google+nexus playerEverything seemed so tidy and settled six months ago.  A growing new conventional wisdom acknowledged that TV is, in fact, clearly moving to Internet protocol, but also, that the titans of pay TV had all but won the day.  Comcast, Time Warner Cable, not to mention AT&T and Verizon, DirecTV and DISH – all of these (and other) pay TV providers have pressed their way into the Internet; keeping their revenue streams intact against the perceived threat of OTT.

For years, pay TV advocates feared that they would be dis-intermediated from the value chain by content providers keen on expanding distribution direct to the consumer without a pay TV subscription.  But now, each of these pay providers have either ensured, or are in the process of ensuring, the secure delivery of pay content to non-set-top devices; both through the emerging category of video gateways, and via the cloud.

This sense of complacency was disrupted this week, however, when Google made a trio of noteworthy announcements at its annual Google I/O developer conference. But first let’s look at the big picture.

The TV value scale
When comparing the various types of Internet-enabled TV, it’s useful to see the options along a continuum.  I like to think of it as the “TV value scale.”  Put the combination of pay TV’s core offerings plus their ‘TV Everywhere’ offerings at the high end, and your Web browser at the low end.

So, on the high-value end is pay TV, which of course, has everything you need, for a price.  On the other hand, while the cornucopia of content that is YouTube is interesting and varied, YouTube is on the low end of the scale because it doesn’t offer live TV, let alone the shows and movies that most people watch.  But it’s free.

Not too very far below the pay TV end of the scale is OTT content, where there’s some live online programming, plus most major TV series on demand; and the value proposition is anywhere-anytime convenience.  Somewhere in the middle are connected consumer electronics with branded apps but limited content, and then, the Google and Apple ecosystems. More on those later.

Some solutions cover multiple bases.  Consider TiVo’s Premiere DVR, which can be customized for service providers that want to offer a blend of Internet video and pay TV.   Same goes for other connected consumer electronics devices, including ‘smart’ TVs, game consoles and Blu-ray players; which have been customized for pay TV providers not just in Japan and Korea (where many of them are made), but also, in the U.S.   Several Samsung TV models implement the RVU Alliance’s Remote User Interface (RUI) standard, which is now part of DLNA for use by DirecTV and others, eliminating the need for the set-top box.  But the majority of connected CE buyers that use their devices online at all simply use branded apps such as Netflix’s to access online on-demand content.

You could argue that by offering apps platforms, all the major connected CE companies lie in the middle of the TV value scale. Also in the middle of the scale is a category that has struck fear in the minds of pay TV operators: the ecosystem.

Ecosystems
Apple has ruled the ecosystem category with a coordinated blend of computers, ‘iDevices’ (the iPod, iPad, and Apple TV), a home media hub (Airport Extreme and Time Capsule), the iTunes content store, a common operating system framework, and a way to access any content anywhere through a broadband connection to iCloud.

Google has been seen as an ecosystem player with some of the pieces missing: yes Android can be found on phones and tablets, and yes, Google Play (formerly known as the Android Market) is a marketplace best known as the source for apps.  But Google lacked a home media hub and a Google-branded tablet.  Until this week.

The Nexus 7 tablet brings online on-demand movies and TV shows from NBC Universal, ABC, and Sony Pictures – through Google Play Store.  The Nexus Q is a home media hub with a unique bowling ball form-factor that also provides a showcase for Google’s social media and YouTube assets.  Certainly Google also has Apple users in mind, by enabling Google Play’s Music Manager to import from the iTunes library of up to 20,000 songs.

And that’s not all from Google.  This week, Sony announced the August launch of Google TV in Canada.

Flying below the radar after being ostracized by the old guard of TV, Google TV may reach critical mass as a mainstream technology, now that it’s shipping in Sony, LG and Vizio TVs.  The company also is partnering with Samsung, and is supporting not just Intel but also ARM processor architectures, and chips by Marvell and MediaTek.

Others companies also are getting more aggressive on the ecosystem and IPTV front.  Microsoft’s upcoming Surface and SmartGlass offerings also fill gaps that assert Microsoft as an ecosystem player.  And TiVo announced a new deal with Sweden’s Com Hem, TiVo’s first real IPTV customer. (Virgin Media, Comcast, DirecTV and others have ties with TiVo but none of them are IP.)

Are ecosystems a threat to pay TV?
Are ecosystems (in general) and Google (in particular) really a threat to pay TV?  Some say yes, and some say no.

I think not yet.

For one reason, it will take time for Google to get the pieces to play well together.  Android is a notoriously fragmented platform.  I also don’t see Google making major inroads until content providers give the ecosystem providers license to offer the same live TV and on-demand content they make available to pay TV operators.   Ultimately the content providers really do hold most of the cards.  What’s a pay TV provider’s network – or a CE device ecosystem, for that matter – without the content?

Call it a case of the content providers wanting it both ways, by continuing to pursue new distribution channels, while resisting the temptation to bite the pay TV hand that feeds them.  But it’s another confirmation that content is king, and the question of distribution is anything but settled.

Five years from now, the consumer experiences of managed pay TV and the open Internet will probably look very similar, in terms of the models and technologies.  But pay TV will still be defending its turf from direct-to-consumer distribution — probably more fiercely than ever.