UPDATE 2-Google TV to launch in Europe next year

Fri Aug 26, 2011 7:31pm EDT

Related Topics

* Google TV to launch in Europe early next year

* Chairman Schmidt urges lighter TV regulation in Britain

* Schmidt says Google can be a friend to the TV industry (Adds analyst comment)

By Georgina Prodhan

EDINBURGH, Scotland, Aug 26 (Reuters) - Google Inc (GOOG.O) will launch its TV service in Europe early next year, Executive Chairman Eric Schmidt said on Friday, despite teething problems that had led some observers to question how committed the company would remain to the project.

Google TV, which allows viewers to mix Web and television content on a TV screen via a browser, was launched in the United States in October but received mixed reviews and was swiftly blocked by three of the top U.S. broadcast networks.

Large parts of the television industry, like the news and telecoms industries, view Google with suspicion and accuse it of stealing their advertising revenues without contributing to the costs of making programmes.

Schmidt sought to allay the fears of Britain's broadcasting elite in a speech to the Edinburgh television festival, the first time a non-TV executive had been invited to give the keynote MacTaggart lecture at Britain's premier industry event.

"Some in the US feared we aimed to compete with broadcasters or content creators. Actually our intent is the opposite," he told an audience who quickly warmed to his friendly style and liberal compliments to the quality of British television.

"We seek to support the content industry by providing an open platform for the next generation of TV to evolve, the same way Android is an open platform for the next generation of mobile," he said.

"We expect Google TV to launch in Europe early next year, and of course the UK will be among the top priorities."

Google TV has gained little traction so far in the United States, and its set top box provider Logitech International SA LOGN.VX slashed prices to $99 in July from an initial price of $299.

Schmidt also included a warning to British television regulators, who he said were far more stringent than their U.S. counterparts and threatened to throttle the development of British television companies in an increasingly global market.

"Stifling the Internet -- whether by filtering or blocking or just plain turning the 'off' switch -- appeals to policy makers the world over," he said. "Instead, policy makers should work with the grain of the Internet rather than against it."

OPPORTUNISTIC

Google has long held ambitions in the television arena, hoping to extend its online advertising business, which made $28 billion for the company last year, to the big screens that still command the lion's share of global advertising budgets.

"If his ambition was to go there and convince the TV people he wasn't a big threat, I don't think he achieved it," said Keith McMahon, an analyst at research firm Telco 2.0/STL Partners.

"The message I got was that TV is such a big market that Google can't ignore it. They're never going to give it up."

So far, Google has had little success breaking into the TV market, despite its ownership of the world's most popular online video site, YouTube.

Last week, however, Google agreed a deal to buy Motorola Mobility Holdings Inc (MMI.N) for $12.5 billion, handing it the world's leading set top box business which delivers content for many of the top cable TV companies in the United States.

The headline attraction of the deal was Motorola's huge portfolio of wireless patents but the set top box business could help Google transform its TV project by giving it insights into pay-TV.

Google has not spelled out its plans for the set top box business, and many analysts expect it to divest the unit at the first opportunity, having no experience or previous interest in running a hardware business.

Others believe Google could change tack under CEO Larry Page, Google's co-founder who took back the reins from Schmidt in April and has already started a social network to compete with Facebook while ditching other projects.

"Google describes itself as an opportunistic company. So while it may not have wanted to buy Motorola's operations, it may now assess whether retaining these assets can compensate for the risk of owning them," New York-based Nomura analyst Stuart Jeffrey wrote in a note this week.

Schmidt made no mention of the Motorola acquisition or its implications on Friday, but will hold a question and answer session in Edinburgh on Saturday. (Additional reporting by Alexei Oreskovic in San Francisco; editing by David Cowell, Tim Dobbyn and Andre Grenon)

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