Dish began distributing foreign-language content on Roku in May, and it wants to be the only one to do so.

The reason for this move? Roku struck a distribution agreement with Dish Network in May, which makes the satellite provider’s DishWorld service the exclusive distributor for foreign programming on the platform. Customers can use DishWorld to subscribe to packages of content from countries like India and Brazil, with streams delivered directly to their Roku boxes — no satellite subscription required.

Roku contacted developers affected by this about a month ago and told them the only way to remain on the service would be to strike a licensing agreement with Dish, which would put the TV provider in charge of distribution and billing of their content. Otherwise, they would have 90 days to transition their customers off the platform but wouldn’t be allowed to add any new customers during that time. A few edge cases, including companies that distribute only small amounts of foreign content, may be able to stay on Roku, but they will need Dish’s approval first. And some will be able to maintain their foreign-language content outside the U.S. and Canada.

A Roku spokesperson sent us the following comment via email:

“As DISH is the leader in international programming, by partnering with them we can leverage their expertise to grow our international and foreign language content under their expertise. For customers, this strategy allows us to maintain the best selection and highest quality of international and foreign language content.”

Limited choices, limited options

Mango Mobile TV has been distributing Indian movies and TV shows on Roku. The company is now looking to accelerate its smart-TV app development.

Predictably, the developers affected by the move don’t share that point of view. Some of them voiced their frustration in Roku’s developer forums.

I have talked with a few developers since Dave Zatz first reported about Roku’s move and also heard various complaints. Krishna Jonnakadla, the VP of marketing for Mango Mobile TV, told me his company is “deeply disappointed” by Roku’s move.

He went on to say,

“Instead of encouraging more people and content to get on to the platform, Roku has taken just the opposite decision. We believe customers are going to face limited choices and limited options. Customers may in fact see an increase in pricing due to the fact that Dish might have to tag on their margins to the aggregated content they will be bringing on to the platform. We don’t believe this will be a good move for Roku or their current customers.”

Mango Mobile TV has been distributing Indian movies and TV content on Roku, and Jonnakadla told me the company is now accelerating its development of apps for Samsung’s connected TVs and other smart-TV platforms in light of Roku’s decision. He also said his company tried to reach out to Dish several times about its presence on Roku but has never gotten any response. I have heard similar complaints from another developer, who described the situation as a “checkmate.”

The future of Roku: looking like a cable box?

There’s some irony in all of this: When Dish brought its DishWorld service to Roku, it seemed like the first step toward a virtual cable operator — a company that offers customers pay-TV bundles transmitted over the Internet without any physical infrastructure in place. There has been lots of talk within the industry about the possibility of such virtual TV offerings, with many hoping this would lead to cheaper and more flexible bundles and eventually more competition.

However, if TV providers are turning to the Internet to distribute their fare, they could also make online video look much more like traditional TV. Devices like Roku could end up looking much more like a traditional cable box — exclusive distribution agreements included.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Who and what to watch in the new era of the living room
• What the shift to the cloud means for the future EPG
• Connected consumer third-quarter 2012

DISHWorld, as the service is called, will offer a number of international packages that bundle Brazilian, Arabic, Hindi and other foreign language content. Bundles go for as little as $5 a month, and all the way up to $44.99, but customers have to mix and match bundles to spend at least $19.99 per month.

Some of the bundles simply offer foreign news stations, while others include movie channels and music TV. Among the networks included in the various bundles are Sony Entertainment Television India, Al Jazeera, Willow Cricket and BBC Arabic. Viewers have access to live TV and can catch up on any of the shows that aired within the last 48 hours on any of the networks they subscribe to.

A press release also hinted at additional offerings targeting other expats in the future, and it suggested that Roku decided against becoming its own operator, partnering with Dish instead:

“Additionally, Roku selected Dish to manage the launch and expansion of future foreign language channels and content on the Roku platform.”

The partnership is a big deal for Roku; the set-top-box has been offering subscription access to a number of foreign channels and packages for some time. But in most cases, these are sold separately by smaller companies, some of which reside outside of the U.S.. Having Dish as a trusted brand to manage and promote these kinds of subscriptions could give Roku a big boost.

But it’s also a remarkable deal for the pay TV world in general. Over the last few months, there have been many rumors that one of the big pay TV providers would eventually decide to go online and target Internet users located outside of its local market with streaming-only packages — an idea that folks in the industry have been dubbing a virtual cable company. Today, this kind of virtual pay TV future became reality — for folks speaking Hindi, Arabic or any other of the targeted languages, anyway.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• What the shift to the cloud means for the future EPG
• Who and what to watch in the new era of the living room
• How consumer media will change in 2013