IMO, Google died the day they announced they weren’t going to work on anything with less than a billion dollar revenue potential.

It sounds like a financially smart thing to do but it cuts your legs out because nobody is doing research anymore, and you select for people with half a billion potential and an eagerness to lie.

I suspect this was exactly it; Google saw a potential for something like this, wanted in on it, and when the whole market didn't pan out, abandoned it.

Microsoft did something similar with the Xbox (people forget that it was basically done because they were afraid that consoles would become general purpose computers and destroy the Windows monopoly) but they also actually made a business with it and made it profitable in its own right.

In his book "The Road Ahead", which was full of bad predictions by the way, Bill Gates wrote something about the competition between computers and TVs and about set-top boxes. The original Xbox makes sense in that context. It was a bottom-up project initially, but its approval probably had something to do with Bill Gates' set-top box ideas. Microsoft Bob was another related development (cf. the Xbox dashboard, computing appliance).

Go back to the 90s or maybe early 2000s, and there was definitely this widespread vision of a media hub connected to the TV in the living room as the primary home entertainment device (or even more broadly home control). People weren't necessarily in broad agreement about the nature of such a device but it was certainly a more centralized view of the world than what ultimately has ended up playing out.

If you replace “TV” with mobile phone we actually got pretty close to the predictions.

True. Many people primarily interact with entertainment, news, etc. through a single connected device. It's just much more individualized and on the go interactions than it was envisioned in the guise of a home theater/living room hub.

But in this case they didn't do any of that?

I see it as a foray into the cloud gaming market and a way to stifle competition. Once Google throws its weight into the game, it might be harder for smaller companies to keep up or even secure enough funding to compete.

It's not always going to work out, but I do think Google's actions helped stifle competition in that market. Google could have successfully stopped another company from blowing up in that market and becoming a real competitor to worry about in other markets down the line.

It certainly made publishers put pressure on nvidia to block their games from its "stream your own steam library" service, because it gave them the idea they could get service exclusivity bonuses and full retail price for the privilege, something I doubt they'll roll back just because that model has failed for now