Google Video in Terms of Porter\'s Five Forces and Porter\'s Competitive Strategy

Porter's 5 Forces

Google failed to break into the video streaming industry for many reasons. Using an analysis of Porter's five forces one can better understand the failures of Google to secure a foothold in the online video streaming industry as an independent entity.

The first force that needs to be analyzed is the threat of new entrants to the market. "Except for the early stages of market development, when new entrants can help a market to expand, new entrants bring additional capacity and resources that usually heighten the competitiveness of the market and diminish profit margins" (Lehmann & Winer, 2005, p. 56). In January 2005, when Google entered the online video market, there was little competition from other corporations. In July 2003, Metacafe, dedicated to streaming short-form original content was launched and in January 2004, MSN began to offer an Internet video download service. Instead of attempting to compete with these two companies and enter into user-generated content video streaming and downloading, Google failed to keep up with technology and instead launched a search engine service that allowed users to search for videos but not view them (Cool, Seitz, & Mestrits, 2010, p. 4).

It was only in April 2005 that Google began to allow user-generated material to be uploaded to its site. In this sense, Porter's second and third forces are intrinsically tied together as the bargaining power of buyers and the bargaining power of suppliers were similar, if not the same due to its user-generated content platform. However, Google was always a step behind with demand. Its competitors were constantly innovating and offering new services that were tailored to customer demand. While other services allowed users to upload their own content in the years leading up to Google Video's founding, it was only in 2007 that Google became a formal video search engine, which actually allowed viewers to watch online videos instead of just looking up transcriptions as in 2005 (Cool et al., 2010, p. 5). Additionally, Google dealt a major blow to its buyers in 2007 when it shut down Google Video Store, especially when users lost access to the protected content that they had purchased through the service.

The fourth force that Google had to contend with was the amount of competition. One of the most business savvy decisions that Google made was to purchase YouTube in 2007, about a year after it was launched. However, this move came after AOL, MSN, and Yahoo! began offering buyers the opportunity to upload, share, tag, link, etc. videos. Furthermore, instead of shifting its focus to the growth and development of YouTube exclusively, Google decided on redundancy and announced that it intended to keep YouTube as a standalone service while "continuing to nurture [its] existing video service" (Cool, et al., 2010, p. 5). It appears as though Google was forced to comply with the demand of buyers and its competitor's reaction to the demand before they were prepared to do so. Because AOL, MSN, and Yahoo! offered the same services as Google, it can also be argued that Porter's fifth force -- pressure from substitutes -- also played a role in forcing Google to adapt to its customer's demands.