TVs Get Smart
Thanks to Smart TVs and services like Netflix, Inc. (NASDAQ:NFLX), consumers are gravitating toward online streaming as a way of life. Families can watch entire seasons of shows for less than $10 a month, rather than paying more than $30 a month for Comcast Corporation (NASDAQ:CMCSA)’s most basic plan.
With its new Chromecast product, Google Inc (NASDAQ:GOOG) aims to do just that. Instead of using the remote to find a video, consumers merely find the video on a laptop, tablet, or smartphone and tap the Chromecast icon to send it to your TV. The device communicates with a flash drive-shaped dongle that plugs directly into a USB port on a TV.
Currently, Google Inc (NASDAQ:GOOG)’s new product only interacts with YouTube, Netflix, and Google Inc (NASDAQ:GOOG) Play, but if the product takes off, more will follow. Which leads industry analysts to conclude that more consumers will gravitate toward streaming, with the final inconveniences now out of the way. Google is known for its innovation and, as owner of YouTube, stands to gain much by ensuring YouTube viewership remains high. Earlier this year, YouTube unveiled “paid subscription channels,” where cable networks and other providers could offer content for a monthly fee.
These days, Google Inc (NASDAQ:GOOG) is working hard to justify its stock price. Investors were eager to shell out $900 a share when the company was doing well, but while it reported solid earnings, it missed expectations. Revenue was up 19% to $14 billion for the company’s second quarter and earnings per share fell $0.42 to $9.71. Analysts were predicting $10.78 per share on revenue of $14.41 billion.
Still, the future is bright for Google Inc (NASDAQ:GOOG), as CEO Larry Page emphasized in a press release. Stellar sales of Chromecast could provide Google Inc (NASDAQ:GOOG) with the boost it needs to beat analyst expectations of only $10.60 a share on $11.8 billion in sales in its current quarter.
Satellite fail
AT&T Inc. (NYSE:T), traditionally a phone service provider, has moved into the cable TV space, going head-to-head with Comcast Corporation (NASDAQ:CMCSA) and other cable providers. And like those other companies, AT&T Inc. (NYSE:T)’s offerings run the gamut, from cell phone service to Internet, TV, landline, and more. But for AT&T, cable TV has become a lucrative business, making up for a 0.9% landline revenue drop in its last quarter. To recover from America’s shift toward VoIP and mobile phone services, AT&T Inc. (NYSE:T) has been beefing up subscribers for its U-Verse cable TV service, adding 233,000 customers over the last three months.
But as customers gravitate toward streaming services, U-Verse may suffer in comparison to Comcast, whose speeds are faster. For streaming customers, speed is crucial.
AT&T’s recent earnings only adds to concerns that the company may be forced to play second fiddle to its biggest competitors -Comcast and Verizon. The company’s net income dropped $80 million to $3.82 billion. But sales were up 1.6%, slightly ahead of analyst predictions. Disappointing profits were blamed on the rising cost of smartphones, which most service providers discount in order to entice customers to sign contracts.
Comcast wins
Either way, Comcast has positioned itself to take advantage of the shift in consumer viewing habits. The company is one of the top home Internet service providers in the country, which means, even if its customers drop cable TV, they’ll likely beef up their Internet speed. The company reported a 8% increase in its high speed Internet business, with its Comcast Video online streaming service growing 2.7%.
Additionally, Comcast owns a piece of Hulu. With more than four million paid subscribers and millions more who watch videos for free on the service, Comcast is poised to reap rewards from a move toward digital streaming.
For the investment dollar, Comcast is by far the best bet when it comes to the future of television. But Google Inc (NASDAQ:GOOG) isn’t far behind by integrating with Comcast to connect devices. The only potential loser of the three is AT&T, who may need to focus a little more effort on its home Internet service and a little less on its TV segment in order to keep up with the changing market.
The article Will Google Revolutionize the Way We Watch TV? originally appeared on Fool.com and is written by Stephanie Faris.
Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Stephanie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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