Google just released a software update to improve user experience for Google TV users, amid speculation they are planning to take on cable giants such as Comcast by offering paid cable TV services. This latest update features a simplified interface, improved search, better YouTube/Google TV integration, and a limited number of apps for TV.

Google TV software can be installed on cable TV boxes or directly on the television to bring online shows and channels from the Web to the living room. This poses an obvious threat to traditional cable companies; if Google can bring the same high quality programming to consumers, possibly for a lower price, competition will increase exponentially.

Of course, entertainment companies could refuse them a license. This doesn’t seem likely, as channel owners stand to benefit from multiple licensees in the market, especially if they’re willing to pay more.

The Wall Street Journal reported last week that Google plans to pilot a video and phone service offering in Kansas City, Kansas, and Kansas City, Missouri. The pilot, slated to launch in early 2012, would pit them directly against current cable, satellite, and telecom giants Time Warner Cable Inc. and DirecTV, among others. They are rumored to have brought former cable TV executive Jeremy Stern onboard to facilitate negotiations with media companies.

Back in September, speculation over a possible Hulu acquisition by Google ran rampant. Business Insider reported that Google CEO Larry Page had some “big ass ideas” for Hulu, though they didn’t elaborate.

This would be a particularly painful move for Comcast, part-owners of Netflix-rival Hulu. It appears now that they needn’t worry about Google scooping up the online video service; Hulu partners released a statement in October declaring they’ve opted to build out the service and won’t be selling anytime soon, despite a Google bid ”in the range of” $4 billion. Don’t expect being shot down to deter Google.

Page doesn’t take kindly to those who spurn his advances. Consider Groupon’s refusal to sell to Google and their launch of rival service Google Offers just a few short months later. Google Offers continues today to make life difficult for the company that wouldn’t sell to them for $6 billion. Facebook and Twitter both refused to play ball and share data with Google – cue Google+ launch. They have a long and storied history of buying what they can, and reinventing what they cannot.

As Google continues to move into new areas, they may even be gaining an edge on Facebook when it comes to social integration. Google’s +1 buttons and sharing to Google+ are already widely integrated on websites and even into Google’s PPC ads. They just might be successfully moving into Facebook’s “seamless sharing” territory, without the pesky third-party privacy concerns inherent to the Open Graph system. If they own the properties consumers use to listen to music, read the news, and watch TV, sharing becomes simplified and could make user-approved apps seem cumbersome.

Comcast and other cable/satellite companies aren’t sitting idly by as Google continues to move into their space. They’ve been developing apps and securing programming rights for online shows to complement their offline offerings. The U.S. television industry is valued at over $150 billion a year in user subscription fees and advertising; incumbents will fight as hard to keep their market share as Google will to steal some of it away.

Google TV wasn’t an instant smash hit by any stretch of the imagination and this latest update is meant to attract more users to their service. The interface is classic Google and reminiscent of the Android phone or tablet screen. A new “TV & Movies” app makes searchable over 80,000 shows and movies from cable, satellite, Netflix, Amazon, and YouTube.

Last week, Google announced the addition of dozens of new YouTube channels rolling out over the next year, including Reuters.com, The Redbull Channel, WWE Fan Nation, and eHow Pets & Animals. In addition to this barrage of original programming, this latest update brings more HD-quality YouTube video to Google TV users. It also more closely integrates YouTube with Google TV search, allowing users to create channels on almost any topic.

They’ve opened up the Google TV apps market to Android developers, allowing the migration of existing apps to Google TV, provided they aren’t dependant on touchscreen, GPS, or telephony technology. Developers can also create new apps specifically for TV. So far, there are 50 apps available to Google TV users.

Have you tried Google TV, or do you plan to make the switch? Let us know what you think in the comments.

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