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Google Aims Its Original Programming Idea at Cable Companies


YouTube orders 100 channels worth of first-run video programming to get TV watchers to cut the cord. Plus, Groupon's troubled IPO and the HP Touchpad's return (again).

It's easy to say that streaming video on the Web could compete more effectively with television if it offered new and original programming instead of miscellaneous reruns. But who's fool enough to compete against the networks and the studios for original programming? More to the point, who's rich enough? Google (GOOG), that's who.

Never a company to move timidly, Google has announced plans to create 100 channels for original made-for-Internet programming on its YouTube site, beginning next month. It's signing up the biggest names it can get for a reported investment of $100 million in advance payments to production companies, and a roughly 50-50 split on advertising revenues.

There will be several comedy channels, including the horribly named American Hipster. Car and Driver magazine gets a whole channel of its own, as does Deepak Chopra. There's a channel for Latinos and a channel for women, called ClevverStyle (sic). Websites from to TheOnion get slots, too. Celebrity names involved so far include Madonna, Jay-Z, Shaquille O'Neal, and the ubiquitous Ashton Kutcher.

For the most part, the channels seem to be stacked with names from print media. Sure, they've all got websites, and they've done a bit of Twitter promotion, but we'll see if they can create compelling video programming.

To really succeed, YouTube's programming has to draw viewers away from old familiars like Dancing with the Stars or The X-Factor. One or two breakout hits might establish it as a real competitor. (The Simpsons did it for the Fox Network.)

The move to original programming is carefully worded in the company announcement as "an even broader range of entertainment." Relationships with the studios and networks probably are quite dicey enough for YouTube and its competitors, notably Netflix (NFLX), Hulu, and Amazon (AMZN).

And that might be the point, after all. The Web companies in the business of buying distribution rights are being pressured to charge more for the newest and most popular programs so they can't continue to undercut cable companies, television networks, and others in the entertainment distribution business.

A writer for VentureBeat has already decided to dump his cable company for a combo that involves a television aerial (remember those?), plus a Netflix subscription and YouTube channels. He thinks it's the end of cable television, or at least the end of the cable companies' ability to force subscribers to take expensive premium bundled options.

Some of us couch potatoes may, by definition, not be that proactive.

New numbers from cable providers show slower growth in their household subscriber numbers, but not the wholesale "cable-cutting" that the industry fears from the growth of competitors including the Internet.

Quarterly numbers from Time Warner Cable (TWC) and Cablevision (CVC) suggest that financial worries are causing some consumers to cut back on premium channels at home. But, the New York Times reports, there's little sign so far that large numbers of people are abandoning cable for Internet programming.

In Brief:

Groupon IPO Looms Small
Local deals site Groupon is moving forward with its IPO on November 3 in the middle of a storm of bad press. Bloomberg News suggests that the IPO has to go forward because Groupon needs the cash. Barron's cites the company's "lack of earnings, competitive challenges and slowing growth." The Wall Street Journal quotes an analyst who calls Groupon "today's Webvan." (Ouch!)

However, the consensus seems to be that the company will make its $16 to $18 price target, at least on Day 1, because of the small size of the offering, about 30 million shares. There are even reports of a last-minute price range increase due to "higher than expected demand."

HP TouchPad Returns
In her latest conjuring trick as new CEO of Hewlett-Packard (HPQ), Meg Whitman has resurrected the HP TouchPad yet again. The tablet device will go on sale at Best Buy for $149, but only to customers who are buying another HP or Compaq PC or notebook.

The TouchPad, initially priced at $499, was killed off by the company in August, but the $99 fire sale that followed was such a hit that the company seems to be testing a comeback strategy.

New Nook?
Barnes & Noble (BKS) is widely expected to unveil a new version of its Nook Color e-reader at a November 7 event that it describes only as "a very special announcement." Its current Nook Color, released in May, is priced at $249. If true, the new device would compete directly against Amazon's $199 Kindle Fire during the upcoming holiday season.

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No positions in stocks mentioned.
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