Google Inc (NASDAQ:GOOG) just jumped ahead of the competition with a new product: Chromecast. The $35 device turns any HD TV into a light Smart TV capable of watching everything from YouTube videos to Netflix, Inc. (NASDAQ:NFLX)’s streaming movies and digital content. Simply plug Chromecast in any available HDMI port and voilà – you’re the proud owner of a Smart TV.
Why this changes the game
Smart TVs retail at price points $2-300 higher than your average HDTV. With added costs comes added functionality as a Smart TV is really just a TV with a cheap, low-power computer built in.
Google Inc (NASDAQ:GOOG) undermined recent developments and the war for the TV with the new Chromecast product. For just $35, customers can watch streaming videos, access chrome apps, and control their streaming content with a mobile device (tablet, mobile phone, or laptop computer). It even has cross-platform functionality, meaning Apple Inc. (NASDAQ:AAPL) users will get just as much use from Chromecast as Android and Windows users.
At the $35 price point, customers also receive three free months of Netflix, Inc. (NASDAQ:NFLX) streaming service, a $23.85 value, making the device itself cost only $11.15. It will soon appear online at Amazon.com, Inc. (NASDAQ:AMZN) and Best Buy Co., Inc. (NYSE:BBY) shelves around the country.
Chromecast’s only deficiency is that it cannot be used to stream local content. Thus, files downloaded to your computer that are not available for public streaming won’t be playable from day one. However, speculation is growing that an army of third-party app developers will have a solution available in a matter of days to fix this minor disadvantage.
Who it affects
A new Chromecast comes as Apple Inc. (NASDAQ:AAPL) and Microsoft Corporation (NASDAQ:MSFT) are making major moves to merge mobile and laptop products with home media centers. Apple Inc. (NASDAQ:AAPL) is rumored to have investigated its own full-capability smart TV while Microsoft Corporation (NASDAQ:MSFT) is betting big on entertainment on the new Xbox One.
Microsoft Corporation (NASDAQ:MSFT) has much to lose from the widespread adoption of Chromecast. The company generates substantial revenue from Xbox Live Gold memberships, which are required for streaming content from Hulu and Netflix, Inc. (NASDAQ:NFLX) via the Xbox hardware. Chromecast’s adjusted price of $11.15 (to reflect the free Netflix, Inc. (NASDAQ:NFLX) subscription) is a much cheaper alternative than the $50 per year price point for Xbox Gold. Customers who renew only to continue to stream content via their game console would naturally favor a one-time payment for Chromecast.