“On television and videois a column exploring the opportunities and challenges of advanced television and video.
Today’s column is by Jay Krihak, Executive Director at Cross-media.
After losing to Microsoft in the Netflix deal, Alphabet’s Google is still licking its wounds. But just because you lost a battle doesn’t mean the war is over. Google must immediately get back into the CTV/OTT fight with all the muscle it can muster.
The urgency of this war grows daily as core businesses are threatened by world governments. On the one hand, there is a risk that Google Analytics will soon be illegal in Europe according to the GDPR. Meanwhile, here in the United States, there is pressure to dismantle Google’s ad tech business.
Case in point: Google’s decision to delay deleting third-party cookies is just another stall tactic until they reach an agreement with privacy regulators. Yet governments have made it clear that they are not advocating half-baked proposals or half-measures.
Alphabet is also on the defensive because of the competition. Search is under attack thanks to TikTok and Amazon. Its DV360 platform, the centerpiece of its programmatic strategy, is catching up with other platforms on the demand side.
It’s time for Alphabet to look in the mirror and pivot via a monumental statement: Google must unload its cookie-based open market stack (DSP, SSP, Ad Server, etc.) and use the funds to buy subscribers and produce content.
The path to innovation is through acquisition
The problem is so obvious. Advertisers pay to keep the lights on free products lit at Google. But on the subscription side, the company has no idea what video products people are willing to pay for.
Compared to Amazon, which has spent around $25 billion on Prime Video content over the past two years, or Apple TV+, which won the Best Picture Oscar with CODA in 2022, Google is missing out on an offering to scale for scripts, subscriptions and advertisements. entertainment.
But it’s not too late to do something disruptive and create a seismic shift in the video ecosystem through acquisition. Let’s review the options.
Paramount is the lowest hanging fruit. An old-school Hollywood brand modernized for the digital age, it touts an app for original programming that would complement YouTube’s creator-centric content well. It’s also cheaper than most other options and would come with an in-depth content library.
Warner Bros. Discovery is very similar to Paramount in that it has tens of millions of HBO Max subscribers and a vast library of content. It’s also not encumbered by existing partnerships, making it a pretty clean transaction. That doesn’t mean there isn’t a downside. This would involve incurring a mountain of debt with AT&T. However, a Google that just made money (selling its ad stack on the open market) could easily repay that debt, so the transaction would be neutral or even positive at worst.
And then there’s Netflix. There is no doubt that Netflix would be the perfect prize. Google’s market-leading chops in digital advertising solutions could be the catalyst for Netflix to capture existing advertisers’ dollar share at a premium. And the pot could grow even bigger, adding Google’s data to the streamer’s mounds of viewership data.
One of the side benefits would be YouTube’s ability to tap into Netflix’s prized recommendation engine, and vice versa, for product improvement and content sourcing ideas. It would be very expensive and they would have to buy out the Microsoft deal. But it would pay off big for the next decade.
Each of these acquisitions would be a good business move and a bold, disruptive move at a time when Alphabet is lacking in innovation.
Speaking of innovation, if Google exited the free market, it would open up innovation and generational growth for the entire ecosystem.
In short, Google exchanging cookies for content is the best outcome we can have. And there’s no better time than now to have it.