BSkyB in Google link-up
The partnership will at first see Google provide its user-generated video, e-mail, search and targeted advertising tools to customers of BSkyB's five-month-old broadband internet service - the first licensing of the video tools Google bought when it acquired YouTube for $1.65bn in October.
Context & Ripple Effects
BSkyB had already signalled a push to make broadband a more aggressive part of its customer offer through a proposed free-broadband plan. The Google agreement adds a service layer—search, email, advertising and user-generated video—to a broadband product only five months old.
For Google, the deal is the first licensing of video tools acquired with YouTube in October. It follows Google's move to share advertising revenue with videographers, connecting video distribution to a targeted-advertising model rather than treating YouTube solely as a destination site.
First-order effects
- BSkyB broadband customers gain Google’s video, email, search and targeted-advertising tools, giving BSkyB a differentiated bundle alongside connectivity.
- Google gets its first external licensee for YouTube-derived video tools and a direct distribution channel through BSkyB’s broadband service.
Second-order effects
- BSkyB’s broadband proposition shifts competition toward bundled online services, raising the value of Google’s consumer tools as an operator differentiator rather than a standalone web destination.
- Advertisers using Google’s targeted-advertising tools gain access to a BSkyB-served audience, tying the commercial value of the partnership to BSkyB’s ability to attract broadband users.
Third-order effects
- The agreement points toward a platform-licensing model in which network operators package search, communications, video and advertising services from web companies instead of building each layer themselves.
- If such arrangements spread, control over the customer relationship may be split: BSkyB retains the broadband subscription while Google supplies the data-rich services and advertising infrastructure.
The trend: Broadband providers are evolving from access sellers into distribution partners for internet platforms, while platforms extend their services through operator bundles.