Boxee to Bow in Set-Top Form; Roku Readies Expanded Content Store

Klein declined to identify Boxee’s CE partner. Boxee has said its software requires “tens of megabytes” to store in a CE device and that it would first go after Internet- enabled TVs, videogames consoles and AppleTV. In addition to content agreements with MLB.com and Joost, Boxee started a program in the spring that has since attracted 100 developers who have created 300 applications. “We need to find a way for our content providers, who are very nervous about partnering with us, to distribute their programming in a way that makes money,” Klein said.

The new partnership comes as Boxee prepares to release a new version of its software that will allow for searches of TV shows and other content available through the service. There will be additional software releases before the set-top version is available, Klein said. The first agreement won’t be exclusive as “everyone knew from the beginning that our interest would to be on as many devices as possible,” he said.

While Roku has forged partnerships with telcos - Qwest offered its SD player free with a new purchase of its Connect Platinum high-speed service - it also will expand its Roku Channel Store late this month, spokesman Brian Jaquet said. Roku has existing agreements with Amazon Video on Demand, MLB.TV and Netflix, and will add Flickr, Pandora, Mediafly, MotionBox, TWiT TV and Revision3. Within “a few weeks” of expanding Roku Channel Store, a free public version of its software development kit will be released to enable development of new Linux-based applications, Jaquet said.

As Roku expands its Channel Store, it also will continue to market players that start at $79 for an SD model, Jaquet said. There will continue to be growth in Roku’s hardware sales for some time since Internet-enabled CE devices are in their infancy, he said. “Our bread and butter right now is a box sale, but over time when embedded becomes more important we'll start to do a lot of software integration and services that allow for search and discovery,” Jaquet said. “We're not religious about our hardware platform, but we think it is the best way to go to market right now. We're making money off of it, but over time we see driving up the value of the product while driving down the price and making it more valuable for content out there. I think we have a long ramp of hardware still.”

Despite the increased availability, Internet-enabled TVs and Blu-ray players won’t be big sellers this holiday season, said retailers and manufacturers we polled. Part of the reason for low expectations is that consumers need to be made aware of the feature, including demonstrating them on the retail floor, said Steve Caldero, chief operating officer at Ken Crane’s Home Entertainment. With manufacturers increasingly moving to add wireless capability to TVs, retailers need to set in-store networks to demonstrate the technology, he said. “I don’t think anyone, us included, is doing a great job demonstrating the products yet,” Caldero said. “The download capabilities and widgets are getting some attention from consumers, but the awareness remains low and we need to do a better job educating them.” Until the benefit of having Internet-connected CE products is fully explained to consumers, Roku players and similar products will “have a pretty good runway,” Jaquet said.

Underscoring the lowered expectations for sales of Internet-enabled TVs is Vizio’s apparent decision to postpone to January from December delivery of its 55-, 47- and 42-inch LCD TVs with its Vizio Internet Apps (VIP) platform. Matthew McRae, vice president and general manager at Vizio, said at the NewTeeVee conference in San Francisco last week that performance of the VIP TVs is “still a challenge,” but it will get better.