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Summary:

Vudu, a Santa Clara, Calif.-based start-up is getting a lot of buzz this morning, thanks to a rather extensive article in the New York Times. Their set-top box is supposed to make downloading and watching movies a pleasurable experience, and do an end run around Cable […]

Vudu, a Santa Clara, Calif.-based start-up is getting a lot of buzz this morning, thanks to a rather extensive article in the New York Times. Their set-top box is supposed to make downloading and watching movies a pleasurable experience, and do an end run around Cable companies’ Video-on-demand offering.

If Vudu succeeds, it may mean goodbye to laborious computer downloads, sticky-floored movie theaters and cable companies’ much narrower video-on-demand offerings. “Other forms of movie distribution are going to look silly and uncompetitive by comparison,” [Tom] Miranz [Vudu founder] asserts.

The reality is that cable companies are not sitting still and are beefing up their Video on demand offerings. Two of the largest cable providers – Comcast and Time Warner Cable are testing a video-on-demand system that would allow them to release the movies on their VoD systems the same day DVD is released, which kind of takes away any competitive advantage of Vudu.

The only thing that stands between the CableCos and mass market adoption is a sensible and userfriendly interface, that they can’t seem to develop. Having not seen the Vudu interface, I am not sure if that will be the little start-up’s edge on cable companies.

Similarly, the telcos who are spending billions on new video-focused broadband networks are going to offer similar services on their set-top boxes. So the challenges are immense for this little company.

Silicon Valley’s record (if you don’t include Apple) on making hit consumer electronics devices is still a bit chequered. The number of dedicated video boxes and services is getting to a point of consumer no-attention. As Pete Rojas notes on Engadget, “the landscape is littered with companies (Moviebeam, anyone?) that have tried to convince consumers that they need yet another box connected to their TV and failed miserably in the process.”

Additional reading:

NewTeeVee: Is the closed set-top box doomed?

NewTeeVee: Is that the Vudu magic.

By Om Malik

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  1. Vudu’s advantage would be to chip away market share from cable cos and satellite networks who take their customers for granted – the traditional cable and satellite companies customer service sucks and I would be willing to bet that if Vudu can avoid the trap of multi year contracts that cable companies try to enforce, they might as well succeed.

    A nice addition to their business would be micro payment for TV shows as well – for ex: 90% of content on TV is mostly useless for many consumers, yet, they are forced to pay for it by way of monthly subscriptions. If Vudu can find a way to offer TV content on demand and charge for what you view, they might be next google.

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  2. Apple has a pretty checkered record in consumer electronics space too. The iPod is a hit, but there are a long string of Apple failures in the space.

    The MSO that embraces Tivo, instead of cutting them out, will do well.

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  3. I still find it amusing how up until satellite, the cable co’s were the very slowest to adopt/add absolutely anything new. Over a 15 year period I remember only two ‘innovations’ – pay per view, and HBO. Most of them wouldn’t even try broadband on their own, and relied on @Home (who they later screwed).

    Even the telco’s (2nd largest monopoly behind cable) added things like call waiting, call display, voicemail etc.

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  4. Simple, this product is DOA!

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  5. They have some really bad-ass engineers.

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  6. The cable cos do have the technology to create a better interface having acquired Liberate and MetaTV by Comcast. Open standards are approaching for eTV applications. Comcast could launch a better movie interface within a year using a Liberate/MetaTV stack. The issue is more business related as the VOD suppliers also want to control the interface. At some point, the MSOs will have enough flexibility to change the UI for all TV applications.

    This product is doomed. Game boxes pose a bigger threat (imagine an XBOX with a TV Tuner and a package of channels targeted towards college students).

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  7. Om,

    If they had an IP based solution (and I have not taken a closer look at Vudu), perhaps they have a chance. This of course assumes they have acess to the right content.

    Game boxes can do this too — and they are not offered thru the comcasts of the world.

    BTW, dont forget about slingbox and tivo…they are both media boxes connected to your tv :)

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  8. I think all this new-box craze is going to be great for people who make furniture & accessories like TV center, entertainment consoles etc. We need to fit so many boxes, and not to mention all those cables. Monster must be happy about all this – don’t you think ;-)

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  9. It seems one of the benefits of this box/service is that as a user, you don’t need to subscribe to a traditional MSO to get video/TV as Vudu appears to be using the internet to deliver the files to your box. I would imagine many users will still have to get their internet connections from their cable company though, given my choices, I would.

    A new player in the net neutrality debate for sure.

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  10. the line from the author of the nyt article that strikes me as most ignorant and naive is “it may mean goodbye to … sticky-floored movie theaters”.

    does that have anything to do with a piece VOD hardware? great VOD technology on its own is not really a reason people don’t go to the movies. it would take a sweeping change in the movie distribution model (i.e. day-and-date release of blockbusters) to make the impact that the author suggests. and we know that, at least anytime soon, vudu is not going to be the company to break that mold.

    that said, the technology sounds great. i’ll be sure to pick it up from best buy right after i set up my new akimbo, moviebeam and full service network boxes ;)

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