Why Netflix has content and Google TV doesn't

If Google managers hope to license premium TV shows and films for Google TV and YouTube, they should do what Netflix did and "build relationships through traditional means."

That's the recommendation of one studio executive who was referring to a tradition that has helped forge partnerships in the movie industry for decades: doing lunch. Sounds simple, but in an industry that relies so heavily on personal relationships forged over arugula salads and sparkling water, Google's usual data-heavy, interchangeable-executive approach doesn't cut it. In Hollywood, it seems, Google has had a people problem.

Google managers now seem to have plenty of motivation to hit the cafes on Sunset Boulevard and do some schmoozing. Netflix's streaming video service has jumped out to a big lead in distributing movies and TV shows online and the company continues to cut licensing deals. Earlier this month, Netflix announced it has renewed an agreement that enables it to stream TV shows from the Disney Channel and ABC.

Not only does Netflix possess more content but the company has is far ahead in building out a distribution infrastructure. Managers at the studios and TV networks can look around and see Netflix's streaming service is a prominent feature on scores of Web-connected TVs and set-top boxes. These partnerships have served to enable subscribers the all-important ability of viewing Netflix movies on their TV sets.

Meanwhile, Google has stumbled rolling out Google TV, the software platform that debuted on Sony TVs and Logitech's Revue Box in October. The offering is designed to enable owners to view Web video on TV sets, but so far, the largest broadcast networks have blocked it from accessing their Web shows. The software's complexity has also helped generate mixed reviews.

Google TV on pause
On Sunday, came another embarrassing headline. The New York Times reported that Google has asked several TV manufacturers, including Toshiba and LG Electronics, to postpone plans to unveil their Internet-connected sets at the Consumer Electronics Show in Las Vegas next month. Google asked them to wait until it can overhaul the software, according to the Times. Google didn't respond to an interview request but the company has stated publicly that it is happy with the performance of Google TV.

If the software problems cause only a brief delay it may not mean much, but it's certainly another sign that Google TV was launched before it was ready. If it was fully baked, why did the company appear so unprepared by the rejection of the platform by broadcasters?

Some in Hollywood suspect the reason is that Google didn't know it was coming. After two years wooing the film and TV sectors, Google is still not very tuned in to the industry, said two film sector insiders who spoke to CNET.

These same executives cautioned against naming Netflix the winner of Internet distribution, adding that there's a long way to go in this contest. But both sources acknowledged that Netflix has had more success acquiring content thanks to the company's big head start in the sector as well as adopting a smarter approach to Hollywood.

Ten years ago, Google was building an advertising juggernaut while Reed Hastings toiled away on the mail-order rental service he co-founded in 1997. Netflix employees have been knocking on the studios' doors ever since.

TV networks and film studios are also more comfortable with Netflix's distribution methods. Netflix pays to acquire material for a specific period and then streams it on demand to paying subscribers. Cable and broadcast TV have operated much the same way for decades.

In contrast, Google TV doesn't technically need a license to present TV shows. The material is made freely available over the Web and all Google does is make it available on a TV. Boxee, a company that began offering similar software years ago, received the same kind of reception from some of the broadcasters.

For the right to present TV shows to a living-room set, cable and traditional broadcast channels pay a lot of money. That money might dry up if Google were allowed to deliver those shows without paying for them.

Rishi Chandra, Google TV's lead product manager, has said that Google TV is just a platform, one that will offer apps, Web browsing, and more. Requiring a platform to pay for content would be comparable to charging Microsoft for enabling video viewing on its Web browser, Chandra said. He qualified that by saying Google is willing to pay to acquire content for YouTube's paid-rental store.

The Wall Street Journal reported last month that Google is in discussions to license films from Miramax, producer of such movies as "Reservoir Dogs" and "The English Patient." That suggests Google TV owners might get licensed content via YouTube's rental service.

Of course, Google must first acquire that content for YouTube.

Google still a Hollywood outsider
In November 2008, CNET broke the news that YouTube was in talks to acquire feature films, and, soon after, the company signed a modest deal with MGM Studios. Google has made little progress since. To date, Google's approach to film acquisition has been hobbled by several factors, according to multiple studio managers. Many in the film industry don't trust the company. Some suspect Google has little respect for content or the people who create it. Finally, the search engine's prior attempts to build ties to Hollywood were described by one executive as "disorganized."

Some of the bad blood at the studios comes from Google's handling of YouTube after acquiring the iconic service in 2006. The company appeared at first unwilling to do much to prevent users from posting pirated clips to the site. Then there's the way Google, and other tech companies including Apple, have used the Internet to wrest control of digital distribution from other media categories, including print publishing and music.

The studios don't want Google or anyone else doing that to them.

But where Google really trails Netflix is in connecting on a personal level with the studios. Google's face in Hollywood isn't yet defined. The search engine has sent too many different representatives to town, said one studio executive. There were Google people and YouTube people, different lawyers, agents and managers, pitching studio chiefs, the source said.

In contrast, Netflix's content-acquisition team, including Ted Sarandos, the unit's leader, has been based in Hollywood for 10 years. Sarandos and his team received high marks for being "good listeners" and for being persistent, the studio sources said. "They don't come off as arrogant," said one insider.

Google is apparently moving to improve relations with entertainment companies. The search engine has recently announced plans to step up antipiracy efforts. In September, Google hired Robert Kyncl, one of Netflix's top content-acquisition execs to oversee its partnership program. On Monday, the blog PaidContent reported that Google has also added Malik Ducard, a senior executive from Paramount Pictures' digital division.

One studio executive warned not to expect any quick fixes. The source said that while Kyncl and Ducard are well-liked in town, Google should look at content acquisition as a long-term goal.

"The smartest thing they could have done [initially] was to take people out to lunch and try to have a dialogue versus just coming in and saying 'this is it,'" said the exec. "When you think about trying to [make inroads] in Hollywood, a lot of people fail out of sheer arrogance or they just don't know how to build the relationships...You've got to work on it ,and it's more than just having a great product and the money. There has to be some trust."