The success of Google’s ambitious television initiative, Google TV, depends more on the acceptance and support of broadcast and cable networks and cable and satellite systems than on technologies coming out of Silicon Valley.

Google TV, a universal guide to TV and Internet video and other services that’s embedded inside Logitech’s Revue box, a line of Sony TVs, and a Sony Blu-ray machine, may have limited appeal if it can’t play the TV and online content people want to see.

Unfortunately for the Internet search giant, most of the broadcasters started blocking Google TV devices from viewing their shows just as they went on sale in stores, because they’re already trying to charge cable systems for carrying their over-the-air signals. And only one satellite system, Dish Network–and not a single cable firm yet–has worked out any deals for Google to be able to search their program guides and DVR content. For now, that makes Google TV devices, which start at $300, an even more dubious proposition for consumers during another tough holiday season.

So today, Google took its case to the belly of the beast: Hollywood. Rishi Chandra, the product lead for Google TV, demonstrated the system in a keynote at Streaming Media West, a gathering of businesses, tech, and content firms in online video. It was the first time since Google formally introduced Google TV last May, at its software developers’ conference, that the company has demonstrated the system to a large public audience.

Google hasn’t radically changed its pitch for Google TV since May, but the sting of getting blocked from showing sites of major broadcasters such as ABC, CBS, and NBC appears to have prompted a renewed emphasis on making nice with content owners and distributors. Indeed, the title of his talk was “The Web Is Now a Channel,” the implication being that TV is still the central experience, and the Web is just part of that. But clearly it’s going to be a big part eventually, and how big and in what way is what TV people in LA and New York are worried about.

Chandra started out with a story: A couple of weeks ago, he was interviewed on TV, and his wife recorded it on their DVR. When she asked their son if he’d like to see his dad on TV, he said no. “Why not?” she asked. “This doesn’t happen very often.” Still no. “I’ve already seen Da-da on TV,” he answered. Turns out their son has his own YouTube station and dad appears in various home videos on it. “He has no concept of the idea that neither he nor his dad wouldn’t be on television,” Chandra said. That’s the new world of “television” that his son is already living in.

“We’re now entering the third phase” of TV, beyond broadcast and cable TV, he said: the Internet. “It’s going from 300 channels to millions of channels. What people are doing is watching more different kinds of television. There’s been a long tail of content that’s been created.” Google’s YouTube video sharing site gets same amount of new content in 60 days that the networks have created since they began, he says.

In fact, he said, it’s the least popular channels that are getting a bigger and bigger share of overall video consumption. Cable networks with less than 1 percent share of viewership together account for 50 percent of viewership, and 0.5 percent of networks account for 30 percent of overall viewership. “What’s really exciting is now because of the Web we can expose a new generation of content creators to the television,” Chandra said.

That no doubt plays well with the many people at the conference who are trying to make a go in online video shows and services. They view the Internet as a way to skirt the traditional filters of television, but the prospect of getting their content to a chunk of the huge television audience holds a lot of appeal.

Again looking to put Hollywood at ease, Chandra sought to dispel what he called three myths: First, he said, Google TV isn’t looking to replace cable. (In case someone in the audience missed that, he repeated that statement.) “Our goal is not to replace cable but to add to it.”

Second, he said there’s a myth that the Web means free. “That’s false,” he said, and there are multiple business models online: Netflix has subscription models. Amazon has on-demand. HBO has authentication model, where TV subscribers can get the same content online.

And third, he said, in contrast to the headlines, the broadcasters’ content is largely available on Google TV. For one, there’s the free over-the-air signals. There are also TV shows on Netflix and Amazon Video On Demand. Only a few current episodes of shows that are on the broadcasters’ Web sites are blocked, he said.

Finally, after a demo of Google TV, Chandra charted out four areas of innovation and opportunity he anticipates:

• Great content can come from anywhere. He pointed to a movie called The Hunt for Gollum, a volunteer prequel to Lord of the Rings. It cost just $5,000 to make the 40-minute video, but it got 1.3 million views in first week. If launched in theaters, it would have been No. 4 movie that week, he said (if it were free, of course).
• Programming is going to become even more important. This is an open question, he admits. It especially becomes more important in a world of infinite choice. “But it’s going to evolve,” he said. “It’s not going to be about programming for the masses anymore. It’s going to be about programming for individuals, for the household.”

• Content discovery will be reinvented. “The program guide breaks when you go from 200 channels to a million channels,” he said. “There has to be a better way. I don’t know what that better way looks like yet.”
• New ad formats. “This is not going to happen overnight,” he said. But “you’re seeing more and more innovation happening on the Web around new ad formats. That’s a good thing for content owners.”

Nonetheless, various people in the audience clearly are wary, judging from their questions. One asked: Is the content that Google TV will access free, and will the content providers receive any payment for that content? Chandra said it’s up to the content owners how they distribute their content and what they charge.

Another asked if Google would get into the communications business with Google TV, which in the form of Logitech’s Revue box with an add-on video camera offers high-quality videoconferencing. Chandra implied Google itself would not, instead offering a platform with Google TV for others to provide such services. With Google TV and related devices and Internet-enabled TVs, he said, “effectively your TV is a computer. So you’re going to see a ton of innovation there. The TV will become the central entertainment device in the home… not just a video consumption device.”

That prompted a final question: How do you define television? Here, Chandra stumbled. “It’s hard to say,” he said. “Video will be video. But the TV device itself will be much more than video.” He noted that the iPhone turned the mobile phone into much more than a phone. But as for what TV becomes, he admitted, “I don’t know how to answer the question, to be obvious.”

A lot of people pondering the future of the last mass medium to be touched by the Internet are hoping they can help find that answer.