My take on Google’s acquisition of SageTV

First congratulations to SageTV for being acquired by Google!

SageTV is a company I’ve followed closely — my company, SnapStream, and SageTV were direct competitors in the “consumer DIY home theater PC” market until we shifted our focus to TV search instead.

Here are some of my opinions on this deal…

1. It’s NOT about turning Google TV into a DVR

I consider it impossible that Google acquired SageTV so they could add native DVR capabilities to Google TV (remember, Google already manages the program guide, channel changing, and even automating your native DVR). I recently read “In the Plex” by Steven Levy and it gives a glimpse of how Google thinks — and for Google, the future is all about the Internet and the cloud. For example, this is the company that declared the filesystem dead when they designed their recently released ChromeOS: “I don’t think we need files anymore” (from here in the book). And Googlers evidently joke that their product-focused co-founder and CEO, Larry Page, “went to the future and came back to tell us about it.”

DVR is too complicated to setup and it’s complicated to use (which is easier: schedule a recording and then watch it after it’s been broadcast vs. “click here to watch”???). DVR is a technology that bolts onto a broadcast medium and makes it “on-demand”…sort of. So it’s no surprise that aftermarket DVRs have NOT been a huge success (see TiVo) while online video (like Hulu, Netflix) HAS been hugely successful.

I just don’t think DVR is what Google envisions for the future of the home theater and living room entertainment.

2. Maybe it’s to accelerate cheaper Google TV hardware

One of the things SageTV had done was port the SageTV user interface to a Sigma reference design set-top box (I know their first generation set-top box — I think they called it an “extender” — was Sigma-based, but I’m not sure if the second generation set-top box was or not?).

Google TV’s 1.0 launch seems to have been commercially weak with low unit sales numbers from Logitech and Sony and, in both cases, significant price decreases (And immediate commercial success may not even have been a goal of Google TV v1– Google probably got what they wanted out of v1, which was a lot of instructive user testing and market feedback).

In any case, part of their go-to-market strategy for version 2 could be to make cheap reference designs available to anyone who wants to ship Google TV, either standalone or as a part of their device (ie on their TV, optical media player, satellite receiver, etc). And the SageTV team could accelerate this for Google TV, with their experience writing set-top box “middleware.” A healthy partnership with a lot of different hardware manufacturers (HTC, Motorola, Samsung) is a big part of how Android succeeded and continues to succeed in mobile.

3. What about Avtrex?

A company that came to mind when I read about Google acquiring SageTV was one that a lot of people probably haven’t heard of: Avtrex. I don’t know a lot about them, but I met with them once and have loosely followed them over the years. They’re an OEM-only digital home entertainment software company– that I know of, all the software they’ve written has been in Linux and has been written with various embedded hardware system platforms in mind (Broadcom, Philips, ATI/AMD, etc). I don’t know the answer, but I think it’s interesting to ask the question of why Google would have bought SageTV over, say, Avtrex? Or, who knows, maybe we’ll see Avtrex get acquired by Google too?

Update, 1:50pm, Monday June 20, 2011:

  • GigaOM writer Janko Roettgers agrees with me but “bets his money” that Google’s going to integrate SageTV’s place-shifting technology into Google TV. My response from the comments there: I doubt it’s the placeshifting thing. In the same way that DVRs require hard drives, placeshifting requires hardware to transcode from the source format to the target format and bit-rate that the audio/video get streamed out in. And I think one of the things that Google will react to in Google TV 2.0 is the high cost of Google TV 1.0 devices (Logitech Revue was originally $400 and the least expensive Sony TV with Google TV is $600 today and was more at launch). And plus, if DVR is relatively difficult to use (as I argue it is), place-shifting is probably 10 times more difficult to setup and get running.
  • Correction: Two commenters pointed out that DVRs have in fact been very successful (40% attach rate in the United States) — they just haven’t been successful in the after market (ie TIVO). I stand corrected, they’re both right, I really meant “aftermarket DVRs” (and I’ve updated the post to reflect this). But my argument still stands, DVR just doesn’t fit the mold of big ideas that Google goes after from what I’ve seen of the company myself and from what I’ve read/heard.
  • For fun (!), here’s my parsing of the note posted on their site: “And as the media landscape continues to evolve [Ch-ch-ch-ch-changes!], we think it’s time our vision of entertainment management grows as well [by joining Google, we’re ceding our vision to Google’s larger vision]. By teaming up with Google, we believe our ideas will reach an even larger audience of users worldwide on many different products, platforms and services [We’ve been acq-hired! There’s a lot of different stuff we’ll be working on at Google, applying our expertise to Google digital home efforts]” :-)
  • One last thing… how many people do others think work at SageTV? I never got the impression that they were more than 6 or 7 people. Anyone else have any other ideas? Did they take outside investment? I’d love to hear if people have a sense of either of these things.
  • Brent Evans “partially agrees” with me but says I’m missing the complete picture of SageTV’s value. I’d love to hear more!

26 thoughts on “My take on Google’s acquisition of SageTV

  1. Phillip Molly Malone

    Interesting take and I am in no position of knowledge to disagree with you. I really see the potential killer feature of a Google TV is having the tuner output as a widget in Android! I am a massive sports fan (in fact Aussie Rules Footy) and I can imagine someone writing an app that puts the tuner output in the middle of the screen and then the app has stats and maybe tweets on the bottom or side! It would be magic!

    Just a thought
    Molly

  2. Ravi Narasimhan

    Do you think this could be part of a Youtube premium content syndication strategy? Recall last year when Youtube announced getting into original (aka produced) content and share the advertising spoils with content creators? Perhaps this is the missing piece of the tech stack and bring this content to the” big” screen in the home.

    1. rakesh Post author

      I don’t think this is to get Youtube to the living room TV. YouTube has been doing that themselves for a while. I don’t think sagetv does anything to help them accomplish this.

  3. Dantv

    I’ve come to hate Google. They are an advertising company masquerading as a Tech Company. Android was a copy of Apple’s iOS. They even stole Java from Oracle to make Android. They only care about their ads and I’m one geek that blocks all their crap.

  4. Fanfoot

    DVRs aren’t successful? Maybe RETAIL DVRs aren’t, but DVR penetration in the US is now over 40% and still rising. Sure On Demand is the future but DVRs aren’t going anywhere soon. Makes your whole “analysis” suspect.

  5. richard

    DVR has not been a huge success? What planet are you from? Sure, Tivo floundered, but every cable and satellite provider ships a DVR box. Literally every person I know (that has a TV), has a DVR.

    My grandmother uses a DVR. My grandmother wouldn’t know Hulu if it hit her in the face.

    I agree that there’s certainly the *potential* for watch-now technologies is greater than record-and-watch technology, but that’s not the state of the world today.

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  11. Greg Andrew

    As Richard says above, DVRs certainly have been a huge success. 42.7% of American TV viewers use them. It’s turned out, for technical and financial reasons,to be a product consumers “rent” from cable and phone companies, rather than one people buy at retail. The main reason for that is the failure of the cable companies to come up with a system to effectively integrate cable boxes with other equipment – cablecards and tru2way have been complete failures for consumers.

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  15. Zetavu

    So of course, being one of those wacky Beyondtv loyalists, my first question Rakesh is would Snapstream see this as an opportunity to return some development back to its idling but still functional consumer product? If Google does move away from the DVR with its Sagetv acquisition, there might be a very large customer base without a format, many of whom were old Snapstream customers, looking to stay with their product. Assuming it doesn’t distract from the Enterprise TV Search market, would Snapstream be interesting in participating again?

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  17. SWKerr

    The problem with aftermarket DVRs has been Cable and Satellite companies. Like cell phone companies they offer up front discounts and make up the difference on monthly fees. It is hard for a outside company like Tivo to compete even with a better product. Most consumers have no problems setting up and using even the crappy DVRs offered by their providers. People love their DVRs.

    I have trouble believing Google that owns YouTube would need help with a streaming product. The usefulness of Placeshifter is its integration with the DVR and media libraries. Placeshifter by itself is a pretty basic streaming technology. The fact that you have access to your recorded shows and other media is what makes it useful, so back to the DVR. I would think someone at Google did some pretty poor research if they bought it just for Placeshifter.

  18. SWKerr

    Oh, ..and I moved from BeyondTV to SageTV because it integrated all my TV, Music and Movies into one interface. For TV, BeyondTV was great but no integration was a deal killer. I think for GoogeTV that adding the home Library and DVR functionality to all the online content is key. Having DVR functionality that only supports one provider is not the way to go. They also still need the streaming support of Placeshifter to complete the package.

    Also: Yea, GoogleTV was way to expensive. The Sage Extender is worth it at $150 but just. Apple at $99 is just right but you are locked into the Apple ecosystem there. Is see real potential if they can bring down the GoogleTV price and just keep the SageTV DVR and Placeshifter as add on functionality for more sophisticated users.

  19. Bill

    …(which is easier: schedule a recording and then watch it after it’s been broadcast vs. “click here to watch”???). …

    Which is more preferred: schedule a recording an then watch it after it’s been broadcast vs. “click here to watch and be subject to all of the commercial content that comes along with it”???

  20. David Vielmetter

    I think there might be a bit more to the youtube in the TV idea. Rakesh, I understand that you Google->YouTube->TV is a long shot, but I’m thinking about it like this: Google feels threatened only by the big boys. Companies that stream the most content (Netflix, Hulu, iTunes) and that occupy much of people’s time spent communicating online (Facebook, Twitter, etc). If they want to have a piece of the content delivery action (i.e. Netflix, hulu and Amazon) they’ll need to leverage YouTube to do it. If we assume that this is a possibility, then having an affordable set top box to deliver that content could help break into that market. If you think about it YouTube channels could be used by media companies to deliver their shows via the YouTube box…it’s not that much of a stretch. Anyways that’s my two cents.

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  22. btdown

    I’d like to learn about any response Rakesh has to Zetavu’s question on any return development to BTV. Would like to see some new rev’s.

  23. What?Why?

    My bet is that Google does with SageTV what it did with Android. It makes a software package that can be put on any cable co’s box. And like Android it is free. And it is better than what (insert any cable or sat co’s name) has. Also, within a home all DVR’s talk to each other. So recorded shows on one can be watched on the other. Recording conflicts can be resolved across boxes. This box will also have an Android like market for apps. Of course it will support the same GTV stuff as today.

    As for placeshifting…of course that will be there too. It will before Android devices and transcoding will be done in HW on the DVR.

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