Last year, Google shocked video publishers by revealing it wasn’t excelling at selling ads on Google TV, its smart TV platform. This unexpected shift came after years of requiring publishers to share a portion of their ad inventory. Usually, platforms like Roku and Vizio do the same. In a surprising twist, Google decided to return unsold ad spots to publishers, asking only for a cut of their profits. This change shows that publishers might be better at selling their own ads than Google expected.
Google has poured vast amounts of money into Google TV but still struggles to earn back that investment. Despite hundreds of millions spent each year, the platform has yet to break even. Costs are rising, and Google now faces tough choices about its future in the smart TV market.
The journey of Google TV started back in 2014 when Android TV was launched. In 2020, Google unified Chromecast and Android TV, creating what we now know as Google TV. They aimed to replicate the success they achieved with mobile devices by focusing first on building a user base before monetizing.
According to Google, it has successfully built a substantial user base, reportedly reaching over 270 million devices. Some sources, however, suggest that the actual numbers may have surpassed 300 million. A considerable number of these devices are in markets that are hard to monetize effectively. A significant chunk of them runs a customized version of Android TV, which leaves little profit for Google.
To gain strength in North America, Google teamed up with brands like Sony, TCL, and Hisense to bring Google TV to their models. But maintaining partnerships with TV manufacturers is becoming increasingly expensive, especially with rivals like Amazon stepping up.
Amazon recently began selling Hisense TVs with its own Fire TV software at Costco, replacing the Hisense TVs running Google TV. This shift has made it harder for Google to maintain its market position. Amazon likely pays hefty sums—up to $50 for each TV sold—to keep its devices on store shelves, a strategy that’s challenging for Google to match.
As noted by Shalini Govil-Pai, Google’s VP of TV platforms, the company prioritizes product innovation and user experience. Despite the challenges, they believe the TV remains central to family entertainment and continue investing in Google TV.
Yet, while Google TV grapples with these hurdles, YouTube has been thriving. TV viewership on YouTube jumped significantly, comprising 12.5% of all TV watching in the U.S. this past May. Last quarter, YouTube brought in an astounding $9.8 billion in ad revenue. Given YouTube’s success, many argue that Google may benefit more from directing its resources to YouTube than Google TV.
Recent reports indicate Google is re-evaluating its budget for Google TV, focusing instead on YouTube’s growth. While Google isn’t likely to abandon TV altogether, it may start to treat it similarly to how Apple regards its smart TV efforts—as more of a side project.
This evolving scenario highlights the competition in the smart TV landscape, reflecting a broader shift in how tech companies strategize their resources. For now, Google TV’s future may depend on finding a balance between innovation and profitability in an increasingly aggressive market.
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