated the device at four out of five stars on Amazon. Comments were generally positive, ranging from “miraculously astounding” to reports of minor setup problems and video quality issues. Even some of those contributors cut Google a break and called them first-iteration nits.
 
The review on TechCrunch is admiring, but says, “the Chromecast is a wireless portal to your TV, and doesn’t try to be anything more.” But that’s not quite true, or we all would have had wireless portals to our TVs years ago.  Google figured out how to do it simply. And there’s nothing simple about that.

See also:

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No positions in stocks mentioned.

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