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Summary:

Boxee will release a dedicated hardware device that will enable users to connect its open-source media center software directly to their TVs. And in doing so, Boxee may either alienate its biggest fans or potential content partners. That’s a tough choice to make.

Boxee generated a lot of excitement on the part of online video fans when it said it would release a dedicated hardware device that will enable users to connect its open-source media center software directly to their TVs. But by becoming a hardware company, Boxee may have to choose between alienating its biggest fans and alienating potential content partners.

As Sam over at OStatic points out, much of Boxee’s success stems from a “very enthusiastic community of users” that has helped augment its media center platform by building out various content channels. But while some content owners have created their own channels, not all channels are built by the content owners themselves — or even sanctioned by them. As just one example, Boxee’s new chief creative officer, Zach Klein, told an audience at the Future of Television conference in New York last week that when he joined Boxee he was surprised to find that users had built channels for IAC’s Vimeo and College Humor, where he previously worked, without that company’s permission.

We saw the possible repercussions of such unsanctioned channel-building earlier this year, when Boxee got into a public cat-and-mouse game with Hulu over the online video site’s content being available through Boxee’s software. Since then, Hulu has gotten even more aggressive in trying to protect its content from being embedded on video aggregation sites without its permission.

Boxee has always defended its software by saying that it was just another browser, even if it was clearly meant to be used for navigating online video content when a user’s laptop is connected to a TV. But by becoming a hardware play, the company may have to rethink what content it makes available.

And therein lies the rub. If Boxee simply ports the software and all the channels that it and others have created into its Boxee Box without the permission of content owners — in other words, if it’s committed to remaining open and allowing anyone to build content channels for the device — then it risks alienating potential content partners. Or worse, it risks getting itself into legal trouble for distributing copyrighted content to the TV without getting the content owners’ permission.

For now the company says it’s committed to providing the same content on the Boxee Box that’s available through its desktop software — even if it doesn’t have rights to distribute that content. In an email to NewTeeVee, Andrew Kippen, Boxee’s vice president of marketing, writes, “It’s always been our goal to keep a consistent experience across all platforms — Windows, Mac, Linux, AppleTV, and now, the Boxee Box. We’ll do our best to make sure our users can access the same content across all the different platforms.”

The alternative would be for Boxee to provide content on the device only from companies with which it’s officially partnered, such as Major League Baseball Advanced Media, Current, Pandora, Digg and Tumblr. But there’s also a whole lot of content on Boxee from major broadcast video sites or cable networks that Boxee doesn’t have deals with, like Hulu, CBS, CNN, Comedy Central or MTV.

While Boxee is taking a chance by making unverified content available without a deal, others are playing it safe. Roku, which already sells a broadband-connected set-top device, only has content from partners available through its channel store. The company also issued an SDK earlier this year that will allow just about anyone to build their own content channels for Roku devices. But in that environment — on its platform and on its box — Roku will have the ultimate say when it comes to who is included.

If Boxee kowtows to content owners, the platform will not only become less open but it will also mean it will offer less content than what it currently makes available — which could make it less attractive to consumers.

  1. Hi Ryan,

    We have a bit of a different view of the situation. We think the future of an Internet connected living room is inevitable. The CPUs in the living room will get stronger. The UI will get simpler. The TV browsers will get better. The remote controls will become more intuitive.

    We also believe it will be a net positive for the industry. More content choices and sources available on more screens will translate to increased demand for content. The Internet does not mean Free. Netflix and MLB are great examples of paid services that are doing great online. Overall spend on entertainment will probably not go down, but rather go up.

    Still there is a real challenge for the industry to experiment with this new medium, while not upsetting the existing distribution channels and revenue sources.

    We are investing time and resources in building relationships with media companies. We are learning from them about the things they care about as they prepare for that future, and we share with them our vision and see whether we could be helpful as they look to test the waters with different offerings.

    Boxee will remain an open platform, while respecting the rights of content owners. We don’t think these two are in conflict.

    Avner

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    1. Avner,

      I understand that you are building relationships with media companies to get them on board with the platform. But at the same time, you say that you plan to distribute content that you’re not actually licensing on this new hardware device. How do they react to that?

      Also, it’s not clear how you plan to remain open while also ‘respecting the rights of content owners.’

      You say that the two aren’t in opposition, but it seems to me that content providers will either want their content on the device (and the software platform in general) or they won’t. But with the Hulu situation, Boxee has shown a willingness to include content against the rightsholder’s wishes.

      Can you explain how you plan to negotiate these rights while also remaining open to anyone creating a video channel (or application, as you call it), with or without a rightsholder’s permission?

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      1. Ryan,

        The Boxee Browser is based on the same engine as Firefox. That means that almost any web-based content can be viewed on Boxee (btw, this is also true for the browser on the Wii or the PS3). Users can create different types of applications linking to webpages and playing videos from these webpages.

        In case a content owner sees a Boxee App that is violating its copyright then they can notify us and we will take it down. It is no different than plug-ins built for Firefox or Applications built for Android.

        The trend that we’re seeing with content owners is not more restrictive, but rather more open. They sometimes build Boxee apps on their own, sometimes they work with a fan that already built an app, and sometimes we help them build it.

        Avner

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  2. Having read the commentary, I’m still a little puzzled by the notion that Boxee has licensing or permission challenges.

    Why does any device that acts merely as a connectivity and presentation enabler require approval — when the content is offered for consumption on the open “public” Internet?

    As an example, does this mean that when I connect my laptop to my TV to view online video on a bigger screen, then I must also ask for permission first?

    If not, when a content publisher selectively denies use on a particular device, then is this a “restraint of trade” issue that government regulators need to review?

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  3. “Or worse, it risks getting itself into legal trouble for distributing copyrighted content to the TV without getting the content owners’ permission.”

    This is naive. Apple doesn’t get into legal trouble when I watch Hulu videos from my Mac Mini connected to my TV via an RSS feed using Safari. A Boxee Box would be no different – hardware with outputs and a browser.

    The distributor is Hulu. They make the copyrighted content available to anyone visiting their site. It’s not being packaged and redistributed. The concept that they can tell the viewer what type of screen they can watch it on is absurd.

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  4. David H. Deans and PookieBadMuffin make good points. The TV set is just a monitor. It is no different than your laptop or desktop screen. It is just bigger.

    Boxee on a connected device is no different from Boxee on a laptop. It just comes in a different package. Any restrictions on where Internet content can or can not play are artificial. It applies to mobile, laptop, netbook, tablet, TV, fridge or any other device connected to the network.

    The challenge and opportunity for the industry is too create value on each one of these different devices and use cases. We believe there are many ways for content owners to build offerings that users value and will be willing to pay for.

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    1. I love Boxee but calling the TV Set “just a monitor” is probably not the right thing. I am heavily involved in the STB business and understand that one of the largest threats to this business is Connected TV Sets.

      Also stating the obvious – the interaction model with a TV vs. a Laptop Screen vs. a Smartphone is distinctly different which to a varying degree influence both the software and hardware platforms.

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      1. But why does that matter. There are thousands of different hardware, OS’s, applications that can access and view Hulu and other online video content legally without asking for permission. What makes Boxee Box any different. Boxee or any streaming platform should not have to worry about permission if it’s available publicly through the internet.

        I don’t see the basic difference between what software or hardware I choose to watch my content through. It’s whining by the industry like this that make me want to not support places like Hulu.

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  5. if you’d like to see mockups and learn more about the upcoming Boxee Box (that sparked this discussion) you should try and make it to our Boxee Beta Unveiling event in Brooklyn on Dec 7th (there will also be a live stream of the event by LiveStream)

    RSVP here http://boxeebeta.eventbrite.com/

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  6. One issue here seems to be how the revenue generating tools that the content owner is using, being that subscription, video advertising, display ads, or other branding options like a customized player are persisted when that content is shown through Boxee. It would be interesting to hear what Boxee is planning to do about this.

    The more difficult I think, is that content owners normally sell content to cable operators, that are getting a little nervous about having that same content available on the TV through a medium that bypasses them. Watching on a PC is not the same on their mind as watching on a TV set. Don’t look at it from technical perspective, but a commercial one.

    Can you connect your PC to the TV? Sure, but having a plug and play solution that you get for cheap and gets you free content forever changes the game big time. As you may imagine, content companies and distributors want to find some way to make money out of this.

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    1. It is up to the content owners to decide how much content they are making available, at what quality, with how many ads, under what bundle, at what price. They can create differentiated offerings.

      The Internet is agnostic of a specific business model, and so does Boxee. We don’t care whether it is free, ad-based, pay-per-view, bundled, subscription, authentication. Our goal is to make it all available to the user.

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    2. @GuilleBe, perhaps the ultimate question is — does Big Media really understand that the open public Internet is not like the closed legacy channels and associated platforms from a bygone era?

      Moreover, blocking the Boxee device isn’t a solution to the greater issue — OTT video consumption on TVs is rapidly moving beyond the early-adopter phase of market development.

      iSuppli forecasts that the total number of Web-enabled sets will grow to between 88 million and 90 million world-wide by 2013 — representing 40 percent of the television market.

      Apparently, there are already over 90 TV models on the market that are Internet-enabled (Ethernet or Wi-Fi), and more are being introduced at CES in January.

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  7. Why ask for any rights at all? Use the platform as a distribution medium, let the rights holders distribute through it and share the revenue.

    The platform has to bring viewers – new viewers to the content. Usually new players don’t have an installed base so they don’t have much to offer the rights holders.

    A Boxee Box, if played right, could bring many new sets of eyeballs to the content given their existing large user base.

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    1. Indeed. We are not licensing content. We are making it easy for content owners, content aggregators and developers to make it easy for users to consume and discover content on a big screen.

      The title of the post should have been “The Opportunity with the Boxee Box”.. :)

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      1. Do you think you can get Boxee running on a Broadcom 7405 platform?

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  8. Boxee requires a full PC to act as the media player. That is a waste of power consumption, of heat and requires to buy a very expensive box.

    I prefer ARM based solutions for set-top-boxes, such that actually use DSP and ARM hardware acceleration instead of X86 software tricks to display user interfaces and to decode the videos.

    An ARM based set-top-box can be made for $100 and consume 4W or less at the most streaming 1080p video from the web. A Boxee box costs $300 or more at the minimum and consumes more than 100W or more to stream the same videos or display the same user interfaces.

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    1. I’m no expert here, but I can say the codebase should be fairly optimized, since it originally run on XBOX which is an Intel Celeron processor (for SD content). Being based on opensource FFmpeg and Mplayer, the platform benefits from them for new format support and features.

      I can say I own a Sigma based solution (NMT – IOBox) and menu navigation leaves a lot to be desired, as does the music playing interface. For an equivalent price (~$200 + hard disk), I would prefer a Boxee box. Having the option of attaching a bluray player would be ideal.

      BTW, Boxee currently supports VDPAU hardware acceleration on Nvidia cards.

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      1. We are doing the work on the product side to make sure we could run lower-end computing platforms. There is no reason that Boxee should not be able to run properly on devices selling under $199 in 2010.

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      2. ARM based menu systems can be based on Android and run just fine. When Boxee PCs are 200 dollars, then ARM based set-top-boxes can be closer to 50 dollars than current 100 dollars.

        Power consumption for ARM Android based solutions is still less than 10 times less than Intel X86 Boxee.

        99.9% of all existing Cable/Satellite set-top-boxes are using ARM based platforms with DSP hardware acceleration already. It’s just a question of time before all the new set-top-boxes come with an Ethernet/WiFi and Android user interfaces optimized for HDTVs, wireless keyboard/mice and remote controls.

        I’ve been using Archos PMPs on my HDTV for more than a year in 720p streaming Youtube in 720p HD, now also playing back MKV 720p. That Archos costs 249 dollars and doubles as a portable media player with its own WVGA screen.

        Vunow does a 720p box for less than 100 dollars already, I filmed it at http://www.youtube.com/watch?v=cgSNPELT3Pk

        It’s only a matter of time till all Cable/Satellite boxes also support Youtube HD streaming and Android user interfaces for apps that show Hulu HD, other VOD, that do all media streaming functionalities.

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  9. Ryan,
    I fear you misunderstood my point. Those users didn’t require IAC’s permission, they used legal, publicly available feeds to solve a usability problem — up until they created those apps it wasn’t easy to watch the web-based content on their TVs. As far as I know, IAC continues to promote this use of their content.

    The core of my message was that superfans are necessary whenever a company lacks the resources to develop applications themselves for edge technology uses.

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  10. [...] it must find ways to woo content partners. And it must handle said content partners with care. As Ryan over at NewTeeVee wrote: “If Boxee simply ports the software and all the channels that it and others have created [...]

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  11. [...] to justify buying yet another standalone box. And that’s not even mentioning Boxee’s bigger problem, which is convincing programmers and cable companies that it isn’t the enemy. Boxee has made [...]

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  12. [...] Boxee and Hulu have a bit of a history together. Hulu cut off access to its site for Boxee users early on, which was met by a work-around by Boxee, which in turn was disabled by Hulu soon after. Boxee has been using a browser to access Hulu ever since, and the video site has kept quiet about this in recent months. One has to wonder whether adding Hulu playback capability to a set-top box will reignite the feud. [...]

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  13. Boxee, is simply trying to make some money as legally as the gray area of “digital information overload” permits. Is it premature to try and make a piece of hardware that can navigate the chaos and make money at the same time without getting caught up in a legal quagmire? Maybe, maybe not. But if they don’t do it someone else will. Whoever can pull it off will be very rich.
    But then,
    I’m just a regular guy who works at Kinko’s what do I know?

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  14. this situation reminds me of the slingbox. its a device that lets you watch your cable tv anywhere in the world with your laptop. so how is that any different than what boxee is doing?

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  15. [...] application to deliver any web video to the TV set; the problem is that they can build those apps whether they own the content or not. Now that it’s a hardware play, Boxee can’t expect to remain an open platform and not [...]

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