Broadband Cable Association of Pennsylvania


Consumers dislike Google TV so much that they are now giving the product back.

Gadgets that use the company's Google TV software to connect televisions to the Internet are selling so poorly that one of Google's key partners disclosed Thursday that customer returns are outpacing sales. Logitech International SA, which makes the Revue set-top box and special keyboard built on the search giant's technology, said Revue revenue was "slightly negative" in the latest quarter as more units were returned than purchased. "There was a significant gap between our price and the value perceived by the consumer," explained Logitech Chairman Guerrino De Luca, in a conference call Thursday.

In a bid to spur sales, Logitech said it would lower the Revue's price to $99 from $249. The Swiss company had earlier this year cut the price from $299. While Mr. De Luca admitted his company misjudged the market, he said the Revue's poor sales are "partly due to the fact that Google TV has not yet fully delivered to its own promises." "We launched Revue with the expectation that it would generate significant sales growth in spite of a relatively high price point and the newness of both the smart TV category and the underlying platform," Mr. De Luca said. "In hindsight, there are number of things we should have done differently."

The lackluster performance of the Revue marks a setback for Google Inc.'s television ambitions. The company unveiled its Google TV software to much fanfare at its developers conference last year. The product was part of the company's broader push to become a force in the distribution of TV shows, movies and other media content. However, Google faced resistance from major networks, which worried their businesses would be undermined if their programming was made available via Google TV. The device was also dogged by complaints that it was complicated to use.

A Google spokeswoman said Logitech's move wouldn't deter the Internet giant from pursuing its TV projects. Sony Corp. also makes Internet-connected TVs powered by Google's software. "It's still early days for smart TVs and we're investing to continue to bring innovation and progress for our partners and users," she said. The company will provide users with an updated version of Google TV later this year, she said. Wall Street Journal Inc. said Thursday it reached a movie-licensing agreement with a unit of NBCUniversal, a move that ramps up the Internet retailer's efforts to expand its presence in the competitive media streaming market.

The deal gives Seattle-based Amazon access to selected Universal Pictures movies, making more than 9,000 movies and TV shows available to members of Amazon's premium service, known as Prime. Prime also enables Amazon customers to receive discounted shipping rates. The arrangement is Amazon's second significant licensing agreement in recent days aimed at augmenting its streaming library. Last week, the company struck a deal with CBS Corp. that covered 2,000 episodes of the television network's shows.

An Amazon spokeswoman said the deals were aimed at giving the streaming service, which launched in February, momentum and content. She declined to comment on the financial terms.

The latest deal bolsters Amazon's presence as it expands in an increasingly competitive online video streaming market. Rivals include Netflix Inc. and Hulu LLC, which is currently up for sale. Apple Inc. and Google Inc. have also offered an expanding array of video entertainment streamed on the Internet. News Corp., which owns The Wall Street Journal, has a stake in Hulu.

BGC Partners analyst Colin Gillis estimates the licensing arrangement with NBCUniversal is costing Amazon roughly $50 million. Mr. Gillis said the deal could bolster Amazon's efforts to provide attractive content for mobile devices. The company is widely expected to announce a tablet device this year. The NBCUniversal deal provides customers with access to movies such as "Eternal Sunshine of the Spotless Mind" and "Babe." That will help Amazon compete with Netflix, which began as a DVD-by-mail company, and its wider catalog that includes access to hit TV shows, such as first four seasons of "Mad Men."

Meanwhile, Google has provided an expanding array of professionally produced content on its YouTube video service, while Apple provides video content through its iTunes store. Stifel Nicolaus analyst Jordan Rohan likened the online video market to the more mature cable TV industry, which supports multiple networks. "There is plenty of room for Hulu, Amazon and Netflix to offer television and film programming in a streaming format," Mr. Rohan said. "Don't we have HBO, Cinemax, Starz and Showtime?"

Dish Network Corp. has signed a nondisclosure agreement to investigate the financials of Hulu LLC, the online video service that is selling itself, according to two people familiar with the situation. Dish's move doesn't mean it will make an offer to acquire Hulu, said the people, who wouldn't be identified because the matter isn't public. Apple, Google, Yahoo and AT&T also have expressed interest in the company, people familiar with the matter said this month. Dish chief executive Joseph Clayton said June 23 he may be interested in deals for companies including Hulu.

Acquisition of Hulu would continue a flurry of takeovers this year for the second-largest U.S. satellite-TV provider. Dish, based in Douglas County, already has purchased DBSD North America Inc., a satellite company that provides voice and data services, and movie-rental chain Blockbuster Inc. This month, Dish won court approval to buy mobile-communications company TerreStar Networks for $1.38 billion. Wall Street Journal