Dive Brief:

• Google is likely to launch a web TV service in early 2017 and has reached an agreement with CBS Corp. to carry the network’s content, according to a report from The Wall Street Journal citing people familiar with the matter. 
• Called Unplugged, the new service will target consumers who do not have subscriptions for traditional TV with a “skinny” bundle of live TV channels that will cost between $25 and $40 per month. 
• The project comes from Google’s YouTube division, where deals with 21st Century Fox and Walt Disney Co. are also reportedly in the works. YouTube Red, an ad-free subscription service launched last year, will likely remain a separate offering, although some its content could appear on Unplugged, according to the Journal. 

Dive Insight:

Over-the-top video services are nothing new, but a new surge of interest is taking place as consumers continue to migrate away from traditional TV. Netflix surprised investors recently by adding more new subscribers than expected, an indication that the trend toward digital streaming services is picking up speed. 

Google’s entry would bring a new competitor to an already crowded space — albeit one with very deep pockets and the ambition to make its mark. Other companies considering web TV services as an alternative to cable include Hulu, which could also launch its offering in early 2017; Dish Network, which launched SlingTV last year; and Sony’s PlayStationVue.

For Google, a Web TV service should be seen as a way for the company to command higher ad rates. But it could face challenges, including the perception that it is not aggressive enough tackling piracy. Google will also need to find the right balance with broadcasters between how they want their content presented and Google’s interest in overlaying data on network feeds and bundling the content with some of YouTube’s more popular content, which is perceived as having lower value by broadcasters.

The news comes as digital platforms like Google look to shore up their role in the home, betting big on a future where digital assistants control everything from home appliances (including TVs) to how consumers research and order products online.

The timing of YouTube's web TV service coincides with Google’s rollout of its AI-powered home assistant and complementary hardware Home, which is already integrated with Chromecast. A recent notice showing up for users of the Cast app suggests an even tighter integration going forward as the app is rebranded to Home. It would not be a surprise to see Google also integrate Unplugged.