Google is widely faulted with effectively killing RSS by pulling the plug on Reader (I, for example, haven’t used RSS since), so I don’t think they’re missing the big picture, I think they just prefer a different picture
We still use RSS and Atom feeds for podcasts. It's a pretty widely-adopted use case. Perhaps there is a lot more to the contraction of RSS as a way for discovering publishing of "blog"-style media than "Reader got killed" (it seems like Reader offered more features than just RSS consolidation that someone could, hypothetically, build... But nobody has yet?).